QCOM Qualcomm 10-K 2026-09-27 section summaries

Business model and organization

Qualcomm’s business combines semiconductor platforms and software with intellectual-property licensing, alongside strategic investments:

• QCT develops and supplies integrated-circuit platforms and system software for mobile devices, automotive and IoT. Its products include Snapdragon platforms for handsets and personal computing, Snapdragon Digital Chassis for automotive connectivity, digital cockpit and ADAS/AD, and Dragonwing for industrial, networking and robotics applications.
• QTL licenses Qualcomm’s patent portfolio, including patents essential or useful to cellular and other wireless products. QUALCOMM Incorporated operates QTL and owns most of the patent portfolio; its patents are licensed by the parent, while Qualcomm Technologies, Inc. (QTI) and its subsidiaries conduct substantially all product, engineering, service and R&D operations and cannot grant rights to the parent’s patents.
• QSI makes strategic investments, primarily in early-stage, non-marketable equity securities, intended to expand opportunities for Qualcomm technologies and support new or enhanced products and services. Qualcomm generally expects to pursue exit strategies for these investments.

Data Center, QGOV and Modular are currently nonreportable businesses. Data Center is developing CPUs, AI accelerators and connectivity products, as well as custom silicon; Modular provides an AI-native software platform and tools and cloud services for building and deploying applications across heterogeneous computing environments. QGOV sells products and provides services to U.S. government agencies and contractors. Beginning in Q1 FY2027, Data Center will be included in QCT to align reporting with planned management of the business.

Strategy and market opportunities

Qualcomm’s technology strategy spans connectivity, high-performance and low-power computing, AI, software, sensing, security and advanced packaging. It is investing across mobile, automotive, IoT and data center, and collaborates with device manufacturers, operators, cloud providers, AI companies and standards organizations. Its processor approach combines CPUs, GPUs and NPUs in heterogeneous SoCs, supported by the Qualcomm AI Engine, Hexagon NPU and AI software tools.

The company sees opportunity in AI workloads moving across cloud and edge devices. It argues that on-device AI can provide low latency, privacy, security and personalization, while device-to-cloud architectures combine edge responsiveness with cloud capabilities. Qualcomm expects AI use to expand in smartphones and PCs and sees potential in wearables, XR, industrial IoT, robotics and automotive. Industry interest in agentic AI is also driving demand for compute, custom silicon, networking, interconnects and orchestration software. Data-center opportunities include AI inference, where customers are assessing specialized architectures and hybrid computing with attention to power, performance and total cost of ownership. These opportunities depend on adoption of AI-enabled devices and workloads and Qualcomm’s ability to develop and commercialize its products, including Data Center offerings still in development. Responsible AI, data privacy and security remain industry and regulatory concerns.

In wireless, 5G supports mobile broadband, IoT and mission-critical use cases; 5G Advanced is intended to extend capabilities, including AI-related improvements and non-terrestrial communications. 6G development has entered the 3GPP development phase, with foundational air-interface decisions underway and initial specifications targeted for 2029/2030. Qualcomm participates in standards development, but its opportunities depend in part on continued evolution and adoption of wireless technologies.

Automotive digitalization is creating demand for connected cockpits, car-to-cloud services, over-the-air updates, vehicle analytics and ADAS/AD. Company-cited analyst projections put embedded cellular connectivity in 72% of new vehicles produced in 2030; 5G connectivity is projected at 51% in 2030 versus 27% in 2026. The projected share of new light-duty vehicles sold globally with Level 2 or higher autonomy rises from 24% in 2025 to 58% in 2030. These are market forecasts, not Qualcomm results, and depend on automakers’ adoption of connected and increasingly automated vehicles.

In IoT, Qualcomm targets personal AI and computing, including PCs and XR, as well as industrial, networking and robotics applications. Snapdragon X Series AI PCs illustrate its push into low-power on-device AI. It sees smart glasses, earbuds and other wearables as potential AI interfaces, and combines connectivity, edge computing, AI and location capabilities for industrial efficiency, safety and automation. Wi-Fi 6/6E/7, fiber and 5G also support its edge-networking opportunity.

Competition, risks and execution

QCT competes in fast-changing semiconductor markets affected by supply constraints, consolidation and customer concentration. Competitors include specialized and large integrated firms, as well as customers developing their own chips—including some of Qualcomm’s largest customers. Performance, integration, price, time-to-market, innovation and supply-chain execution are key competitive factors; competition or customer vertical integration could reduce demand or average selling prices. Apple and Samsung each accounted for at least 10% of consolidated revenue in FY2026, exposing results to a small number of customers or licensees.

QCT is primarily fabless and relies on third parties for wafer fabrication, assembly, packaging and much of testing, while internally fabricating certain RF front-end modules and filters. Key foundry suppliers include TSMC, Samsung Electronics and GlobalFoundries; Micron and Samsung are primary memory suppliers. Major assembly and test suppliers include Amkor, ASE, SPIL and STATS ChipPAC. Most foundry, memory and assembly/test suppliers are in Asia-Pacific, creating geographic and supplier-concentration exposure. Qualcomm also manufactures certain RF products directly, with front-end fabrication in Germany and Singapore and back-end work in China and Singapore.

QTL’s licensing portfolio covers cellular standards and other technologies, including 3G/4G/5G, Wi-Fi, positioning, codecs, connectivity and computing applications. A substantial portion of licensing revenue comes from cellular standard-essential patents. Royalties are primarily per-unit amounts generally based on a percentage of the licensee’s wholesale price of complete licensed products, subject to deductions and, for some products, minimums, caps or fixed per-unit amounts. Government investigations and legal proceedings challenging licensing practices could require changes that adversely affect the business and results.

Qualcomm identifies sustained R&D as essential amid rapid technological change, evolving standards and frequent product launches. It plans continued work in computing, AI, connectivity, multimedia, ADAS/AD and XR, from fundamental AI research to applied platforms, and may pursue acquisitions or other transactions to obtain technology, development resources or market opportunities. These efforts support diversification and future licensing opportunities but require investment and successful execution in competitive markets.

Workforce and fiscal-year comparability

At September 27, 2026, Qualcomm had approximately 57,000 workers across more than 200 locations in 38 countries; most were full-time, and most employees worked in engineering or technical roles. FY2026 voluntary turnover was approximately 6%. The company identifies attracting and retaining specialized technical talent as important to innovation and uses broad-based and targeted equity awards, including retention awards for key personnel and critical engineering skills.

FY2026 and FY2025 each had 52 weeks, while FY2024 had 53 weeks; FY2027 is expected to have 52 weeks. FY2024 results may therefore not be directly comparable with results for 52-week fiscal years.

Item 1A — Risk Factors

Customer concentration, handset exposure, and diversification

Qualcomm depends substantially on a limited number of handset customers and licensees, including Apple, Samsung, and Chinese OEMs. Apple’s expected shift toward internally developed modems is expected to significantly negatively affect QCT revenue, results, and cash flows. Samsung, Xiaomi, and potentially other customers may also expand their use of in-house chips. Premium-device demand, OEM market-share shifts, slower replacement cycles, and consumer use of refurbished devices could reduce sales, particularly of Qualcomm’s higher-revenue, higher-margin products. Concentrated purchasing power, customer-specific development costs without purchase commitments, and changes in customer orders or product-launch timing can further pressure pricing, margins, and period-to-period results.

Qualcomm is investing beyond handsets in automotive, IoT, data center, AI, and integrated hardware, software, and platform offerings. These markets could diversify growth, but returns may be delayed, fall short, or fail to become material; investment costs may exceed expectations, and unsuccessful initiatives could lead to reduced growth or asset impairments. Success depends on competitive products, customer adoption, standards and IP outcomes, skilled employees, partnerships, and broader software and developer ecosystems. Automotive’s lengthy design-in and qualification cycles and stringent safety and reliability requirements, and data center’s concentrated customer base, long deployments, and demanding performance and software needs, add execution hurdles. AI investment also depends on compelling use cases and willingness to pay; evolving architectures and customer-developed solutions could limit adoption. AI use brings additional privacy, security, IP, regulatory, and reputational risks.

Licensing, intellectual property, and legal exposure

Qualcomm’s licensing business depends on a limited number of mobile OEMs, successful licensee products, the relevance of its patent portfolio, and timely renewals on acceptable terms. Lower device volumes or selling prices, payment and reporting failures, delayed renewals, or disputes could reduce or defer royalties and cash flow. Licensees may challenge royalty obligations through litigation, arbitration, underreporting, nonpayment, or efforts to shift obligations to suppliers. Audits and enforcement can be costly, lengthy, and incomplete.

Courts, regulators, governments, or standards bodies could change licensing terms or remedies. Proposals include aggregate royalty caps, royalty allocation by patent count, narrower royalty bases, and limits on injunctions or damages. Adverse legal or policy outcomes could require lower royalties, licensing at the chipset or component level, changes to existing agreements, or restrictions on business practices; they could also lead to fines, damages, injunctions, or private antitrust claims. Disputed or invalidated agreements could interrupt royalties, encourage similar challenges by other licensees, and weaken Qualcomm’s ability to enforce patents or fund R&D and other investments.

Qualcomm also faces third-party IP claims, including those involving acquired technology and AI. Litigation may require damages, licenses, redesigns, or product changes and could delay or prevent sales; contractual indemnification obligations may add exposure. Open-source software terms may require disclosure of source code or licensing of derivative works on unfavorable terms, potentially exposing proprietary technology and weakening competitive or licensing advantages. Qualcomm’s reliance on Arm technology also creates risk if Arm’s competition with licensees affects access to future technologies on acceptable terms or timelines.

Supply chain, manufacturing, and geopolitical concentration

Qualcomm primarily uses a fabless manufacturing model and relies on a limited number of third parties for wafer fabrication, assembly, and most testing, with company facilities producing certain RFFE modules and RF filters. Suppliers and logistics are concentrated in Asia; Taiwan is particularly important for foundry capacity, and assembly and testing are concentrated in Taiwan and Korea. Qualcomm also sources certain critical integrated circuits from China, has manufacturing facilities in several countries, and maintains significant technical personnel in India. A China–Taiwan conflict or other geopolitical, natural-disaster, climate, health, or transportation disruption could impede supply, manufacturing, logistics, or customer demand.

Leading-edge capacity is limited, and suppliers may prioritize competitors or their own products. Long lead times can require commitments before customer demand is firm; capacity agreements may involve non-refundable costs without guaranteeing supply. Capacity constraints, higher supplier prices—including expected cost pressure from leading-edge nodes and AI and data-center demand—or forecast errors could limit shipments, compress margins, cause lost sales, and leave excess or obsolete inventory. Qualcomm’s owned RFFE and RF-filter facilities have higher fixed costs, so lower utilization can hurt gross profit; process difficulties can also reduce yields or interrupt production. Trade restrictions, tariffs, export controls, and other U.S.–China measures may restrict sales, sourcing, or access to equipment and materials, raise costs, and disrupt royalty or customer payments.

Product, cybersecurity, competition, and talent risks

Increasing product complexity and smaller process geometries raise design, manufacturing, reliability, and security risks. Defects may emerge after products are integrated into customers’ systems. Failures in vehicles, data centers, industrial equipment, robotics, or other critical applications could result in recalls or customer actions, repairs, write-downs, indemnification, litigation, regulatory penalties, shipment delays, lost design wins, and reputational damage. Safety-sensitive applications may create substantial liability, and insurance may be inadequate or unavailable on acceptable terms.

Sophisticated cyberattacks, including attacks through third-party providers, could disrupt IT or manufacturing operations or expose confidential information, IP, or personal data. Unauthorized disclosure or use of technology by employees, customers, licensees, or partners also threatens competitive position. Cybersecurity requirements and certifications add compliance costs. Qualcomm’s innovation and expansion depend on recruiting and retaining specialized technical employees amid intensifying competition.

Semiconductor competition, rapid technology change, short product cycles, price erosion, and supply-demand swings can produce weaker demand, lower average selling prices, excess inventory, and underused capacity. Competitors may have lower costs, government support, stronger regional relationships, better-established ecosystems, or more experience and customer access in newer markets. Customers may choose competing or internally developed chips.

Regulatory, financial, and other risks

Qualcomm faces changing or conflicting rules covering competition and patent licensing, cybersecurity, privacy and AI, export controls, tariffs, national security, automotive standards, environmental matters, spectrum, tax, and labor. Compliance failures or new requirements may raise costs, divert management attention, or restrict operations. Environmental regulation and physical climate impacts may require investment or disrupt facilities and supply chains. Acquisitions, joint ventures, and other investments may require significant capital, fail to deliver returns or synergies, or create integration, approval, and impairment risks.

Debt service uses cash and may constrain investment, acquisitions, dividends, repurchases, and flexibility in responding to business changes. If cash flow is insufficient, refinancing, spending reductions, asset sales, or cuts to capital returns may be necessary, and may be unavailable or unfavorable; higher rates or credit-rating downgrades could increase borrowing costs or restrict financing. Tax audits or changes—including reduced U.S. tax benefits—could raise liabilities, earnings, and cash-flow pressure. Business, market, legal, and regulatory developments can also increase share-price volatility and securities-litigation costs.

Cybersecurity Program and Risk

Qualcomm’s cybersecurity program combines administrative, physical, and technical controls with recurring employee training, ongoing threat monitoring, incident response, and periodic external assessments. Assessments include security and penetration testing and tabletop exercises. Cybersecurity is integrated into enterprise risk management: a cross-functional senior-leadership team assesses risks and monitors mitigation plans.

The supplier assurance program is embedded in procurement. It classifies suppliers by risk and assesses their security controls, posture, and maturity, with risk treatment intended to reflect each supplier’s level of risk.

Qualcomm recognizes that evolving threats and techniques mean it cannot prevent or detect every attack. It has experienced intrusions and unauthorized-access attempts, and some third-party service providers have experienced intrusions as well. Potential exposures include breaches or misappropriation of technology and confidential information, and vulnerabilities or defects in Qualcomm products or products of its customers and licensees. For fiscal 2026, Qualcomm identified no cybersecurity risks that materially affected, or were reasonably anticipated to materially affect, its business strategy, results of operations, or financial condition.

Oversight and Governance

The Board has primary responsibility for risk oversight, supported by the Audit Committee. The committee receives quarterly cybersecurity updates and typically receives at least semiannual briefings from management, including the CIO and Vice President of Cybersecurity. Significant threats or incidents may be escalated as needed.

Program oversight involves the CIO, the Vice President of Cybersecurity, the Information Security and Risk Management organization, and legal functions. Senior executives and the executive leadership team also receive regular or annual risk reporting.

FY2026 results

Revenue declined 3%. Net income rose 146%, but the increase primarily reflected a $5.781B tax benefit from releasing the federal deferred-tax-asset valuation allowance, rather than comparable growth in operating performance. The effective tax rate was negative 45%, versus 56% in FY2025; the prior year included a $5.724B expense related to the valuation allowance. Qualcomm released the allowance after Treasury/IRS guidance on CAMT treatment of previously capitalized domestic R&D, and no longer expects to be subject to CAMT in the foreseeable future. Realization of deferred tax assets remains dependent on future taxable income and tax-law developments. OBBB changes to domestic R&D deductions reduced FY2026 FDDEI benefits versus FY2025.

Gross margin fell mainly because QCT gross margin declined. R&D rose to 24% of revenue from 20%, including $701M of higher development costs and $428M of higher share-based compensation. SG&A included $229M of higher share-based compensation; other expenses increased substantially due to restructuring and severance. A two-year equity award replaced annual cash incentives for broader non-executive leadership in FY2026 and FY2027, contributing to higher share-based compensation and intended to support retention and diversification.

Investment and other income benefited from higher QSI-related gains: equity-method gains were $258M versus $12M, gains on other investments were $252M versus $44M, and marketable-security gains were $386M versus $254M. Interest and dividend income fell to $424M from $639M.

Segment results

QCT EBT margin declined to 27% from 30%, pressured by lower revenue, higher product costs and higher operating expenses. Handset revenue fell as certain major OEMs reduced chipset purchases while adjusting build plans amid memory constraints and price increases. Automotive growth reflected $1.3B of higher revenue per unit from mix and average selling prices, and $712M of higher shipments, including new vehicle launches. IoT growth primarily reflected favorable mix. QCT equipment-and-services revenue was $36.6B versus $37.7B.

QTL EBT margin held at 72%. Lower estimated cellular-product sales and prior-period royalties were largely offset by higher revenue per unit from mix. QSI’s higher EBT reflected investment gains, including equity-method, observable-price-change and IPO-related marketable-security gains. Data Center equipment-and-services revenue increased $235M, primarily following the Alphawave acquisition, completed in Q1 FY2026. Qualcomm expects custom-silicon shipments under agreements with large hyperscale customers to begin ramping in Q1 FY2027.

Cash flows, liquidity and capital allocation

Operating cash flow was pressured partly by inventory increases to secure supply amid constraints. FY2026 cash uses included $7.8B of share repurchases, $3.9B of dividends, $2.5B of capital expenditures, $1.6B for acquisitions and other investments, and $1.1B of tax withholding on vested awards. Repurchases totaled $7.817B, including excise taxes, for 48M shares at an average $161.96 per share, versus $8.791B for 56M shares at $155.43 in FY2025. Dividends were $3.62 per share and $3.854B total, compared with $3.48 and $3.805B. $19.6B remained authorized for repurchases. Qualcomm expects near-term capex to increase, mainly to support engineering infrastructure and IC testing.

At September 27, 2026, cash, cash equivalents and marketable securities, including restricted cash, totaled $7.681B, down from $12.478B a year earlier. The components were cash and equivalents of $4.636B versus $5.520B, restricted cash of nil versus $2.323B, and marketable securities of $3.045B versus $4.635B. The prior-year restricted cash related to the Alphawave acquisition.

Debt was $15.112B, versus $14.811B. Year-end debt included $15.1B principal of fixed-rate notes, with $2.0B maturing in 2027 and the remainder in 2028–2053, and $499M of commercial paper. The $4.0B revolving facility had no borrowings and expires in August 2029; the commercial-paper program limit is $4.5B. Qualcomm may issue debt depending on maturities, investment and funding needs, and interest rates.

Supplier purchase obligations were $18.6B, primarily for IC products and multi-year capacity commitments, with $13.8B expected to be paid within 12 months. Operating lease payments totaled $1.1B, including $162M due within 12 months. The company expects to continue strategic investments and acquisitions, which could vary significantly.

Risks and estimates

Memory constraints and price increases, along with higher semiconductor input costs and capacity constraints across fabrication, assembly, testing, advanced packaging and materials, are pressuring costs and handset demand. Qualcomm is raising product prices and expects the full gross-margin benefit in H2 FY2027, but supply limits could constrain fulfillment, delay or eliminate revenue, and weaken cash flow. Apple’s growing use of internally developed modems is expected to significantly reduce future QCT revenue, results and cash flows; customer vertical integration is also a competitive risk. Other exposures include China concentration and U.S.–China trade and national-security policies, tariffs and trade actions, litigation, seasonality, product-launch timing, wireless-generation cycles, and QTL licensee disputes or government proceedings.

Sales-based royalties rely substantially on preliminary licensee sales estimates; actual royalties were materially consistent with estimates in FY2026 and FY2025, with no significant revenue reversals. Inventory valuation is sensitive to demand, macroeconomic conditions and trade policies; weaker demand could prompt further write-downs and lower gross margin. Estimate and reserve changes affected less than 1% of cost of revenue in each year. There were no significant impairments of non-marketable equity investments or material impairments of long-lived or indefinite-lived assets in either year; many non-marketable investments are in early-stage companies and may rely on unobservable valuation inputs. Reporting-unit fair values were substantially above carrying values at year-end.

Legal and regulatory outcomes are uncertain, and losses could exceed accrued or disclosed amounts and be material. A one-percentage-point increase in the annual effective tax rate would increase tax expense by $94M, based on FY2026 results. Deferred-tax-asset realization remains sensitive to forecast taxable income, tax-law changes, including CAMT rules, and the share of income eligible for FDDEI treatment.

Market risk

Qualcomm’s modeled interest-rate and marketable-equity sensitivities were not material, while its largest quantified market-risk exposure was foreign-exchange sensitivity in a Korean withholding-tax receivable. The company also has valuation and liquidity exposure through private-company investments.

A hypothetical 100-basis-point increase across the yield curve would have caused an immaterial fair-value decrease in cash equivalents and marketable debt securities in both periods. The company’s issued term debt consisted of unsecured fixed-rate notes. Commercial paper outstanding was $499 million at September 27, 2026; its original maturities were approximately three months or less, leaving negligible interest-rate exposure. The swaps convert payments on certain fixed-rate debt to floating rates, but a hypothetical 100-basis-point rate increase would not cause a material earnings loss.

Equity-price exposure

At September 27, 2026, non-marketable equity investments, including equity-method investments, spanned more than 150 private companies and had an aggregate carrying value of $2.0 billion in other assets. Impairment losses were not material in any period presented. However, investees’ ability to raise capital and Qualcomm’s ability to realize value through IPOs, mergers or private sales are exposed to equity-market volatility, and private holdings may face valuation and liquidity risk.

Marketable equity securities were valued at $679 million. A hypothetical adverse 10% price change at September 27, 2026 and September 28, 2025 would not have caused a material earnings loss. Some holdings are in growth-stage public companies and remain more volatile.

Foreign-exchange exposure

Currency movements can affect non-functional-currency assets and liabilities, foreign cash flows, recoverability of foreign investments and product affordability in affected markets. Qualcomm uses foreign-currency forwards, options and, at times, other instruments designated as net-investment hedges for risk management rather than speculation. Gains or losses on hedged transactions and investments—including certain royalties, operating expenses and foreign net investments—are generally offset by changes in the hedges. Persistent currency declines could nevertheless make products more expensive for customers and adversely affect future sales.

The receivable was $2.7 billion at September 27, 2026. Exchange-rate changes affecting it contribute to fluctuations in the effective tax rate. Other foreign-currency transaction gains and losses were not material in the periods presented.

For the quarter ended September 27, 2026, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement. This section contains no financial metrics, business risks, or strategic developments.

Qualcomm FY2026 (year ended September 27, 2026)

Consolidated results

Revenue declined 2.6% year over year, while cost of revenues rose and R&D and SG&A increased to $10.207B (from $9.042B) and $3.701B (from $3.110B), respectively. Operating income fell 29.9%. The sharp rise in net income primarily reflects the $4.214B tax benefit in FY2026, versus a $7.122B tax expense in FY2025—not stronger operating performance. A Q2 change in Treasury/IRS guidance prompted release of a $5.7B federal deferred-tax-asset valuation allowance; Qualcomm expects to realize existing federal deferred tax assets and not be subject to CAMT in the foreseeable future, subject to future conditions.

Segments and reconciliation

QCT revenue mix shifted toward automotive and IoT as handset revenue declined.

Automotive growth reflects connectivity, digital cockpit and ADAS/AD; IoT includes personal AI and compute, industrial, networking and robotics. QCT revenue was $37.208B versus $38.367B (FY2024: $33.196B). QTL revenue was principally handset royalties. From Q1 FY2027, Data Center will be included in QCT.

Cash generation and capital returns

Cash generation weakened despite higher reported earnings, including a $5.858B tax-payment adjustment (versus a positive $3.980B in FY2025) and a $2.049B inventory cash outflow (versus $138M). Financing activities used $12.295B, including $7.817B in repurchases and $3.854B in dividends. Qualcomm completed its prior $15.0B repurchase authorization and began a new $20.0B program; $19.6B remained at year-end. Shares outstanding were 1.072B at FY2026 year-end versus 1.074B at FY2025 year-end. Dividends announced per share were $3.62, $3.48 and $3.30 in FY2026, FY2025 and FY2024, respectively.

Balance sheet, debt and commitments

Goodwill increased principally through $5.043B of FY2026 acquisitions; cumulative goodwill impairments were $812M. Inventory rose 32.4%, led by work-in-process ($5.450B versus $3.985B), amid longer supplier lead times and greater risk of excess inventory if customer demand or forecasts weaken.

Term debt principal was $15.107B; carrying value was $14.613B, including $1.993B short-term and $12.620B long-term. Notes mature from 2027 to 2053, with $2.0B of scheduled principal payments in FY2027; fixed-rate effective rates are 2.63%–6.06%. Cash interest paid was $642M (FY2025: $614M). Commercial paper outstanding was $499M at a 3.84% weighted-average rate. The $4.0B revolver, expiring August 2029, was undrawn, and Qualcomm was covenant-compliant.

Purchase obligations totaled $18.6B, including $13.8B expected within 12 months, largely for integrated-circuit inventory. Some foundry and capacity commitments may require fees or forfeiture of advances if minimums are unmet. Related advances fell to $750M from $1.9B.

Acquisitions, tax, and risk

Qualcomm acquired Alphawave for an accounting purchase price of $2.3B, adding high-speed connectivity IP and custom silicon for its data-center expansion. Modular was acquired for a preliminary $2.615B, adding an AI-native software platform for data-center and edge systems; its purchase-price allocation remains subject to adjustment. Both transactions generated substantial goodwill, making expected synergies dependent on successful integration and execution.

Three customers/licensees represented 22%, 20% and 13% of FY2026 revenue, versus 21%, 20% and below 10% in FY2025. China, including Hong Kong, accounted for $18.079B (42%) of revenue, down from $20.340B (46%); these figures reflect customer/licensee headquarters, not necessarily end-device sales locations. Qualcomm also relies on sole- or limited-source suppliers for some QCT products.

An Amazon-affiliate warrant issued in September 2026 covers up to 25M shares at $161.26 per share and had a grant-date fair value of $1.8B. Vesting is tied to commercial arrangements, binding orders and purchase milestones; the warrant is recorded as a reduction of revenue as related revenue is recognized. FY2026 share-based compensation expense was $3.452B before tax (FY2025: $2.783B); 30M service-based RSUs were outstanding, with $4.1B of unrecognized compensation expense expected over 1.9 years.

PwC gave unqualified opinions on the financial statements and internal control, finding internal control effective in all material respects. QCT revenue recognition was a critical audit matter because contract terms, performance obligations and estimates of customer incentives affect timing and amounts; the auditor tested controls, transactions and selected receivables. The company also cites royalty-collection disputes, regulatory proceedings and litigation as sources of uncertainty. Its FY2026 period, like FY2025, had 52 weeks; FY2024 had 53 weeks.