Qualcomm (QCOM) Risk Factor Changes

RISKS RELATED TO REVENUE AND CUSTOMER CONCENTRATION

RISKS RELATED TO DIVERSIFICATION AND OTHER STRATEGIC INITIATIVES

•Our increasing focus on artificial intelligence (AI), including on-device AI, agentic AI and AI infrastructure, may not result in the anticipated benefits and could expose us to additional competitive, regulatory, in…

RISKS RELATED TO REVENUE AND CUSTOMER CONCENTRATION

Although we expect to derive an increasing portion of our revenues from areas outside of mobile handsets, such as automotive, IoT and data center, we continue to derive a significant portion of our revenues from a sma…

A delay of significant purchases by any of our key mobile handset customers, even if only temporary, would reduce our revenues in the period of the delay.

Further, as we seek to grow and diversify our business in areas such as automotive, IoT and data center, we may also

derive a significant portion of revenues in such areas from a limited number of customers, hyperscalers, automakers or other industry participants.

continue to develop, introduce and deliver high-volume products that achieve and sustain customer acceptance.

RISKS RELATED TO DIVERSIFICATION AND OTHER STRATEGIC INITIATIVES

For example, the automotive industry is subject to long design-in time frames, long product life cycles and a high degree of regulatory, safety and other requirements (including, in some cases, customer requirements t…

In addition, in order to successfully extend our technologies and products into new and expanded product areas, industries and applications, we may need to transition to new business models or transform aspects of our…

Our increasing focus on artificial intelligence (AI), including on-device AI, agentic AI and AI infrastructure, may not result in the anticipated benefits and could expose us to additional competitive, regulatory, int…

AI technologies, including machine learning, generative AI, agentic AI and other data driven computational techniques, are increasingly important to our strategy across mobile, automotive, IoT, data center and other i…

The successful adoption and monetization of AI-enabled products depends on numerous factors beyond our control, including consumer demand, the willingness of customers to pay for AI-enabled functionality, the developm…

AI technologies also may expose us to legal, regulatory, cybersecurity, privacy, intellectual property, operational and reputational risks.

If any of these risks materialize, our AI-related investments may not achieve the anticipated benefits, and our business, results of operations, cash flows and financial condition could be materially adversely affected.

consummate acquisitions has been or is in the future harmed.

We compete with many different semiconductor companies, ranging from multinational companies with integrated research and development, manufacturing, sales and marketing organizations across a broad spectrum of produc…

commercialization of products.

Competition in any or all of the industries in which we operate, or in any product areas or device tiers within such industries, may result in the loss of business or customers or reduce average selling prices for our…

We rely on sole- or limited-source suppliers for certain products, which may exacerbate the risks identified above, and subject us to other significant risks, including poor product performance and reduced control ove…

In addition, we license for use in our products certain technologies and intellectual property from Arm, such as the Arm instruction set architecture.

Our manufacturing operations depend on securing raw materials, equipment and other supplies in adequate quality and quantity in a timely manner from multiple suppliers, and in some cases, we rely on a limited number o…

In addition, employees and former employees, in particular former employees who become employees of our competitors, customers, licensees or other third parties, including state actors, have in the past and may in the…

Further, some third parties have proposed significant changes to existing intellectual property policies for implementation by SDOs and other industry organizations with the goal of significantly devaluing standard-es…

shipment delays and/or cause damage to our customer relationships, any of which could have an adverse effect on our results of operations and cash flows.

including employee compensation costs, reduce demand for our products or those of our customers or licensees due to increased prices of those products, or result in employee attrition to the extent our compensation do…

of operations,” “A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions,” “There are numerous risks assoc…

RISKS RELATED TO OUR OPERATING BUSINESSES

RISKS RELATED TO OUR OPERATING BUSINESSES

We derive a significant portion of our revenues from a small number of customers and licensees, and particularly from their sale of premium-tier handset devices, and we expect this trend to continue in the foreseeable…

In addition, a number of our largest customers have developed, are developing or may develop their own integrated circuit products, or may choose our competitors’ integrated circuit products, which they have in the pa…

Further, political actions, including trade and/or national security protection policies (for example, tariffs and other controls on imports or exports), or other actions by governments, particularly the U.S.

Apple purchases our MDM (or thin modem) products, which do not include our integrated application processor technology, and which have lower revenue and margin contributions than our combined modem and application pro…

financial results.

Further, while we derive a portion of our revenues from areas outside of mobile handsets, e.g., from industries such as automotive and IoT, certain product categories within those industries may in themselves be subje…

We derive a significant portion of our revenues from Chinese OEMs, and from non-Chinese OEMs that utilize our products in devices they sell into China, which has the largest number of smartphone users in the world.

circuit products or on devices which incorporate our integrated circuit products made purchasing such products or devices more expensive to our Chinese customers or Chinese consumers; or our Chinese licensees delay or…

For example, in May 2024, the U.S.

For example, the automotive industry is subject to long design-in time frames, long product life cycles and a high degree of regulatory and safety requirements, necessitating suppliers to the industry to comply with s…

ESG-related standards) of a particular industry or application, we may be unable to successfully expand our business in that industry or application, and our growth could be limited.

In addition, in order to successfully extend our technologies and products into new and expanded product areas, and industries and applications beyond mobile handsets, we may need to transition to new business models…

geometry process technologies (which adds risk to manufacturing yields and reliability), and to effectively compete with the manufacturing processes and performance of our competitors, could impact our ability to intr…

carry out extensive research and development, each of which may require investment of significant amounts of capital and may have a material adverse effect on our results of operations, cash flows and financial condit…

The misappropriation, theft, misuse, disclosure, loss or destruction of the technology, intellectual property, or the proprietary, confidential or personal information, of us or our employees, customers, licensees, su…

We expect that such proposals, interpretations and strategies will continue in the future, and if successful, our business model would be harmed, either by limiting or eliminating our ability to collect royalties (or…

If we were required to reduce the royalty rates in our patent license agreements, our revenues, earnings and cash flows would be negatively impacted absent a sufficient increase in the volume of sales of devices upon…

If we were required to grant patent licenses to chipset manufacturers or other component suppliers (which could lead to implementing a more complex, multi-level licensing structure in which we license certain portions…

on devices); access to capacity in the supply chain; and value-added features that drive selling prices and consumer demand for new devices.

We anticipate that additional competitors will introduce products as a result of growth opportunities in the industries in which we operate, the trend toward global expansion by foreign and domestic competitors, and t…

and OEMs in certain geographic regions (such as China); longer operating histories in industries and applications beyond mobile handsets (such as automotive, IoT and data center), including more established and/or str…

Competition in any or all product areas or device tiers may result in the loss of business or customers, which would negatively impact our business, results of operations, cash flows and financial condition.

Our products may be responsible for critical functions in our customers’ products and networks.

We have engaged in litigation and arbitration in the past and may need to further litigate or arbitrate in the future to enforce our contract and/or intellectual property rights, protect our trade secrets or determine…

imposing, remedies with effects that extend beyond the borders of that country or region.

expectations of securities analysts or investors, among others.

Regulations are complex and changing (which may create uncertainty regarding compliance), are subject to varying interpretations, and their application in practice may evolve over time.

Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting (BEPS) project that was undertaken by the Organization for Economic Co-operation and Development…

•Our growth depends in part on the continued expansion of our business in industries and applications beyond mobile handsets, including in automotive, the internet of things (IoT) and data center.

•Our revenues depend on our customers’ and licensees’ sales of products and services based on cellular communications and other technologies, and increasingly on customer demand for our products and platform solutions…

We spend a significant amount of engineering and development time, funds and resources in understanding our key customers’ feedback and/or specifications and attempt to incorporate such input into our product launches…

Although we have many licensees, we derive a significant portion of our QTL licensing revenues from a limited number of mobile handset OEMs, which includes a number of Chinese OEMs.

Certain of our largest mobile handset customers (for example, Samsung and Xiaomi) have developed their own integrated circuit products, which they have in the past used, and/or currently use, in certain of their devices.

Similarly, we derive a significant portion of our handset revenues from certain Chinese OEMs.

We derive a significant portion of our revenues from Chinese customers.

Political actions, including trade protection and national security policies of the U.S.

Our growth depends in part on the continued expansion of our business in industries and applications beyond mobile handsets, including in automotive, the internet of things (IoT) and data center.

While we continue to invest significant resources toward advancements of foundational technologies used in the mobile industry, including wireless connectivity, high-performance and low-power computing and on-device A…

In particular, our future growth depends in part on our ability to succeed in new and expanded product areas, industries and applications, including automotive, IoT and data center; our ability to develop leading and…

If our products, software and other integrated solutions fail to perform to specifications, compete with the product quality, performance, efficiency or cost effectiveness of our competitors or meet quality or regulat…

If we are not successful in extending our technologies and products into new and expanded product areas, industries and applications, if our new technologies and products in these areas are not successful, or if we ar…

Many of our acquisitions and other strategic investments require approval by the United States and/or foreign government agencies.

Our revenues depend on our customers’ and licensees’ sales of products and services based on cellular communications and other technologies, and increasingly on customer demand for our products and platform solutions…

We develop, patent and commercialize technology, products and platform solutions based on cellular and other communications technologies (which are primarily wireless), high-performance and low-power computing and adv…

Our revenues and growth in revenues could be negatively impacted, our business may be harmed and our substantial investments in these technologies may not provide us an adequate return, if: our customers’ and licensee…

Our products, technologies and platform solutions face significant competition.

•increase or accelerate adoption of our technologies, products and platform solutions in industries and applications outside of mobile handsets, including automotive, IoT and data center;

•continue to be a leader in mobile, and drive the adoption of our technologies and products into the most popular device models and across a broad spectrum of devices in mobile and personal computing, such as smartpho…

•provide leading products and technologies to OEMs, high level operating systems providers, operators, cloud providers, hyperscalers, automakers, industrial customers and other industry participants as competitors, ne…

Some of these current and potential competitors may have advantages over us that include, among others: motivation by our customers in certain circumstances to use our competitors’ integrated circuit products, to util…

We anticipate that additional competitors will introduce products as a result of growth opportunities in the industries in which we operate, the trend toward global expansion by foreign and domestic competitors, and t…

Further, political actions, including trade and/or national security protection policies, or other actions by governments, particularly the U.S.

We primarily utilize a fabless production model, which means that we do not own or operate foundries for the production of silicon wafers from which our integrated circuit products are made.

to bring such products to production, both of which may increase for complex or leading process technologies.

or source of raw materials; supply is suspended due to quality or other issues; there is a shortage of supply due to a rapid increase in demand; and/or we or our suppliers are prohibited from utilizing certain raw mat…

Our manufacturing processes are highly complex, require advanced and costly equipment and must be continuously modified to improve yields and performance.

The misappropriation, theft, misuse, disclosure, loss or destruction of the technology, intellectual property, or the proprietary, confidential or personal information, of us or our employees, customers, licensees, su…

Our products are complex and may contain defects, errors or security vulnerabilities, or experience failures or unsatisfactory performance, due to any number of issues, including issues in materials, design, fabricati…

Our products may be responsible for critical functions in our customers’ products and networks, including in vehicles, data centers, industrial systems, robots or other connected systems.

The occurrence of defects, errors or security vulnerabilities may also give rise to product liability or other commercial claims, particularly if such defects, errors or security vulnerabilities in our products or the…

Over the years, we have been subject to various litigation and/or governmental investigations and proceedings challenging our patent licensing practices.

For example, some have put forth proposals which would require a maximum aggregate intellectual property royalty rate for the use of all standard-essential patents owned by all of the member companies to be applied to…

We expect that such proposals, interpretations and strategies will continue in the future, and if successful, our business model would be harmed, either by limiting or eliminating our ability to collect royalties (or…

If we were required to reduce the royalty rates in our patent license agreements or reduce the base on which our royalties are calculated (e.g., license at the chipset level rather than at the device level), our reven…

We have engaged in litigation and arbitration in the past and may need to further litigate or arbitrate in the future to enforce our contract and/or intellectual property rights, protect our trade secrets or determine…

We have been and may continue to be involved in litigation and/or be required to appear in front of administrative bodies (such as the United States International Trade Commission) to defend against patent assertions…

A decline in global, regional or local economic conditions, or a slow-down in economic growth, particularly in geographic regions with high concentrations of wireless device users or high concentrations of our custome…

Our stock price and financial results have fluctuated in the past and are likely to fluctuate in the future.

Our business and products, and those of our customers and licensees, are subject to various laws, rules and regulations globally, as well as government policies and the specifications of international, national and re…