QUALCOMM Incorporated (QCOM) Business Profile

What it does

Qualcomm develops chips, software and wireless technologies used by manufacturers of phones, cars, computers, connected devices and data-center equipment. Founded in 1985 and headquartered in San Diego, the company is led by President and Chief Executive Officer Cristiano R. Amon.

Its semiconductor business supplies processors, modems and other components that let devices compute, connect to networks and run applications. Snapdragon platforms combine several of these functions for smartphones, PCs and other products. In vehicles, Snapdragon Digital Chassis platforms provide connectivity, digital cockpit and assisted-driving capabilities. Dragonwing products serve industrial, networking and robotics applications.

Qualcomm also licenses patents and other intellectual property to companies making wireless products. Its patent portfolio includes rights relevant to cellular standards used in devices such as smartphones, PCs and connected vehicles. A manufacturer can license those rights whether or not it buys Qualcomm chips.

The company is expanding its data-center business with custom chips, processors, connectivity products and AI software. Some Dragonfly products are still in development. Modular supplies software tools and cloud services for building and running AI applications across different computing systems. Qualcomm also serves U.S. government agencies and contractors through its QGOV business and makes strategic investments through Qualcomm Ventures.

How it makes money

Qualcomm earns most of its revenue in two ways: selling semiconductor products and licensing intellectual property. Fiscal 2026 revenue was $43.1 billion; fiscal fourth-quarter non-GAAP revenue was $10.4 billion.

The QCT semiconductor business sells integrated circuits and licenses system software to manufacturers. Products include Snapdragon and Dragonwing platforms, standalone modems, radio-frequency components, power-management chips and connectivity products. Manufacturers incorporate them into devices across a range of price tiers. QCT sales generally follow purchase orders, with customers able to reschedule or cancel within specified terms. Equipment and services revenue in QCT was $36.6 billion in fiscal 2026.

QTL licenses portions of Qualcomm’s patent portfolio, including patents relevant to cellular standards. Its revenue consists primarily of royalties paid quarterly as licensees sell products using the licensed technology. Royalties are generally based on a percentage of a device’s wholesale selling price after permitted deductions; some products have minimums, caps or fixed per-unit amounts. This creates continuing revenue as licensed devices are sold, although agreements must be renewed or renegotiated.

Qualcomm renewed licensing agreements with Apple and Huawei and said its QTL revenue run rate remained unchanged. Revenue can fluctuate with device launches, consumer demand and technology cycles: chip sales occur as manufacturers prepare devices, while royalties follow licensees’ sales.

QSI makes strategic investments, including in early-stage companies. Data Center, QGOV and Modular were nonreportable businesses in fiscal 2026. Qualcomm plans to include Data Center within QCT beginning in the first quarter of fiscal 2027.

Customers and how it sells

Qualcomm sells chips and software to device manufacturers and licenses patents to companies that make cellular products. Customers and licensees serve markets including smartphones, PCs, cars, connected devices and network equipment. QCT sells primarily through supply terms that use purchase orders and order confirmations.

A small number of customers and licensees account for a significant portion of revenue. Apple and Samsung each represented 10% or more of consolidated revenue in fiscal 2026. Qualcomm expects Apple to use its own modems in most of its devices going forward, while Apple has also renewed a Qualcomm licensing agreement.

In data centers, Qualcomm has a custom silicon and optical connectivity agreement with Amazon Web Services, and its Dragonfly CPU is scheduled to ship to Meta. SpaceX selected Qualcomm technology for its planned U.S. terrestrial 5G network. Qualcomm says deployment under that agreement begins in 2027.

Qualcomm operates globally and licenses its cellular standard-essential patents worldwide. It says a significant portion of its business is concentrated in China. Its patents have coverage in countries including China, India, Japan, South Korea and the United States, as well as countries in Europe.

Suppliers and costs

QCT uses a mostly fabless production model: Qualcomm designs chips but relies on other companies for wafer fabrication, assembly, packaging and most testing. Its foundry suppliers include Taiwan Semiconductor Manufacturing Company, Samsung Electronics and GlobalFoundries. It buys memory for some products from Micron Technology and Samsung Electronics. Most foundry, memory and semiconductor assembly and test suppliers are in the Asia-Pacific region.

Qualcomm uses its own facilities for certain radio-frequency modules and filters, with fabrication in Germany and Singapore and later production processes in China and Singapore. Suppliers procure most raw materials and components for Qualcomm’s integrated circuits, while Qualcomm directly buys some materials and components.

Research and development expenditures were $10.2 billion in fiscal 2026. Higher product costs contributed to a decline in QCT gross margin that year, while research and development and selling, general and administrative expenses also increased. Qualcomm is raising product prices in response to semiconductor input costs and expects the full benefit in gross margins in the second half of fiscal 2027.

Competitive position

Qualcomm competes with semiconductor designers and manufacturers across handsets, automotive and connected devices. Competition depends on factors including performance, integration, price, time to market, engineering, supply capacity and customer support. Competitors may overlap with only some of Qualcomm’s product lines.

The company also faces competition from customers developing their own chips. Apple already uses an internally developed modem in some smartphones, and Qualcomm expects Apple to use its own modems in most devices going forward. Qualcomm also identifies Samsung as a customer pursuing vertical integration. In processors, Qualcomm has described Arm as both a supplier and a competitor.

Qualcomm’s patents cover cellular technologies incorporated into industry standards, and it has licensed its intellectual property to hundreds of companies. Its chip platforms combine processors, connectivity, software and supporting components. The company also provides tools intended to help developers deploy AI models on its chips.

Our reading: The patent portfolio is a meaningful source of protection because cellular device makers license rights across generations of standards, though agreements must be renewed and licensing practices can face legal challenges. Our reading: Integrated chips and software can help Qualcomm compete for device designs, but customer chip development and competition on price and performance limit the durability of that advantage.

Growth opportunities

Qualcomm is extending technologies developed for mobile devices into automotive, connected products and data centers. Its automotive platforms cover connectivity, digital cockpits and assisted driving; its IoT products address PCs, industrial equipment, networking and robotics. In fiscal 2026, lower handset revenue was partly offset by higher automotive and IoT revenue.

Qualcomm says commercial shipments of its fifth-generation Snapdragon Digital Chassis began in the September 2026 quarter and will continue to ramp in fiscal 2027. It expects on-device AI capabilities and adoption to expand in handsets and other devices, including personal AI products.

In data centers, Qualcomm is developing processors, AI accelerators, connectivity and software, alongside custom silicon for customers. Custom accelerators for Amazon Web Services began shipping in October, and Qualcomm expects data-center revenue of more than $650 million in the first fiscal quarter of 2027. It has set a data-center revenue target of $5 billion for fiscal 2027 and $15 billion for fiscal 2029.

Qualcomm also expects non-handset QCT revenue across automotive, IoT and data center to grow by greater than 60% year over year in fiscal 2027. Its agreement with SpaceX provides another application for Dragonwing infrastructure products, with network deployment planned to begin in 2027.

Structural risks

• Customer concentration and in-house chips: A small number of handset customers and licensees account for significant revenue. Qualcomm expects Apple’s increased use of its own modems to have a significant negative effect on QCT revenue, results and cash flows.
• Handset demand and memory: Qualcomm expects memory supply constraints and related price increases to hurt demand from several phone manufacturers. The effect depends on availability, pricing and consumer demand.
• Manufacturing and costs: Qualcomm depends on a limited number of outside suppliers for much of its manufacturing and testing. Capacity shortages, supplier disruptions or higher input costs could constrain shipments or affect margins.
• Licensing and legal challenges: Licensing success requires Qualcomm to evolve its patent portfolio and renew agreements. Investigations, legal proceedings or changes to licensing practices could adversely affect the business.
• Diversification and geography: Growth depends partly on expansion beyond handsets into automotive, IoT and data centers. A significant portion of Qualcomm’s business is concentrated in China, where trade and national-security policies may affect its prospects.

Bottom line

Our reading

Qualcomm combines chip sales with recurring royalties from wireless intellectual property, but both businesses remain tied to device makers and their sales. (item1; item7) Its expansion into automotive, IoT and data centers offers additional sources of revenue, while customer concentration, in-house chip development and manufacturing constraints remain material exposures. (item1a; item7; call_prepared)