What changed in Qualcomm Inc/De's 10-K for the fiscal year ended September 28, 2025

Political actions, including trade protection and national security policies of the U.S. and Chinese governments, such as tariffs, bans or placing companies on restricted entity lists, have in the past, currently are and could in the future limit or prevent us from transacting business with certain of our Chinese or Chinese-affiliated customers or suppliers, limit, prevent or discourage such customers or suppliers from transacting business with us, or make it more expensive to do so. Given our revenue concentration in China, if, due to actual, threatened or potential U.S. or Chinese government actions or policies: we were further limited in, or prohibited from, selling our integrated circuit products to Chinese or Chinese-affiliated customers; our non-Chinese OEM customers were limited in, or prohibited from, selling devices that incorporate our integrated circuit products into China; Chinese OEMs develop and use their own integrated circuit products or use our competitors' integrated circuit products in some or all of their devices rather than our integrated circuit products; Chinese tariffs on our integrated [added] 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 cease making payments of royalties they owe us, our business, results of operations, cash flows and financial condition could be materially harmed.

[added] 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 the validity and scope of proprietary rights of others. As a result of such litigation or arbitration, we could lose our ability to enforce one or more patents, portions of our license agreements could be determined to be invalid or unenforceable (which may in turn result in other licensees either not complying with their existing license agreements or initiating litigation or arbitration), license terms (including but not limited to royalty rates for the use of our intellectual property) could be imposed that are less favorable to us than existing terms, and we could incur substantial costs. Actions we take to enforce our contract or intellectual property rights could be costly and could absorb significant management time and attention, which, in turn, could negatively impact our results of operations and cash flows. Further, even a positive resolution to our enforcement efforts may take time to conclude, which may reduce our revenues and cash resources available for other purposes, such as research and development, in the periods prior to conclusion.

[added] Finally, the intellectual property ownership and license rights, including copyrights and patents, surrounding AI technologies, which we are increasingly building into our product offerings, have not been fully addressed by U.S. or foreign courts, laws or regulations, and the use of AI in the development of our products and services could result in our loss of, or failure to obtain, intellectual property rights, as well as subject us to risks related to intellectual property infringement or misappropriation.

Our products may be responsible for critical functions in our customers' products and networks. Failure of our products to perform to specifications, meet certain regulatory or industry standards (including product safety and information security standards, which may differ by region, geography and industry, and which are particularly stringent in the automotive industry), or other product defects, errors or security vulnerabilities, could lead to substantial damage to the products we sell to our customers, the devices into which our products are integrated and the end users of such devices, and potentially to our customers' IT infrastructure. Such defects, errors or security vulnerabilities could give rise to significant costs, including [added] costs related to developing solutions, recalling products or participating in customer recalls (for example, in the automotive industry), repairing or replacing defective products, writing down defective inventory or indemnification obligations under our agreements, and could result in the loss of sales and divert the attention of our engineering personnel from our product development efforts. In addition, defects, errors or security vulnerabilities in our products could result in failure to achieve market acceptance, a loss of design wins, a shifting of business to our competitors, and litigation or regulatory actions against us, and could harm our reputation, our relationships with customers and partners and our ability to attract new customers, as well as the perceptions of our brand. Other potential adverse impacts of product defects, errors or security vulnerabilities include shipment delays, write-offs of property, plant and equipment and intangible assets, and losses on unfavorable purchase commitments. In addition, defects, errors or security vulnerabilities in the products of our customers or licensees could cause a delay or decrease in demand for the products into which our products are integrated, and thus for our products.

[added] In addition, recent changes in global trade policy, including tariffs and related trade actions announced by the U.S., China and other countries, have resulted in significant volatility in capital markets and increased economic uncertainty. The escalation of trade tensions and the implementation of additional trade barriers between the U.S. and its trading partners may have the effect of increasing prices and/or decreasing demand for end-user products incorporating our products (including wireless devices and connected vehicles, among others), and could result in a general economic slowdown or recession, any of which would have an adverse impact on our results of operations and financial condition. In addition, tariffs may increase the cost of certain supplies used in our business, which could result in increased operating expenses and reduced margins. Finally, continued uncertainty regarding global economic conditions and trade policy may make it harder for management to estimate the future performance of our business.

[added] On July 4, 2025, tax reform legislation included in the OBBB was enacted in the United States. The OBBB includes significant corporate tax reforms, including the permanent reinstatement of deducting domestic research and development expenditures as incurred beginning in fiscal 2026 (under prior law such expenditures were capitalized and amortized over five years). The legislation also modifies international tax provisions, including changes to the FDII regime. Specifically, it renames FDII as Foreign-Derived Deduction Eligible Income (FDDEI), maintains the current FDDEI effective tax rate of 13% through fiscal 2026 and adjusts the FDDEI effective tax rate to a permanent 14% rate in fiscal 2027 (compared to 16% under prior law). As a result of these changes, we expect to be subject to the corporate alternative minimum tax (CAMT) beginning in fiscal 2026. CAMT imposes a 15% federal minimum tax on adjusted financial statement income, reduced by general business credits, including research and development credits. As we expect to perpetually be subject to CAMT, we no longer expect to realize substantially all of our existing federal deferred tax assets and recognized a charge of $5.7 billion to income tax expense to establish a valuation allowance in the fourth quarter of fiscal 2025.

[added] • On June 9, 2025, we announced that we reached an agreement to acquire Alphawave at an implied enterprise value of approximately $2.4 billion (as of the announcement date). The purchase price will be paid in cash or, if validly elected by eligible shareholders of Alphawave, in shares of our common stock or securities exchangeable for shares of our common stock. The acquisition is subject to certain closing conditions, including receipt of regulatory approvals. Subject to the satisfaction of these conditions, this acquisition is expected to complete during the first quarter of calendar 2026.

[added] (1) In connection with our pending acquisition of Alphawave IP Group plc (Alphawave), we agreed to restrict the use of approximately $2.3 billion of cash to be held for purposes of satisfying payment of the consideration to effect the acquisition. Additional information regarding our pending acquisition of Alphawave is provided in this Annual Report in "Notes to Consolidated Financial Statements, Note 9. Acquisitions."

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

No corresponding language in the FY2025 10-K.

[added] Certain of our largest mobile handset customers (for example, Apple, Samsung and Xiaomi) develop their own integrated circuit products, which they have in the past utilized, and/or currently utilize, in certain of their devices. We expect such customers will in the future utilize their own integrated circuit products in some or all of their devices, rather than our products. In particular, we expect [added] that Apple will increasingly use its own modem products, rather than our products, in [added] its future devices, which will have a significant negative impact on our QCT revenues, results of operations and cash flows.

Although we maintain a cybersecurity program to manage cybersecurity risks, as described in the "Cybersecurity" section of this Annual Report, we cannot anticipate, detect, repel or [added] guarantee the effectiveness of our preventative measures against all cybersecurity threats, particularly because the techniques used are increasingly sophisticated and constantly evolving. For example, as AI continues to evolve, cyber-attackers could also use AI to develop malicious code and increasingly sophisticated phishing attempts. [added] Like many companies, we have encountered, and may continue to encounter, intrusions and attempts to gain unauthorized access to our IT systems [added] or other attacks and incidents, and we have had third-party service providers who have encountered intrusions and may continue to encounter intrusions. In some cases, we might be unaware of an incident or its magnitude and effects. As part of our cybersecurity program, we seek to identify and remediate vulnerabilities in our IT systems [added] and software (including third party software used in our IT systems) that could be exploited by hackers or other malicious actors. However, we may not be aware of all such vulnerabilities, and we may fail to identify and/or remediate such vulnerabilities before they are exploited.

The patent license agreements that generate a significant portion of our licensing revenues are [added] each effective for a specified term. To receive royalties after the expiration of the specified term, we will need to extend or modify [added] the applicable license agreement or enter into [added] a new license [added] agreement with the applicable [added] licensee. We might not be able to extend or modify [added] such license agreements, or enter into new license agreements, without negatively affecting the material terms and conditions of our license agreements with such licensees, and such modifications or new agreements may negatively impact our revenues. In some circumstances, we may extend, modify or enter into new license agreements as a result of arbitration or litigation, and terms imposed by arbitrators or courts may be less favorable to us than existing [added] terms and may impact the financial or other terms of license agreements not subject to the litigation or arbitration. If there is a delay in extending, modifying or entering into a new license agreement with a licensee, there would be a delay in our ability to recognize revenues related to that licensee's product sales. Further, if we are unable to reach agreement on such modifications or new agreements, it could result in patent infringement and/or other litigation with such licensees. Finally, certain of our license[added] agreements contain binding renewal provisions which provide that if the parties are unable to agree upon the terms and conditions of a new license agreement by a specified date, either party may initiate binding arbitration proceedings to establish such terms and conditions, which would become effective immediately after the expiration of the prior agreement. Nonetheless, in either event, we may not be able to recognize some or any revenues related to that licensee's product sales until such new license agreement is finalized. See also the Risk Factor below titled "Efforts by some OEMs to avoid paying fair and reasonable royalties for the use of our intellectual property may require the investment of substantial management time and financial resources and may result in legal decisions or actions by governments, courts, regulators or agencies, Standards Development Organizations (SDOs) or other industry organizations that harm our business."

Revenues were [added] $44.3 billion, an increase of [added] 14% compared to revenues of [added] $39.0 billion in fiscal [added] 2024, with net income of [added] $5.5 billion, a decrease of 45% compared to net income of [added] $10.1 billion in fiscal [added] 2024. Key items from fiscal 2025 included:

• We expect continued intense competition, including from vertical integration by certain of our customers [added] (for example, Apple and Samsung). In particular, Apple began utilizing its own modem (rather than our products) in its recently released smartphones and we expect that Apple will increasingly use its own modem products, rather than our products, in its future devices, which will have a significant negative impact on our QCT revenues, results of operations and cash flows.

Cash, cash equivalents and marketable [added] securities (including restricted cash). The net [added] decrease in cash, cash equivalents and marketable securities [added] (including restricted cash) in fiscal [added] 2025 was primarily due to [added] $8.8 billion in payments to repurchase shares of our common stock, $3.8 billion in cash dividends paid, $1.4 billion repayment of unsecured fixed-rate notes that matured in May 2025, $1.2 billion in capital expenditures, $1.1 billion in payments [added] of tax withholdings related to the vesting of share-based awards and $743 million in cash [added] paid for acquisitions and other investments. This was partially offset by cash provided by operating activities, proceeds from the issuance of $1.5 billion of unsecured fixed-rate notes in May 2025 and $404 million in [added] proceeds from the issuance of common stock (primarily under our Employee Stock Purchase Plan).

[added] QTL licensing revenues and EBT remained approximately flat in fiscal 2025. During the second quarter of fiscal 2025, we executed final agreements for new long-term licenses with two key Chinese OEMs (for which the initial terms had expired) and entered into [added] comprehensive 4G and 5G license agreements with Transsion (a growing, China-headquartered OEM that sells primarily in developing [added] regions). As a result of our agreements with Transsion, all outstanding litigation between the parties has been dismissed. Beginning in the [added] second quarter of fiscal 2025, QTL revenues did not include royalties from Huawei, whose license agreement has expired.

During fiscal [added] 2025, income taxes paid were [added] less than our provision. This was driven primarily by the $5.7 billion charge to income tax expense to establish a valuation allowance in fiscal 2025 as a result of the tax reform legislation included in the OBBB. This was [added] partially offset by our installment payment for a one-time U.S. repatriation tax accrued in fiscal 2018 of $530 million and the adverse impact of the requirement to capitalize and amortize research and development expenditures for federal income tax [added] purposes. The enactment of the OBBB includes significant corporate tax reforms, including the permanent reinstatement of deducting domestic research and development expenditures as incurred beginning in fiscal 2026. We expect this change will have a favorable effect on our cash flows from operations due to lower cash tax payments compared to fiscal 2025 beginning in fiscal 2026.

Legal and Regulatory Proceedings. We [added] are currently involved in certain legal and regulatory proceedings, the outcomes of which are inherently uncertain. If there is at least a reasonable possibility that a material loss may have been incurred associated with pending legal and regulatory proceedings, we disclose such fact. We record our best estimate of a loss related to pending legal and regulatory proceedings when the loss is considered probable and the amount can be reasonably estimated. We face difficulties in evaluating or estimating likely outcomes and/or the amount of possible loss in certain legal and regulatory proceedings.[added] Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded (or the possible loss disclosed), and such amounts could be material.

(2) Includes our issued debt reported as long-term and short-term. At September [added] 28, 2025, we had [added] $15.1 billion of principal fixed-rate notes [added] outstanding with maturity dates [added] between 2027 and 2053.

Income Taxes. We make significant judgments and estimates in determining our provision for income taxes, including our assessment of our income tax [added] positions, both in the U.S. and foreign jurisdictions, given the uncertainties involved in the interpretation and application of complex tax laws and regulations in various taxing jurisdictions.[added] While we believe we have appropriate support for the positions we have taken or plan to take on our tax returns, we regularly assess the potential outcomes of examinations by taxing authorities in determining the adequacy of our provision for income taxes based on the technical merits of the position. The actual liability for U.S. or foreign taxes may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Based on our results for fiscal 2025, an assumed one-percentage point increase to our annual effective tax rate would result in an increase in income tax expense of $127 million.

+ [added] $143 million in licensing revenues [added] resulting from a settlement of a licensing dispute in the second quarter of fiscal 2025, which was not allocated to our segment results

We currently intend to continue to use cash dividends as a means of returning capital to stockholders, subject to capital availability and our view that cash dividends are in the best interests of our stockholders, among other factors.[added] Additional information regarding our capital returns is provided in this Annual Report in "Notes to Consolidated Financial Statements, Note 4. Capital Stock."

[added] Gross margin percentage decreased in fiscal 2025 primarily due to a decrease in the proportion of total revenues related to QTL licensing revenues (which have a higher margin percentage contribution).

+ [added] $70 million increase in [added] employee-related expenses

[added] Beginning in fiscal 2023 and through fiscal 2025, for federal income tax purposes, we were required to capitalize and amortize domestic research and development expenditures over five years (such expenditures were previously deducted as incurred). Our cash flows from operations were adversely affected due to significantly higher cash tax payments. However, since the resulting deferred tax asset was established at the statutory rate of 21% (rather than the current effective tax rate of 13% after considering the FDII deduction), capitalization favorably affected our total provision for income taxes and results of operations. With the enactment of OBBB, such impacts on our cash flows and tax provision are not expected to continue beginning in fiscal 2026. Changes in future taxable income (including less of our income qualifying for preferential treatment as FDDEI), tax laws (including changes to the CAMT rules) and other factors may change our determination regarding whether we will be able to realize our deferred tax assets.

• QTL revenues [added] remained approximately flat in fiscal [added] 2025 compared to the prior [added] year.

Net gains on other investments in fiscal 2024 was primarily driven by [added] observable price changes on certain of our QSI non-marketable equity investments.

+ [added] $231 million increase in sales and marketing expenses[added] (including investments in key growth and diversification initiatives)

[added] Other expenses in fiscal [added] 2025 consisted of restructuring and restructuring-related charges.

Gross margin percentage remained [added] approximately flat in fiscal [added] 2025, primarily driven by higher product costs, partially offset by higher average selling prices.

+ higher handsets revenues, due to $2.5 billion in higher revenues per chipset primarily driven by higher average selling prices and favorable mix, and $423 million in higher chipset shipments by certain major OEMs, both of which benefited from an increase in demand for premium-tier Snapdragon platforms in Android devices [added] + higher IoT revenues due to [added] $1.5 billion in higher shipments across edge networking, consumer and industrial products, partially offset by [added] unfavorable mix + higher automotive revenues, primarily driven by an increase in shipments from new vehicle launches with our Snapdragon digital cockpit products QCT EBT as a percentage of revenues increased in fiscal 2025 primarily due to:

• Cash outflows for capital expenditures were [added] $1.2 billion in fiscal [added] 2025 and $1.0 billion in fiscal [added] 2024. We expect capital expenditures to increase from fiscal [added] 2025 in the near term [added] primarily to support [added] the testing of our integrated circuits.

Net changes in our operating assets and liabilities positively impacted our operating cash flows in fiscal [added] 2025 primarily from [added] a decrease in other assets driven by the utilization of prior advanced supply agreement payments, partially offset by an increase in accounts [added] receivables primarily driven by higher revenues.

+ higher handsets revenues, due to [added] $2.5 billion in higher [added] revenues per chipset primarily driven by [added] higher average selling prices and favorable mix, and $423 million in higher chipset shipments by certain major OEMs, both of which benefited from an increase in demand for premium-tier Snapdragon platforms in Android devices + higher IoT revenues due to $1.5 billion in higher shipments across edge networking, consumer and industrial products, partially offset by unfavorable mix + higher automotive revenues, primarily driven by an increase in shipments from new vehicle launches with our Snapdragon digital cockpit products

We develop and commercialize foundational technologies and products used [added] across industries and applications from mobile devices [added] to other areas including automotive and the internet of things (IoT). We derive revenues principally from sales of integrated circuit products and licensing our intellectual property, including patents and other rights.

At September [added] 28, 2025, $7.2 billion remained authorized for repurchase under [added] our stock repurchase program. [added] Our stock repurchases were at an increased level in fiscal 2025 compared to fiscal 2024. The timing of [added] future stock repurchases and the number of shares of common stock to be repurchased will depend upon prevailing market conditions and other factors. Repurchases may be made in the open market, through 10b5-1 programs, through accelerated share repurchase programs, in privately negotiated transactions or through the use of derivative instruments. Our stock repurchase programs are subject to periodic evaluations to determine when and if repurchases are in the best interests of our stockholders, and we may accelerate, suspend, delay or discontinue repurchases at any time.

QSI EBT increased in fiscal [added] 2025 primarily due to [added] higher net gains on [added] marketable securities resulting from the initial public offerings of certain of our [added] equity investments, partially offset by lower net gains from observable price changes on certain of our non-marketable equity investments.

(2) Earnings before income taxes.

+ higher IoT revenues due to $1.5 billion in higher shipments across edge networking, consumer and industrial products, partially offset by unfavorable mix + higher automotive revenues, primarily driven by an increase in shipments from new vehicle launches with our Snapdragon digital cockpit products QCT EBT as a percentage of revenues increased in fiscal [added] 2025 primarily due [added] to:

• We expect leading process technology nodes to continue to drive product cost increases from certain of our key semiconductor wafer suppliers.

Capital Return Program. The following table summarizes stock repurchases [added] (including excise taxes paid) and dividends paid during fiscal [added] 2025 and 2024 (in millions, except per-share amounts):

+ higher handsets revenues, due to $2.5 billion in higher revenues per chipset primarily driven by higher average selling prices and favorable mix, and $423 million in higher chipset shipments by certain major OEMs, both of which benefited from an increase in demand for premium-tier Snapdragon platforms in Android devices + higher IoT revenues due to $1.5 billion in higher shipments across edge networking, consumer and industrial products, partially offset by unfavorable mix + higher automotive revenues, primarily driven by an increase in [added] shipments from new vehicle launches with our Snapdragon digital cockpit products QCT EBT as a percentage of revenues increased in fiscal 2025 primarily due to:

• QCT revenues increased by [added] 16% in fiscal [added] 2025 compared to the prior year, primarily due to higher [added] handsets, IoT and automotive revenues.

Impairment of Non-marketable Equity Investments. We monitor our [added] investments, many of which are in early-stage companies, for events or circumstances that could indicate impairment, including those that result from observable price adjustments. Key considerations in this assessment include the investee's financial and liquidity position and business forecasts (including their ability to respond to any significant deterioration), industry performance, development and/or market acceptance of the investee's products or technologies, as well as considering any appreciation in fair value that has not been recognized in the carrying values of such investments and other relevant events and factors. [added] Measurement of any impairments may require the use of unobservable inputs. In fiscal [added] 2025 and 2024, there were no significant impairment losses or adjustments to our previous judgments and estimates recorded.

Our principal sources of liquidity are our existing cash, cash equivalents and marketable [added] securities (including restricted cash), cash generated from operations and cash provided by our debt programs, which we believe will satisfy our working and other capital requirements for at least the next 12 months based on our current business plans.

Seasonality. Many of our products and much of our intellectual property are incorporated into consumer wireless devices, which are subject to seasonality and other fluctuations in demand. Our revenues have historically fluctuated based on consumer demand for devices, as well as on the timing of customer/licensee device launches and/or innovation cycles (such as the transition to the next generation of wireless technologies). This has resulted in fluctuations in QCT revenues in advance of and during device launches incorporating our products [added] (for example, certain major handset OEMs accelerated their premium-tier device launches into the first quarter of fiscal 2025) and in QTL revenues when licensees' sales occur. These trends may or may not continue in the future. Further, the trends for QTL have been, and may in the future be, impacted by disputes and/or resolutions with licensees and/or governmental investigations or proceedings.

Further, regulatory authorities in certain jurisdictions have investigated our business practices and instituted proceedings against [added] us, and they or other regulatory authorities may do so in the future. Additionally, certain of our direct and indirect customers and licensees have pursued, and [added] they or others may in the future pursue, [added] litigation, arbitration or other strategies against us related to our business. Unfavorable resolutions of one or more of these matters have had and could in the future have a material adverse effect on our business, results of operations, financial condition and cash flows. See "Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies" and "Part I, Item 1A. Risk Factors" in this Annual Report.

• Our purchase obligations at September [added] 28, 2025, which primarily relate to purchase commitments with certain suppliers of our integrated circuit products, including those under multi-year capacity commitments, totaled [added] $15.1 billion, of which, [added] $10.5 billion is expected to be paid in the next 12 months.

[added] The increase in research and development expenses in fiscal 2025 was primarily due to a $118 million increase in share-based compensation expense. Our costs related to the development of wireless and integrated circuit technologies (including [added] investments in key growth and diversification initiatives) remained approximately flat, primarily driven by [added] $314 million in higher non-recurring engineering cost reimbursements for product-related development work, partially offset by [added] an increase in [added] employee-related costs.