Qualcomm Annual Report 2017

Plain-text annual report

QUALCOMM INC/DE FORM 10-K (Annual Report) Filed 11/01/17 for the Period Ending 09/24/17 Address 5775 MOREHOUSE DR SAN DIEGO, CA, 92121 8585871121 CIK 0000804328 Telephone Symbol QCOM SIC Code 3663 - Radio and Television Broadcasting and Communications Equipment Industry Communications & Networking Sector Technology Fiscal Year 09/25 http://www.edgar-online.com © Copyright 2017, EDGAR Online, a division of Donnelley Financial Solutions. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, a division of Donnelley Financial Solutions, Terms of Use. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K(Mark one) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended September 24, 2017OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to .Commission File Number 0-19528QUALCOMM Incorporated(Exact name of registrant as specified in its charter) Delaware(State or Other Jurisdiction ofIncorporation or Organization) 95-3685934(I.R.S. EmployerIdentification No.) 5775 Morehouse Dr.San Diego, California(Address of Principal Executive Offices) 92121-1714(Zip Code)(858) 587-1121(Registrant’s telephone number, including area code)Securities registered pursuant to section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredCommon stock, $0.0001 par value NASDAQ Stock Market LLCSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes x No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will notbe contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerginggrowth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2of the Exchange Act. (Check one):Large acceleratedfilerxAcceleratedfileroNon-accelerated filer(Do not check if a smaller reportingcompany)oSmaller reportingcompanyoEmerging growthcompanyoIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at March 26, 2017 (the last business day of theregistrant’s most recently completed second fiscal quarter) was $83,990,231,661 , based upon the closing price of the registrant’s common stock on that date asreported on the NASDAQ Global Select Market.The number of shares outstanding of the registrant’s common stock was 1,474,164,639 at October 30, 2017 .DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s Definitive Proxy Statement in connection with the registrant’s 2018 Annual Meeting of Stockholders, to be filed with theCommission subsequent to the date hereof pursuant to Regulation 14A, are incorporated by reference into Part III of this Report.1QUALCOMM INCORPORATEDForm 10-KFor the Fiscal Year Ended September 24, 2017Index Page PART I Item 1.Business4Item 1A.Risk Factors18Item 1B.Unresolved Staff Comments35Item 2.Properties35Item 3.Legal and Regulatory Proceedings36Item 4.Mine Safety Disclosures36 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities37Item 6.Selected Financial Data39Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations40Item 7A.Quantitative and Qualitative Disclosures about Market Risk54Item 8.Financial Statements and Supplementary Data55Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure55Item 9A.Controls and Procedures55Item 9B.Other Information56 PART III Item 10.Directors, Executive Officers and Corporate Governance56Item 11.Executive Compensation57Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters57Item 13.Certain Relationships and Related Transactions, and Director Independence57Item 14.Principal Accounting Fees and Services57 PART IV Item 15.Exhibits and Financial Statement Schedules57Item 16.Form 10-K Summary612TRADEMARKSQualcomm, Snapdragon, MSM, Adreno and Wireless Reach are trademarks of Qualcomm Incorporated, registered in the United States and other countries.Other products and brand names may be trademarks or registered trademarks of their respective owners.3In this document, the words “Qualcomm,” “we,” “our,” “ours” and “us” refer only to QUALCOMM Incorporated and its subsidiaries and not any other personor entity. This Annual Report (including, but not limited to, the section regarding Management’s Discussion and Analysis of Financial Condition and Results ofOperations) contains forward-looking statements regarding our business, investments, financial condition, results of operations and prospects. Words such as“expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Annual Report. Additionally, statements concerning futurematters such as the development of new products, enhancements or technologies, industry and market trends, sales levels, expense levels and other statementsregarding matters that are not historical are forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this AnnualReport.Although forward-looking statements in this Annual Report reflect our good faith judgment, such statements can only be based on facts and factors currentlyknown by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materiallyfrom the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in resultsand outcomes include without limitation those discussed under “Part I, Item 1A. Risk Factors” below, as well as those discussed elsewhere in this Annual Report.Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. We undertake noobligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report.Readers are urged to carefully review and consider the various disclosures made in this Annual Report, which attempt to advise interested parties of the risks andfactors that may affect our business, financial condition, results of operations and prospects.PART IItem 1. BusinessWe incorporated in California in 1985 and reincorporated in Delaware in 1991. We operate and report using a 52-53 week fiscal year ending on the lastSunday in September. Our 52-week fiscal years consist of four equal fiscal quarters of 13 weeks each, and our 53-week fiscal years consist of three 13-week fiscalquarters and one 14-week fiscal quarter. The financial results for our 53-week fiscal years and our 14-week fiscal quarters will not be exactly comparable to our52-week fiscal years and our 13-week fiscal quarters. The fiscal years ended September 24, 2017 , September 25, 2016 and September 27, 2015 included 52 weeks.OverviewWe are a global leader in the development and commercialization of foundational technologies and products used in mobile devices and other wirelessproducts, including network equipment, broadband gateway equipment and consumer electronic devices. Our inventions helped power the growth in smartphones,which have connected billions of people. We are a pioneer in 3G (third generation) and 4G (fourth generation) wireless technologies, and are now a leader in 5G(fifth generation) wireless technologies to empower a new era of intelligent, connected devices. Our technologies and products are also used in industry segmentsbeyond mobile, including automotive, IoT (Internet of Things), data center, networking, computing and machine learning, and allow millions of devices to connectwith each other in new ways. We derive revenues principally from sales of integrated circuit products and licensing our intellectual property, including patents,software and other rights.The foundational technologies we invent help power the modern mobile experience. We share these inventions broadly through our licensing program,ensuring wide ecosystem access to technologies at the core of mobile innovation, and through the sale of our wireless chipset platforms and other products, whichaccelerates consumer adoption of experiences empowered by these inventions. As a company, we collaborate across the ecosystem, including manufacturers,operators, developers, governments and industry standards organizations, to create a global environment that drives continued progress and growth.We have a long history of driving innovation. We played a leading role in developing the inventions that serve as the foundation for 3G and 4G wirelesstechnologies, which are expected to serve as the basis for 5G wireless technologies. This includes the CDMA (Code Division Multiple Access) and OFDMA(Orthogonal Frequency Division Multiple Access) families of technologies, with the latter encompassing LTE (Long Term Evolution), which, along with TDMA(Time Division Multiple Access), are the primary digital technologies currently used to transmit a wireless device user’s voice or data over radio waves using apublic cellular wireless network. We own significant intellectual property applicable to products that implement any version of CDMA and OFDMA, includingpatents, patent applications and trade secrets. Companies in the mobile communications industry generally recognize that any company seeking to develop,manufacture and/or sell4subscriber units or infrastructure equipment that use CDMA-based and/or OFDMA-based technologies will require a license or other rights to use our patents.We also develop and commercialize numerous other key technologies used in handsets and other wireless devices that contribute to end-user demand, and weown substantial intellectual property related to these technologies. Some of these inventions were contributed to and are being commercialized as industrystandards, such as certain video and audio codec, wireless LAN (local area network), GPS (global positioning system) and positioning and Bluetooth. Othertechnologies widely used by wireless devices that we have developed are not related to any industry standards, such as operating systems, user interfaces, graphicsand camera processing functionality, RF (radio frequency) and antenna design and application processor architectures. Our patents cover a wide range oftechnologies across the entire wireless system (including wireless devices and infrastructure equipment) and not just what is embodied in chipsets.We are organized on the basis of products and services and have three reportable segments. We conduct business primarily through our QCT (QualcommCDMA Technologies) semiconductor business and our QTL (Qualcomm Technology Licensing) licensing business. QCT develops and supplies integrated circuits(also known as chips or chipsets) and system software based on CDMA, OFDMA and other technologies for use in mobile devices, wireless networks, devicesused in the Internet of Things (IoT), broadband gateway equipment, consumer electronic devices and automotive telematics and infotainment systems. QTL grantslicenses to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certainwireless products. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable segments, including ourmobile health, data center, small cell and other wireless technology and service initiatives.Industry TrendsThe mobile industry has experienced tremendous growth for more than 20 years, growing from less than 60 million global connections in 1994 (WCIS+,October 2017) to approximately 7.8 billion global connections as of September 30, 2017 (GSMA Intelligence, October 2017). As the largest technology platformin the world, mobile has changed the way we work, the way we live and the way we connect with each other. The scale and pace of innovation in mobile,especially around connectivity and computing capabilities, is also impacting industries beyond wireless. Our business model and inventions have been integral tothe mobile evolution, providing foundational technologies for this continued innovation and growth.Extending connectivity. 3G/4G multimode mobile broadband technology has been a key growth driver of mobile, providing users with fast, reliable, always-on connectivity. As of September 30, 2017, there were approximately 4.7 billion 3G/4G connections globally (CDMA-based, OFDMA-based and CDMA/OFDMAmultimode) representing nearly 60% of total mobile connections (GSMA Intelligence, October 2017). By 2020, global 3G/4G connections are projected to reach6.3 billion, with approximately 83% of these connections coming from emerging regions (GSMA Intelligence, October 2017).3G/4G multimode mobile broadband has also emerged as an important platform for extending the reach and potential of the Internet. In 2010, the number ofbroadband connections using mobile technology surpassed those using fixed technologies (GSMA Intelligence, October 2017), making mobile networks theprimary method of access to the Internet for many people around the world. This is further amplified in emerging regions, where, as of September 30, 2017, 3G/4Gconnections are approximately six times the number of fixed Internet connections (GSMA Intelligence and WBIS, October 2017). In China, 3G/4G LTEmultimode services have experienced strong adoption since being launched in the fourth quarter of calendar 2013, with more than 939 million connections reportedas of September 30, 2017 (GSMA Intelligence, October 2017). In India, mobile operators continue to expand their 4G multimode services, providing consumerswith the benefits of advanced mobile broadband connectivity while creating new opportunities for device manufacturers and other members of the mobileecosystem. 3G/4G mobile broadband may be the first and, in many cases, the only way that people in these regions access the Internet.Looking ahead, Qualcomm and the wireless industry are actively developing and standardizing 5G technology, which is the next generation of wirelesstechnology, expected to be commercially deployed starting in 2019. While the 5G New Radio (NR) standard is still being defined, it is expected to provide aunified connectivity network for all spectrum and service types based on OFDM technology. 5G is being designed to support faster data rates, lower networklatency and wider bandwidths of spectrum. Incorporating many of the innovations developed for 4G, 5G is also expected to be scalable and adaptable across avariety of use cases, which include, among others: empowering new industries and services, such as autonomous vehicles and industrial applications, through ultra-reliable, ultra-low latency communication links; and connecting a significant number of “things” (also known as the Internet of Things or IoT, including theconnected home, smart cities devices, wearables and voice and music devices), with connectivity designed to meet ultra-low power, complexity and costrequirements. 5G is also expected to enhance mobile broadband services, including ultra-high definition (4K) video streaming and augmented and virtual reality,with multi-gigabit speeds.5Most 5G devices are expected to include multimode support for 3G, 4G and Wi-Fi, enabling service continuity where 5G has yet to be deployed andsimultaneous connectivity across 4G and Wi-Fi technologies, while also allowing mobile operators to utilize current network deployments. At the same time, 4G isexpected to continue to evolve in parallel with the development of 5G and become fundamental to many of the key 5G technologies, such as support for unlicensedspectrum, gigabit LTE user data rates and LTE IoT to meet the needs of ultra-low power, complexity and cost applications. The first phase of 5G networks areexpected to support mobile broadband services for the smartphone form factor both in lower spectrum bands below 6 GHz as well as higher bands above 6 GHz,including millimeter wave (mmWave).We continue to work closely with mobile operators and infrastructure companies around the world on 5G demonstrations and trials in preparation forcommercial network launches.Growth in smartphones. Smartphone adoption continues to expand globally, fueled by fast 3G/4G LTE multimode connectivity advanced multimedia featuresand enhanced location awareness capabilities, among others. In 2016, approximately 1.5 billion smartphones shipped globally, representing a year-over-yearincrease of approximately 5%, with cumulative smartphone shipments between 2017 and 2021 projected to reach approximately 8.6 billion (Gartner, September2017). Most of this growth is happening in emerging regions, where smartphones accounted for approximately 75% of handset shipments in 2016 and are expectedto reach approximately 92% in 2021 (Gartner, September 2017). Growth in smartphones has not only been driven by the success of premium-tier devices, but alsoby the number of affordable handsets that are fueling shipments in emerging regions and the variety of flexible and affordable data plans being offered by mobileoperators.Consumer demand for new types of experiences empowered by 3G/4G LTE connectivity, combined with the needs of mobile operators and devicemanufacturers to provide differentiated features and services, is driving continued innovation within the smartphone. We have been a leading contributor to thisinnovation that is happening across multiple technology dimensions, including connectivity, intelligence, camera, audio, video, sensors and security. As a result,the smartphone has become the go-to device for social networking, music, gaming, email and web browsing, among others. It is also replacing many traditionalconsumer electronics devices due to advanced capabilities, including digital cameras, video cameras, Global Positioning System (GPS) units and music players,combined with an always on and connected mobile platform.Transforming other industries. With its significant scale, rapid development cycles and highly integrated solutions, a number of industries beyond mobile areleveraging technology innovations found in smartphones. Our inventions that contribute to the formation of advanced cellular technologies, such as 3G/4G LTEconnectivity, are helping transform industry segments outside of the traditional cellular industry, including automotive and IoT, among others, and empoweringcompanies to create new products and services.The proliferation of intelligent, connected things is also enabling new types of user experiences, as smartphones are able to interact with and control more ofthe objects around us. Through the addition of embedded sensors and on-device artificial intelligence processing, connected things are able to collect data and learnabout their environment, providing users with contextually relevant information and further increasing the device’s utility and value.Wireless Technologies OverviewThe growth in the use of wireless devices worldwide and the demand for data services and applications requires continuous innovation to further improve theuser experience, support new services, increase network capacity, make use of different frequency bands and allow for dense network deployments. To meet theserequirements, different wireless communications technologies continue to evolve. For nearly three decades, we have invested heavily in research and developmentto drive the evolution of wireless technologies, including CDMA and OFDMA. As a result, we have developed and acquired (and continue to develop and acquire)significant related intellectual property. This intellectual property has been incorporated into the most widely accepted and deployed cellular wirelesscommunications technology standards, and we have licensed it to several hundred licensees, including leading wireless device and infrastructure manufacturers.Cellular wireless technologies. Relevant cellular wireless technologies can be grouped into the following categories.TDMA-based. TDMA (Time Division Multiple Access)-based technologies are characterized by their access method allowing several users to share the samefrequency channel by dividing the signal into different time slots. Most of these systems are classified as 2G (second generation) technology. The main examplesof TDMA-based technologies are GSM (deployed worldwide), IS-136 (deployed in the Americas) and Personal Digital Cellular (PDC) (deployed in Japan).Since CDMA technologies are the basis for all 3G wireless systems, GSM connections are declining. According to GSMA Intelligence estimates as ofSeptember 30, 2017, there were approximately 3.1 billion GSM connections worldwide, representing approximately 39% of total cellular connections, down from46% as of September 30, 2016. The transition of6wireless devices from 2G to 3G/4G technologies continued around the world with 3G/4G connections up 16% year-over-year (GSMA Intelligence, October 2017).CDMA-based. CDMA-based technologies are characterized by their access method allowing several users to share the same frequency and time by allocatingdifferent orthogonal codes to individual users. Most of the CDMA-based technologies are classified as 3G technology.There are a number of variants of CDMA-based technologies deployed around the world, in particular CDMA2000, EV-DO (Evolution Data Optimized),WCDMA (Wideband CDMA) and TD-SCDMA (Time Division-Synchronous CDMA) (deployed exclusively in China). CDMA-based technologies provide vastlyimproved capacity for voice and low-rate data services as compared to analog technologies and significant improvements over TDMA-based technologies such asGSM. To date, these technologies have seen many revisions, and they continue to evolve. New features continue to be defined in the 3rd Generation PartnershipProject (3GPP), an industry standards development organization.CDMA technologies ushered in a significant increase in broadband data services that continue to grow globally. According to GSMA Intelligence estimates asof September 30, 2017, there were approximately 2.4 billion CDMA-based connections worldwide, representing approximately 30% of total cellular connections.OFDMA-based. OFDMA-based technologies are characterized by their access method allowing several users to share the same frequency band and time byallocating different subcarriers to individual users. Most of the OFDMA-based technologies to be deployed through 2017 are classified as 4G technology. It isexpected that 5G will heavily leverage OFDM-based technologies. We continue to play a significant role in the development of LTE and LTE Advanced, whichare the predominant 4G technologies currently in use, and their evolution to LTE Advanced Pro.LTE is incorporated in 3GPP specifications starting from release 8 and uses OFDMA in the downlink and single carrier FDMA (SC-FDMA) in the uplink.LTE has two modes, FDD (frequency division duplex) and TDD (time division duplex), to support paired and unpaired spectrum, respectively, and is beingdeveloped by 3GPP. The principal benefit of LTE is its ability to leverage a wide range of spectrum (bandwidths of up to 20 MHz or more through aggregation).LTE is designed to seamlessly interwork with 3G through 3G/4G multimode devices. Most LTE devices rely on 3G for voice services across the network, as wellas for ubiquitous data services outside the LTE coverage area, and on 4G for data services inside the LTE coverage area. LTE’s voice solution, VoLTE (voice overLTE), is being commercially deployed in a growing number of networks.Carrier aggregation, one of the significant improvements of LTE Advanced, was commercially launched in June 2013 and continues to evolve to aggregateadditional carriers in the uplink as well as the downlink. Along with carrier aggregation, LTE Advanced brings many more enhancements, including advancedantenna techniques and optimization for small cells. Apart from improving the performance of existing networks, these releases also bring new enhancementsunder the umbrella of LTE Advanced Pro to which we have been a significant contributor, including, LTE Direct for proximity-based device-to-device discovery,cellular vehicle-to-everything (C-V2X) communication, improved LTE broadcast, optimizations of narrowband communications designed for IoT (known aseMTC and NB-IoT) and the ability to use LTE Advanced in unlicensed spectrum (LTE Unlicensed) as well as in emerging shared spectrum bands in variousregions (such as the Citizens Broadband Radio Service or CBRS in the United States). There will be multiple options for deploying LTE Unlicensed for differentdeployment scenarios.• LTE-U, which relies on an LTE control carrier based on 3GPP Release 12, uses carrier aggregation to combine unlicensed and licensed spectrum in thedownlink and has been introduced in early mobile operator deployments in the United States and evolves to Licensed Assisted Access (LAA).• LAA, introduced as part of 3GPP Release 13, also aggregates unlicensed and licensed spectrum in both up and downlink and is being deployed globallyby mobile operators. LAA is a key technology for many operators with limited licensed spectrum to deliver Gigabit LTE speeds.• MulteFire can operate in unlicensed spectrum without a licensed anchor control channel.There also have been ongoing efforts to make the interworking between LTE and Wi-Fi more seamless and completely transparent to the users. Furtherintegration is achieved with LTE Wi-Fi Link Aggregation (LWA), which will utilize existing and new carrier Wi-Fi deployments.According to GSMA Intelligence estimates as of September 30, 2017, there were approximately 2.3 billion global LTE connections worldwide, representingapproximately 30% of total cellular connections.According to the Global mobile Suppliers Association (GSA), as of September 30, 2017, more than 810 wireless operators have commercially deployed orstarted testing LTE with 644 commercially launched in 200 countries. In addition, LTE Advanced standards featuring carrier aggregation have begun to bedeployed, with 212 operators having commercially launched LTE Advanced networks in 105 countries (GSA, October 2017).7As we look forward, the wireless industry is actively building the next generation of cellular technologies under the name 5G in 3GPP. While 5G is still beingdefined, our inventions that serve as foundational technologies for 3G and 4G are expected to serve as the basis for 5G wireless technologies. 5G is expected totransform the role of wireless technologies and incorporate advancements on 3G/4G features available today, including further enhanced mobile broadbandservices, device-to-device capabilities, use of all different types of spectrum (including licensed, unlicensed and shared spectrum) and connectivity of a significantnumber of things. 5G is also expected to include operation in emerging higher frequency bands, such as those in the millimeter wave range to significantly increasethe data rate offered to users. Furthermore, 5G is expected to offer techniques that will allow cellular networks to expand into new vertical product segments, suchas enabling automation-based platforms for industrial companies (known as Industrial IoT), and define a radio link with much higher levels of reliability forcontrol of vehicles and machines. This development, which builds on the various 3G and 4G features addressing IoT, will further sustain the trend of enablingcellular connectivity to non-handset categories of devices. We continue to play a significant role in driving 5G from standardization to commercialization,including contributing to 3GPP standardization activities to define the 5G New Radio (NR) and Next Generation Core (NGC) standard and collaborating withindustry participants on 5G demonstrations and trials to prepare for commercial network launches. We continue to enhance and track the 3GPP standard in our 5GNR prototypes for spectrum below 6GHz and mmWave spectrum, as well as for shared and unlicensed spectrum. These prototypes will be used for interoperabilitydevice testing starting in late 2017 with infrastructure partners as well as for early trial activities with mobile operators.Other (non-cellular) wireless technologies. There are other, non-cellular wireless technologies that have also been broadly adopted.Wireless Local Area Networks. Wireless local area networks (WLAN), such as Wi-Fi, link two or more nearby devices wirelessly and usually provideconnectivity through an access point. Wi-Fi systems are based on standards developed by the Institute of Electrical and Electronics Engineers (IEEE) in the 802.11family of standards. 802.11ax, the latest standard, adds advanced features such as downlink and uplink OFDMA and uplink multiple user multiple in/multiple out(UL MU MIMO) to the 802.11 baseline standard. This technology primarily targets broadband connectivity for mobile devices, tablets, laptops and other consumerelectronics devices using 2.4 GHz and 5 GHz spectrum. For 60GHz mmWave technology, 802.11ay adds wider channel bandwidth and the use of MIMO to theexisting 802.11ad (also known as Gigabit Wi-Fi or WiGig) standard. 802.11ah was finalized in early 2017 and targets sub-1 GHz spectrum and is expected to be asolution for “connected home” applications that require long battery life. We played a leading role in the development of 802.11ac, 802.11ax, 802.11ay, 802.11ahand 802.11p, and we are actively involved in innovative programs developed in the context of the Wi-Fi Alliance.Bluetooth. Bluetooth is a wireless personal area network that provides wireless connectivity between devices over short distances ranging from a fewcentimeters to a few hundred meters. Bluetooth technology provides wireless connectivity to a wide range of fixed or mobile consumer electronics devices.Bluetooth functionalities are standardized by the Bluetooth Special Interest Group in various versions of the specification (from 1.0 to 5.0), which include differentfunctionalities, such as enhanced data rate, low energy and mesh technologies. In August 2015, we acquired CSR plc, a leading contributor to Bluetooth evolutionin the areas of mobile devices, HID (human interface device), A/V (audio/video) and mesh technologies.Location Positioning Technologies. Location positioning technologies have evolved rapidly in the industry over the past few years in order to deliver anenhanced location experience. We were a key developer of the Assisted-GPS (A-GPS) positioning technology used in most cellular handsets today. For usesrequiring the best accuracy for E911 services and navigational based services, A-GPS provided a leading-edge solution.The industry has now evolved to support additional inputs for improving the location experience. Our products and intellectual property now support multipleconstellations, including: GPS, GLONASS, Galileo and BeiDou; terrestrial-based positioning using WWAN (Wireless Wide Area Network) and Wi-Fi-basedinputs; Wi-Fi RSSI (received signal strength indication) and RTT (round-trip time) signals for indoor location; and third-party sensors combined with GNSS(Global Navigation Satellite System) measurements to provide interim support for location-based services in rural areas and indoors where other signal inputs maynot be available.Other Significant Technologies used in Cellular and Certain Consumer Electronic Devices and NetworksWe have played a leading role in developing and/or acquired many of the other technologies used across the wireless system, such as cellular and certainconsumer electronic devices and not just what is embodied in the chipsets, and networks, including:• graphics and display processing functionality;•video coding based on the HEVC (high efficiency video codec) standard, which is being deployed to support 4K video and immersive media content;• audio coding, including EVS (enhanced voice services) and MPEG-H 3D Audio;8•the latest version of 3GPP’s codec for multimedia use and for voice/speech use, which is being deployed commercially;•multimedia transport, including MPEG-DASH (Dynamic Adaptive Streaming over HTTP) enabling advanced multimedia experiences;• camera and camcorder functions;• operating system and user interface features;• machine learning platforms;• augmented reality (AR) and virtual reality (VR) features enabling new types of user experiences;• security and content protection systems for enhanced device security without compromising the user experience;• volatile (LP-DDR2, 3, 4) and non-volatile (eMMC) memory and related controllers;• power management systems for improved battery life and device charging; and•RFFE (radio frequency front-end) system products for improved signal performance and reduced power consumption, while simplifying the design formanufacturers to develop LTE multimode, multiband devices.AcquisitionsRF360 Holdings. On February 3, 2017, we completed the formation of a joint venture with TDK Corporation (TDK), under the name RF360 HoldingsSingapore Pte. Ltd. (RF360 Holdings), to enable delivery of radio frequency front-end (RFFE) modules and radio frequency (RF) filters into fully integratedproducts for mobile devices and Internet of Things (IoT) applications, among others. The joint venture is owned 51% by Qualcomm Global Trading Pte. Ltd.(Qualcomm Global Trading), a Singapore corporation and wholly-owned subsidiary of ours, and 49% by EPCOS AG (EPCOS), a German wholly-ownedsubsidiary of TDK. Certain intellectual property, patents and filter and module design and manufacturing assets were carved out of existing TDK businesses andare owned by the joint venture, and certain assets were acquired directly by affiliates of ours. Qualcomm Global Trading has the option to acquire (and EPCOS hasan option to sell) EPCOS’s interest in the joint venture for $1.15 billion 30 months after the Closing Date. The total purchase price was $3.1 billion. RF360Holdings, which is included in our QCT segment, is a Singapore corporation with research and development and manufacturing and/or sales locations in the UnitedStates, Europe and Asia and its headquarters in Munich, Germany.NXP Semiconductors N.V. On October 27, 2016 , we announced a definitive agreement under which Qualcomm River Holdings, B.V. (Qualcomm RiverHoldings), an indirect, wholly owned subsidiary of QUALCOMM Incorporated, will acquire NXP Semiconductors N.V. (NXP). Pursuant to the definitiveagreement, Qualcomm River Holdings has commenced a tender offer to acquire all of the issued and outstanding common shares of NXP for $110 per share incash, for estimated total cash consideration to be paid to NXP’s shareholders of $38 billion . NXP is a leader in high-performance, mixed-signal semiconductorelectronics in automotive, broad-based microcontrollers, secure identification, network processing and RF power products.The transaction is subject to receipt of regulatory approvals in various jurisdictions and other closing conditions, including the tender of at least 80% of theissued and outstanding common shares of NXP in the offer (provided that the minimum tender threshold may be reduced to a percentage not less than 70% withthe prior written consent of NXP). While we continue to work to close by the end of calendar 2017, the transaction may close in early 2018. At an ExtraordinaryGeneral Meeting of NXP’s shareholders held on January 27, 2017, NXP’s shareholders approved certain matters relating to the transaction, including theappointment of designees of Qualcomm River Holdings to NXP’s board of directors (effective upon the closing of the transaction) and certain transactions that areintended to be consummated after the completion of the tender offer.In May 2017, we issued an aggregate principal amount of $11.0 billion of unsecured floating- and fixed-rate notes with varying maturities, of which a portionwill be used to fund the purchase price and other related transactions. In addition, we have secured $4.0 billion in committed financing through a Term LoanFacility, which is expected to be drawn on at the close of the NXP transaction (See “Notes to Consolidated Financial Statements, Note 6. Debt.”). The remainingamount will be funded with cash held by our foreign entities.Qualcomm River Holdings and NXP may terminate the definitive agreement under certain circumstances. If the definitive agreement is terminated by NXP incertain circumstances, NXP will be required to pay Qualcomm River Holdings a termination fee of $1.25 billion . If the definitive agreement is terminated byQualcomm River Holdings under certain circumstances involving the failure to obtain the required regulatory approvals or the failure of NXP to complete certainpre-closing reorganization steps in all material respects, Qualcomm River Holdings will be required to pay NXP a termination fee of $2.0 billion .9Operating SegmentsWe have three reportable segments. We conduct business primarily through QCT (Qualcomm CDMA Technologies) and QTL (Qualcomm TechnologyLicensing), and QSI (Qualcomm Strategic Initiatives) makes strategic investments. Revenues in fiscal 2017 , 2016 and 2015 for our reportable segments were asfollows (in millions, except percentage data): 2017 2016 2015QCT$16,479 $15,409 $17,154As a percent of total74% 65% 68%QTL$6,445 $7,664 $7,947As a percent of total29% 33% 31%QSI$113 $47 $4As a percent of total1% — —QCT Segment. QCT is a leading developer and supplier of integrated circuits and system software based on CDMA, OFDMA and other technologies for usein wireless voice and data communications, networking, application processing, multimedia and global positioning system products. QCT’s integrated circuitproducts are sold and its system software is licensed to manufacturers that use our products in mobile devices, tablets, laptops, data modules, handheld wirelesscomputers and gaming devices, access points and routers, broadband gateway equipment, data cards and infrastructure equipment, other consumer electronics andautomotive telematics and infotainment systems. Our Mobile Station Modem (MSM) integrated circuits, which include the Mobile Data Modem, Qualcomm®Single Chip and Qualcomm® Snapdragon™ mobile platforms and processors and LTE modems, perform the core baseband modem functionality in wirelessdevices providing voice and data communications, as well as multimedia applications and global positioning functions. In addition, our Snapdragon mobileplatforms and processors provide advanced application and graphics processing capabilities. Because of our experience in designing and developing CDMA- andOFDMA-based products, we design both the baseband integrated circuit and the supporting system, including the RF (Radio Frequency), PM (PowerManagement) and wireless connectivity integrated circuits. This approach enables us to optimize the performance of the wireless device with improved productfeatures and integration with the network system. QCT’s system software helps enable the other device components to interface with the integrated circuit productsand is the foundation software enabling manufacturers to develop devices utilizing the functionality within the integrated circuits. We also provide support,including reference designs and tools, to assist our customers in reducing the time required to design their products and bring their products to market.QCT offers a broad portfolio of products, including both wireless device and infrastructure integrated circuits, in support of CDMA2000 1X and 1xEV-DO, aswell as the EV-DO Revision A/B evolutions of CDMA 2000 technology. Leveraging our expertise in CDMA, we also develop and offer integrated circuitssupporting the WCDMA version of 3G for manufacturers of wireless devices. Device manufacturers have widely adopted our WCDMA products that supportGSM/GPRS, WCDMA, HSDPA (High-Speed Downlink Packet Access), HSUPA (High-Speed Uplink Packet Access) and HSPA+ for their devices. QCT alsosells multimode products for the LTE standard, which are designed to support seamless backward compatibility to existing 3G technologies. Our integrated circuitproducts are included in a broad range of devices, from low-tier, entry-level devices for emerging regions, which may use our Qualcomm Reference Design (QRD)products, to premium-tier devices. In fiscal 2017 , QCT shipped approximately 804 million MSM™ integrated circuits for wireless devices worldwide, comparedto approximately 842 million and 932 million in fiscal 2016 and 2015 , respectively.Our modems are built to work with increasingly complex networks. They support the latest communication technologies and adapt to network conditions anduser needs in real time to enable delivery of faster, smoother data and voice connections. Our 3G/4G modem roadmap delivers the latest network technologiesacross multiple product tiers and devices. This roadmap is the result of our years of research into emerging network standards and the development of chipsets thattake advantage of these new standards, while maintaining backward compatibility with existing standards.Each Snapdragon mobile platform and processor is a highly integrated, mobile optimized system on a chip incorporating our advanced technologies, includinga Snapdragon modem for fast reliable mobile broadband connectivity, a high performance central processing unit (CPU), digital signal processor (DSP), graphicsprocessing unit (GPU), image signal processor, multimedia subsystems, including high fidelity audio, high-definition video and advanced imaging capabilities, ourmobile security technology, and accurate location positioning engines. Our CPU cores are designed to deliver high levels of compute performance at low power,allowing manufacturers to design powerful, slim and power-efficient devices. Our Qualcomm® Adreno™ GPUs are also designed to deliver high quality graphicsperformance for visually rich 3D gaming and10user interfaces. The heterogeneous compute architecture of our Snapdragon mobile platforms and processors is designed to help ensure that the CPU, DSP andGPU work efficiently together, each being utilized only when needed, which enhances the processing capacity, speed and efficiency of our Snapdragon mobileplatforms and processors and the battery life of devices using our processors.Our portfolio of RF products includes QFE (Qualcomm Front End) radio frequency front-end (RFFE) components that are designed to simplify the RF designfor LTE multimode, multiband mobile devices, reduce power consumption and improve radio performance. Through our RF360 Holdings joint venture, QCToffers an expanded portfolio of RFFE products for mobile devices and IoT applications. Our technologies provide comprehensive RFFE product offerings withsystem level performance from the modem and transceiver to the antenna tuner that include power tracking, tuning systems, switching, multimode-multibandpower amplification, low noise amplifiers, complex transmit and receive modules, in addition to discrete filtering applications across cellular, infrastructure andautomotive markets.Our wireless products also consist of integrated circuits and system software for WLAN, Bluetooth, Bluetooth Smart, frequency modulation (FM) and nearfield communications, as well as technologies that support location data and services, including GPS, GLONASS and BeiDou. Our WLAN, Bluetooth and FMproducts have been integrated with the Snapdragon mobile platforms and processors to provide additional connectivity for mobile devices, tablets, laptops,consumer electronics and automotive telematics and infotainment systems. QCT also offers standalone WLAN, Bluetooth, Bluetooth Smart, applications processorand Ethernet products for mobile devices, consumer electronics, computers, IoT applications, other connected devices and automotive telematics and infotainmentsystems. Our networking products include WLAN, Powerline and Ethernet chips, network processors and software. These products help enable home and businessnetworks to support the growing number of connected devices, digital media, data services and other smart home applications.QCT primarily utilizes a fabless production model, which means that we do not own or operate foundries for the production of silicon wafers from which ourintegrated circuits are made. Integrated circuits are die cut from silicon wafers that have completed the package assembly and test manufacturing processes. Thesemiconductor package supports the electrical contacts that connect the integrated circuit to a circuit board. Die cut from silicon wafers are the essentialcomponents of all of our integrated circuits and a significant portion of the total integrated circuit cost. We employ both turnkey and two-stage manufacturingmodels to purchase our integrated circuits. Under the turnkey model, our foundry suppliers are responsible for delivering fully assembled and tested integratedcircuits. Under the two-stage manufacturing model, we purchase die in singular or wafer form from semiconductor manufacturing foundries and contract withseparate third-party suppliers for manufacturing services such as wafer bump, probe, assembly and the majority of our final test requirements. RF360 Holdingsuses certain internal fabrication facilities to manufacture RFFE modules and RF filter acoustic products, and its manufacturing operations consist of front-end andback-end processes. The front-end processes primarily take place at manufacturing facilities located in Germany and Singapore and involve the imprinting ofsubstrate silicon wafers with the circuitry required for semiconductors to function (also known as wafer fabrication). The back-end processes involve the assembly,packaging and test of semiconductors to prepare RFFE modules and RF filter acoustic products for distribution. The back-end manufacturing facilities are locatedin China, Germany and Singapore.Other than RF360 Holdings, we primarily rely on independent third-party suppliers to perform the manufacturing and assembly, and most of the testing, of ourintegrated circuits based primarily on our proprietary designs and test programs. Our suppliers also are responsible for the procurement of most of the rawmaterials used in the production of our integrated circuits. The primary foundry suppliers for our various digital, analog/mixed-signal, RF and PM integratedcircuits are Global Foundries Inc., Samsung Electronics Co. Ltd., Semiconductor Manufacturing International Corporation, Taiwan Semiconductor ManufacturingCompany and United Microelectronics Corporation. The primary semiconductor assembly and test suppliers are Advanced Semiconductor Engineering, AmkorTechnology, Siliconware Precision Industries and STATSChipPAC. The majority of our foundry and semiconductor assembly and test suppliers are located in theAsia-Pacific region.QCT’s sales are primarily made through standard purchase orders for delivery of products. QCT generally allows customers to reschedule delivery dateswithin a defined time frame and to cancel orders prior to shipment with or without payment of a penalty, depending on when the order is canceled. The industry inwhich QCT operates is intensely competitive. QCT competes worldwide with a number of United States and international designers and manufacturers ofsemiconductors. As a result of global expansion by foreign and domestic competitors, technological changes, device manufacturer concentrations and the potentialfor further industry consolidation, we anticipate the industry to remain very competitive. We believe that the principal competitive factors for our products includeperformance, level of integration, quality, compliance with industry standards, price, time-to-market, system cost, design and engineering capabilities, new productinnovation and customer support. QCT also competes in both single- and multi-mode environments against alternative communications technologies including, butnot limited to, GSM/GPRS/EDGE and TDMA. Further, QCT is expanding its product offerings to11adjacent industry segments outside traditional cellular industries, including automotive, which is subject to long design-in time frames, long product life cycles anda high degree of regulatory and safety requirements, necessitating suppliers to the industry to comply with stringent qualification processes, very low defect ratesand high reliability standards, all of which results in a significant barrier to entry and may result in increased costs.QCT’s current competitors include, but are not limited to, companies such as Broadcom Limited, Cirrus Logic, Cypress Semiconductor Corporation, HiSiliconTechnologies, Intel, Marvell Technology, Maxim Integrated Products, MediaTek, Microchip Technology Inc., Murata Manufacturing Co., Ltd., NordicSemiconductor, Nvidia, Qorvo Inc., Realtek Semiconductor, Renesas Electronics Corporation, Samsung Electronics, Sequans Communications S.A., SkyworksSolutions Inc., Sony Corporation and Spreadtrum Communications (which is controlled by Tsinghua Unigroup). QCT also faces competition from productsinternally developed by our customers, including some of our largest customers, and from some early-stage companies. Our competitors devote significantamounts of their financial, technical and other resources to develop and market competitive products and, in some cases, to develop and adopt competitive digitalcommunication or signal processing technologies, and those efforts may materially and adversely affect us. Although we have attained a significant position in theindustry, many of our current and potential competitors may have advantages over us that include, among others: motivation by our customers in certaincircumstances to utilize their own internally-developed integrated circuit products, to use our competitors’ integrated circuit products and/or sell such products toothers, including by bundling with other products, or to choose alternative technologies; lower cost structures and/or a willingness and ability to accept lowerprices and lower or negative margins for their products, particularly in China; foreign government support of other technologies or competitors; better known brandnames; ownership and control of manufacturing facilities and greater expertise in manufacturing processes; more extensive relationships with local distributioncompanies and original equipment manufacturers in certain geographic regions (such as China) and/or experience in adjacent industry segments outside traditionalcellular industries (such as automotive and IoT); and/or a more established presence in certain regions.QTL Segment . QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which, among other rights, includescertain patent rights essential to and/or useful in the manufacture and sale of certain wireless products, including, without limitation, products implementingCDMA2000, WCDMA, CDMA TDD and/or LTE standards and their derivatives. We have historically licensed our cellular standard-essential patents togetherwith other Qualcomm patents that may be useful to such licensed products because licensees typically have desired to obtain the commercial benefits of receivingsuch broad patent rights from us. However, we also have licensed only our cellular standard-essential patents to certain licensees who have requested such licenses.In addition, our practice in China since 2015 is to offer licenses to our 3G and 4G standard-essential Chinese patents for devices sold for use in China separatelyfrom licenses to our other patents. Our licensees manufacture wireless products including mobile devices (also known as subscriber units, which include handsets),other consumer devices (e.g., tablets and laptops), machine-to-machine devices (e.g., telematics devices, meter reading devices), plug-in end user data modemcards, certain embedded modules for incorporation into end user products, infrastructure equipment required to establish and operate a network and equipment totest networks and subscriber units.Since our founding in 1985, we have focused heavily on technology development and innovation. These efforts have resulted in a leading intellectual propertyportfolio related to, among other things, wireless technology. We have an extensive portfolio of United States and foreign patents, and we continue to pursue patentapplications around the world. Our patents have broad coverage in many countries, including Brazil, China, India, Japan, South Korea, Taiwan, the United Statesand countries in Europe and elsewhere. A substantial portion of our patents and patent applications relate to digital wireless communications technologies,including patents that are essential or may be important to the commercial implementation of CDMA2000, WCDMA (UMTS), TD-SCDMA, TD-CDMA (TimeDivision CDMA) and OFDMA/LTE products. Our patent portfolio is the most widely and extensively licensed in the industry, with several hundred licensees.Additionally, we have a substantial patent portfolio related to key technologies used in communications and other devices and/or related services, some of whichwere developed in industry standards development bodies. These include certain video codec, audio codec, WLAN, memory interfaces, wireless power, GPS andpositioning, broadcast and streaming protocols, and short range communication functionalities, including NFC and Bluetooth. Our patents cover a wide range oftechnologies across the entire wireless system, including the device (handsets and other wireless devices) and not just what is embodied in the chipsets. Over theyears, a number of companies have challenged our patent position, but companies in the mobile communications industry generally recognize that any companyseeking to develop, manufacture and/or sell subscriber units or infrastructure equipment that use CDMA-based and/or OFDMA-based technologies will require alicense or other rights to use our patents.We have licensed or otherwise provided rights to use our patents to hundreds of companies on industry-accepted terms. Unlike some other companies in ourindustry that hold back certain key technologies, we offer companies substantially our entire patent portfolio for use in cellular subscriber devices and cell siteinfrastructure equipment. Our strategy to make our12patented technologies broadly available has been a catalyst for industry growth, helping to enable a wide range of companies offering a broad array of wirelessproducts and features while increasing the capabilities of and/or driving down average and low-end selling prices for 3G handsets and other wireless devices. Bylicensing or otherwise providing rights to use our patents to a wide range of equipment manufacturers, encouraging innovative applications, supporting equipmentmanufacturers with integrated chipset and software products and focusing on improving the efficiency of the airlink for wireless operators, we have helped 3GCDMA evolve and grow and reduced device pricing, all at a faster pace than the 2G (second generation) technologies such as GSM that preceded it.Upon the initial deployment of OFDMA-based networks, the products implementing such technologies generally have been multimode and implementCDMA-based technologies. The licenses granted under our existing CDMA license agreements generally cover multimode CDMA/OFDMA (3G/4G) devices, andour licensees are obligated to pay royalties under their CDMA license agreements for such devices. Further, the majority of the leading handset and other wirelessdevice companies (including Huawei, LG, Microsoft, Oppo, Samsung, Sony, vivo, Xiaomi and ZTE) have royalty-bearing licenses under our patent portfolio foruse in LTE or other OFDMA-based products that do not implement any CDMA-based standards.Standards bodies have been informed that we hold patents that might be essential for all 3G standards that are based on CDMA. We have committed to suchstandards bodies that we will offer to license our essential patents for these CDMA standards consistent with our commitments to those bodies. We have alsoinformed standards bodies that we hold patents and pending patent applications that are potentially essential for certain standards that are based onOFDM/OFDMA technology (e.g., LTE, including FDD and TDD versions) and have committed to offer to license our essential patents for these OFDMAstandards consistent with our commitments to those bodies. We have made similar commitments with respect to certain other technologies implemented in industrystandards.QTL licensing revenues include license fees and royalties based on sales by licensees of products incorporating or using our intellectual property. License feesare fixed amounts paid in one or more installments. License fees are recognized over the estimated period of benefit of the license to the licensee, typically 5 to 15years. Royalties are generally based upon a percentage of the wholesale (i.e., licensee’s) selling price of complete licensed products, net of certain permissibledeductions (including transportation, insurance, packing costs and other items). We broadly provide per unit running royalty caps that apply to certain categories ofcomplete wireless devices, namely smartphones, tablets and laptops, which effectively provide for a maximum running royalty amount per device (i.e., the royaltycaps limit the running royalties due on a per unit basis). QTL recognizes royalty revenues based on royalties reported by licensees and when other revenuerecognition criteria are met. Licensees, however, do not report and pay royalties owed for sales in any given quarter until after the conclusion of that quarter, whichis generally the following quarter. Revenues generated from royalties are subject to quarterly and annual fluctuations. The vast majority of QTL revenues havebeen generated through our licensees’ sales of CDMA2000-based, WCDMA-based and LTE-based products (including 3G and 4G multi-mode devices), such asfeature phones and smartphones. We have invested and continue to invest in both the acquisition and development of OFDMA technology and intellectual propertyand have generated the industry leading patent portfolio applicable to LTE, LTE Advanced and LTE Advanced Pro. Additionally, we have invested and continue toinvest in the development of 5G, which while still being defined, is expected to heavily leverage OFDMA-based technologies. Nevertheless, we face competitionin the development of intellectual property for future generations of digital wireless communications technologies and services.Separate and apart from licensing manufacturers of wireless devices and network equipment, we have entered into certain arrangements with competitors ofour QCT segment, such as Broadcom Limited. A principal purpose of these arrangements is to provide our QCT segment and the counterparties certain freedom ofoperation with respect to each party’s integrated circuits business. In every case, these agreements expressly reserve the right for QTL to seek royalties from thecustomers of such integrated circuit suppliers with respect to such suppliers’ customers’ sales of CDMA-, WCDMA- and OFDMA-based wireless devices intowhich such suppliers’ integrated circuits are incorporated.Our license agreements also may provide us with rights to use certain of our licensees’ technology and intellectual property to manufacture and sell certaincomponents (e.g., Application-Specific Integrated Circuits) and related software, subscriber units and/or infrastructure equipment.We are currently subject to various governmental investigations and private legal proceedings challenging our patent licensing practices, which may require usto change our patent licensing practices as described more fully in this Annual Report in “Part I, Item 1A. Risk Factors” under the heading “If we are required tochange our patent licensing practices due to governmental investigations and/or private legal proceedings challenging those practices, our business and results ofoperations could be adversely impacted” and in “Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.”13QSI Segment. QSI makes strategic investments that are focused on opening new or expanding opportunities for our technologies and supporting the designand introduction of new products and services (or enhancing existing products or services) for voice and data communications and new industry segments. Many ofthese strategic investments are in early-stage companies in a variety of industries, including, but not limited to, automotive, IoT, mobile, data center and healthcare.Investments primarily include non-marketable equity instruments, which generally are recorded using the cost method or the equity method, and convertible debtinstruments, which are recorded at fair value. In addition, QSI segment results include revenues and related costs associated with license and developmentcontracts with one of our equity method investees. As part of our strategic investment activities, we intend to pursue various exit strategies for each of our QSIinvestments in the foreseeable future.Other Businesses. Nonreportable segments include our mobile health, data center, small cell and other wireless technology and service initiatives. Ournonreportable segments develop and sell products and services that include, but are not limited to: products and services for mobile health; license of chipsettechnology and products and services for use in data centers; products designed for implementation of small cells to address the challenge of meeting the increaseddemand for data; development, other services and related products to U.S. government agencies and their contractors; and software products and content and push-to-talk enablement services to wireless operators.Additional information regarding our operating segments is provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 8. SegmentInformation.” Information regarding seasonality is provided in this Annual Report in “Part II, Item 7. Management’s Discussion and Analysis of FinancialCondition and Results of Operations” in the “Our Business and Operating Segments” section under the heading “Seasonality.”Strategic Realignment PlanIn the fourth quarter of fiscal 2015, we announced a Strategic Realignment Plan designed to improve execution, enhance financial performance and driveprofitable growth as we worked to create sustainable long-term value for stockholders. As part of this Strategic Realignment Plan, among other actions, weimplemented a cost reduction plan, which included a series of targeted reductions across our businesses, particularly in QCT, and a reduction to annual share-basedcompensation grants. The cost reduction initiatives were achieved by the end of fiscal 2016 and other activities under the plan were completed by the end of fiscal2017. Additional information regarding our Strategic Realignment Plan is provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 10.Strategic Realignment Plan.”Corporate StructureWe operate our businesses through our parent company, QUALCOMM Incorporated, and multiple direct and indirect subsidiaries. We have developed ourcorporate structure in order to address various legal, regulatory, tax, contractual compliance, operations and other matters. Substantially all of our products andservices businesses, including QCT, and substantially all of our engineering, research and development functions, are operated by QUALCOMM Technologies,Inc. (QTI), a wholly-owned subsidiary of QUALCOMM Incorporated, and QTI’s subsidiaries. QTL is operated by QUALCOMM Incorporated, which owns thevast majority of our patent portfolio. Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights under or to anypatents owned by QUALCOMM Incorporated.Revenue Concentrations, Significant Customers and Geographical InformationRevenues in fiscal 2017 were negatively impacted by the actions of Apple Inc. and Hon Hai Precision Industry Co., Ltd./Foxconn, its affiliates and othersuppliers to Apple, as well as the previously disclosed dispute with another licensee, who underpaid royalties due in the second quarter of fiscal 2017 and did notreport or pay royalties due in the third or fourth quarter of fiscal 2017. A small number of customers/licensees historically have accounted for a significant portionof our consolidated revenues.In fiscal 2017 , 2016 and 2015 , revenues from suppliers to Apple Inc. and from Samsung Electronics each comprised more than 10% of consolidatedrevenues. Combined revenues from GuangDong OPPO Mobile Telecommunications Corp. Ltd. and vivo Communication Technology Co., Ltd., and theirrespective affiliates, also comprised more than 10% of consolidated revenues in fiscal 2017 .Consolidated revenues from international customers and licensees as a percentage of total revenues were 98% , 98% and 99% in fiscal 2017 , 2016 and 2015 ,respectively. During fiscal 2017 , 65% and 16% of our revenues were from customers and licensees based in China (including Hong Kong) and South Korea,respectively, compared to 57% and 17% during fiscal 2016 , respectively, and 53% and 16% during fiscal 2015 , respectively. We report revenues from externalcustomers by country based on the location to which our products or services are delivered, which for QCT is generally the country in which our customersmanufacture their products, or for licensing revenues, the invoiced addresses of our licensees. As a result, the revenues by country presented herein are notnecessarily indicative of either the country in which the devices14containing our products and/or intellectual property are ultimately sold to consumers or the country in which the companies that sell the devices are headquartered.For example, China revenues could include revenues related to shipments of integrated circuits to a company that is headquartered in South Korea but thatmanufactures devices in China, which devices are then sold to consumers in Europe and/or the United States. Additional geographic information is provided in thisAnnual Report in “Notes to Consolidated Financial Statements, Note 8. Segment Information.”Research and DevelopmentThe communications industry is characterized by rapid technological change, evolving industry standards and frequent new product introductions, requiring acontinuous effort to enhance existing products and technologies and to develop new products and technologies. We have significant engineering resources,including engineers with substantial expertise in CDMA, OFDMA and a broad range of other technologies. Using these engineering resources, we expect tocontinue to invest in research and development in a variety of ways in an effort to extend the demand for our products, including continuing the development ofCDMA, OFDMA and other technologies, developing alternative technologies for certain specialized applications, participating in the formulation of new voice anddata communication standards and technologies, assisting in deploying digital voice and data communications networks around the world and leveraging ourexisting technology in new and expanded product areas, such as RFFE, and adjacent industry segments outside of traditional cellular industries, such asautomotive, IoT and networking. Our research and development team has a demonstrated track record of innovation in voice and data communication technologiesand application processor technology, among others. Our research and development expenditures in fiscal 2017 , 2016 and 2015 totaled approximately $5.5 billion, $5.2 billion and $5.5 billion , respectively.We continue to invest significant resources towards advancements in 4G OFDMA-based technologies (including LTE) and 5G-based technologies. We alsoengage in acquisitions and other transactions, such as joint ventures, to meet certain technology needs, to obtain development resources or open or expandopportunities for our technologies and supporting the design and introduction of new products and services (or enhancing existing products and services) for voiceand data communications and new industry segments outside of the traditional cellular industry. Recent transactions include our acquisition of CSR plc, our RF360Holdings joint venture with TDK Corporation and our proposed acquisition of NXP.We make investments to provide our integrated circuit customers with chipsets designed on leading-edge technology nodes that combine multiple technologiesfor use in consumer devices (e.g., smartphones, tablets and laptops), consumer electronics and other products (e.g., access points and routers, data cards andinfrastructure equipment). In addition to 3G and 4G LTE technologies, our chipsets support other wireless and wired connectivity technologies, including WLAN,Bluetooth, Ethernet, GPS, GLONASS, BeiDou and Powerline communication. Our integrated chipsets often include multiple technologies, including advancedmultimode modems, application processors and graphics engines, as well as the tools to connect these diverse technologies. We continue to support Android,Windows and other mobile client software environments in our chipsets.We develop on our own, and with our partners, innovations that are integrated into our product portfolio to further expand the opportunity for wirelesscommunications and enhance the value of our products and services. These innovations are expected to enable our customers to improve the performance or valueof their existing services, offer these services more affordably and introduce revenue-generating broadband data services ahead of their competition.We have research and development centers in various locations throughout the world that support our global development activities and ongoing efforts todevelop and/or advance 4G OFDMA, 5G and a broad range of other technologies. We continue to use our substantial engineering resources and expertise todevelop new technologies, applications and services and make them available to licensees to help grow the communications industry and generate new orexpanded licensing opportunities.We also make investments in opportunities that leverage our existing technical and business expertise to deploy new and expanded product areas, such asRFFE, and enter into adjacent industry segments, such as products for automotive, IoT (including the connected home, smart cities, wearables, voice and musicand robotics), data center, networking, computing and machine learning, among others.Sales and MarketingSales and marketing activities of our operating segments are discussed under Operating Segments. Other marketing activities include public relations,advertising, digital marketing and social media, participation in technical conferences and trade shows, development of business cases and white papers,competitive analyses, industry intelligence and other marketing programs, such as marketing development funds with our customers. Our Corporate Marketingdepartment provides company information on our Internet site and through other channels regarding our products, strategies and technology to industry analystsand media.15CompetitionCompetition faced by our operating segments is discussed under Operating Segments. Competition in the communications industry throughout the worldcontinues to increase at a rapid pace as consumers, businesses and governments realize the potential of wireless communications products and services. We havefacilitated competition in the wireless communications industry by licensing our technologies to a large number of manufacturers. Although we have attained asignificant position in the traditional cellular industry, many of our current and potential competitors may have advantages over us that include, among others:motivation by our customers in certain circumstances to utilize their own internally-developed integrated circuit products, to use our competitors’ integrated circuitproducts and/or sell such products to others, including by bundling with other products, or to choose alternative technologies; lower cost structures and/or awillingness and ability to accept lower prices and lower or negative margins for their products, particularly in China; foreign government support of othertechnologies or competitors; better known brand names; ownership and control of manufacturing facilities and greater expertise in manufacturing processes; moreextensive relationships with local distribution companies and original equipment manufacturers in certain geographic regions (such as China) and/or experience inadjacent industry segments outside traditional cellular industries (such as automotive and IoT); and/or a more established presence in certain regions. Theserelationships may affect customers’ decisions to purchase products or license technology from us. Accordingly, new competitors or alliances among competitorscould emerge and rapidly acquire significant market positions to our detriment.We expect competition to increase as our current competitors expand their product offerings and introduce new technologies and services in the future and asadditional companies compete with our products or services based on 3G, 4G or other technologies. Although we intend to continue to make substantialinvestments in developing new products and technologies and improving existing products and technologies, our competitors may introduce alternative products,services or technologies that threaten our business. It is also possible that the prices we charge for our products and services may continue to decline as competitioncontinues to intensify. See also the Risk Factor entitled “ Our industry is subject to competition in an environment of rapid technological change that could resultin decreased demand and/or declining average selling prices for our products and/or those of our customers and/or licensees.”Corporate Responsibility and SustainabilityWe strive to better our local and global communities through ethical business practices, socially empowering technology applications, educational andenvironmental programs and employee diversity and volunteerism.•Our Governance. We aim to demonstrate accountability, transparency, integrity and ethical business practices throughout our operations and interactionswith our stakeholders.•Our Products. We strive to meet or exceed industry standards for product responsibility and supplier management.•Our Workplace. We endeavor to provide a safe and healthy work environment where diversity is embraced and various opportunities for training, growthand advancement are encouraged for all employees.•Our Community. We have strategic relationships with a wide range of local organizations and programs that develop and strengthen communitiesworldwide.•Our Environment. We aim to expand our operations while minimizing our carbon footprint, conserving water and reducing waste.•Qualcomm® Wireless Reach™. We invest in strategic programs that foster entrepreneurship, aid in public safety, enhance delivery of health care, enrichteaching and learning and improve environmental sustainability through the use of advanced wireless technologies.EmployeesAt September 24, 2017 , we employed approximately 33,800 full-time, part-time and temporary employees. During fiscal 2017 , the number of employeesincreased by approximately 3,300 primarily due to increases in engineering resources and the formation of our consolidated RF360 Holdings joint venture withTDK.Available InformationOur Internet address is www.qualcomm.com. There we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q,current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to,the Securities and Exchange Commission (SEC). We also make available on our Internet site public financial information for which a report is not required to befiled with or furnished to the SEC. Our SEC reports and other financial information can be accessed through the investor relations section16of our Internet site. The information found on our Internet site is not part of this or any other report we file with or furnish to the SEC.Executive OfficersOur executive officers (and their ages at September 24, 2017 ) are as follows:Paul E. Jacobs, age 54, has served as Executive Chairman since March 2014, as Chairman of the Board of Directors since March 2009 and as a director sinceJune 2005. He served as Chief Executive Officer from July 2005 to March 2014. In addition, he served as an Executive Vice President from February 2000 toJune 2005. Dr. Jacobs joined Qualcomm as an intern in 1986 and full-time in 1990 as an engineer and throughout his tenure at Qualcomm has held several otherleadership positions. Dr. Jacobs holds a B.S. degree in Electrical Engineering and Computer Science, an M.S. degree in Electrical Engineering and a Ph.D. degreein Electrical Engineering and Computer Science from the University of California, Berkeley.Steve Mollenkopf, age 48, has served as Chief Executive Officer since March 2014 and as a director since December 2013. He served as Chief ExecutiveOfficer-elect and President from December 2013 to March 2014 and as President and Chief Operating Officer from November 2011 to December 2013. Inaddition, he served as Executive Vice President and Group President from September 2010 to November 2011 and as Executive Vice President and President, QCTfrom August 2008 to September 2010. Mr. Mollenkopf joined Qualcomm in 1994 as an engineer and throughout his tenure at Qualcomm has held several othertechnical and leadership positions. Mr. Mollenkopf has been a director of General Electric Company since November 2016. Mr. Mollenkopf holds a B.S. degree inElectrical Engineering from Virginia Tech and an M.S. degree in Electrical Engineering from the University of Michigan.Derek K. Aberle, age 47, has served as President since March 2014. He served as Executive Vice President and Group President from November 2011 toMarch 2014 and as Executive Vice President and President, QTL from September 2008 to November 2011. Mr. Aberle joined Qualcomm in December 2000 as anattorney and throughout his tenure at Qualcomm has held several other legal and leadership positions. Mr. Aberle holds a B.A. degree in Business Economics fromthe University of California, Santa Barbara and a J.D. degree from the University of San Diego. Mr. Aberle will be leaving Qualcomm effective January 4, 2018.Cristiano R. Amon, age 47, has served as Executive Vice President, Qualcomm Technologies, Inc. (QTI, a subsidiary of Qualcomm Incorporated) andPresident, Qualcomm CDMA Technologies (QCT) since November 2015. He served as Executive Vice President, QTI and Co-President, QCT from October 2012to November 2015, Senior Vice President, Qualcomm Incorporated and Co-President, QCT from June 2012 to October 2012 and as Senior Vice President, QCTProduct Management from October 2007 to June 2012. Mr. Amon joined Qualcomm in 1995 as an engineer and throughout his tenure at Qualcomm held severalother technical and leadership positions. Mr. Amon holds a B.S. degree in Electrical Engineering from UNICAMP, the State University of Campinas, Brazil.George S. Davis, age 59, has served as Executive Vice President and Chief Financial Officer since March 2013. Mr. Davis is responsible for leading Finance,Information Technology and Investor Relations. Prior to joining Qualcomm, Mr. Davis was Chief Financial Officer of Applied Materials, Inc., a provider ofmanufacturing equipment, services and software to the semiconductor, flat panel display, solar photovoltaic and related industries, from November 2006 to March2013. Mr. Davis held several other leadership positions at Applied Materials from November 1999 to November 2006. Prior to joining Applied Materials, Mr.Davis served 19 years with Atlantic Richfield Company in a number of finance and other corporate positions. Mr. Davis holds a B.A. degree in Economics andPolitical Science from Claremont McKenna College and an M.B.A. degree from the University of California, Los Angeles.Matthew S. Grob, age 51, has served as Executive Vice President, Qualcomm Technologies, Inc. (QTI) since March 2017. He served as Executive VicePresident, QTI and Chief Technology Officer from October 2012 to March 2017. He served as Executive Vice President, Qualcomm Incorporated and ChiefTechnology Officer from July 2011 to October 2012. Mr. Grob joined Qualcomm in August 1991 as an engineer and throughout his tenure at Qualcomm heldseveral other technical and leadership positions. Mr. Grob holds a B.S. degree in Electrical Engineering from Bradley University and an M.S. degree in ElectricalEngineering from Stanford University.Brian T. Modoff, age 58, has served as Executive Vice President, Strategy and Mergers & Acquisitions since October 2015. Prior to joining Qualcomm, Mr.Modoff was a Managing Director in Equity Research at Deutsche Bank Securities Inc. (Deutsche Bank), a provider of financial services, from March 1999 toOctober 2015. Prior to joining Deutsche Bank, Mr. Modoff was a research analyst at several financial institutions from November 1993 to March 1999. Mr.Modoff holds a B.A. degree in Economics from California State University, Fullerton and a Master of International Management from the Thunderbird School ofGlobal Management.17Alexander H. Rogers, age 60, has served as Executive Vice President and President, QTL since October 2016. He served as Senior Vice President andPresident, QTL from September 2016 to October 2016, Senior Vice President, Deputy General Counsel and General Manager, QTL from March 2016 toSeptember 2016, Senior Vice President and Deputy General Counsel from October 2015 to March 2016 and Senior Vice President and Legal Counsel from April2007 to October 2015. Mr. Rogers joined Qualcomm in January 2001 as an attorney and throughout his tenure at Qualcomm held several other leadership positionsin the legal department. Prior to joining Qualcomm, Mr. Rogers was a partner at the law firm of Gray, Cary, Ware & Friedenrich (now DLA Piper). Mr. Rogersholds B.A. and M.A. degrees in English Literature from Georgetown University and a J.D. degree from Georgetown University Law Center.Donald J. Rosenberg, age 66, has served as Executive Vice President, General Counsel and Corporate Secretary since October 2007. He served as Senior VicePresident, General Counsel and Corporate Secretary of Apple Inc. from December 2006 to October 2007. From May 1975 to November 2006, Mr. Rosenberg heldnumerous positions at IBM Corporation, including Senior Vice President and General Counsel. Mr. Rosenberg has served as a member of the board of directors ofNuVasive, Inc. since February 2016. Mr. Rosenberg holds a B.S. degree in Mathematics from the State University of New York at Stony Brook and a J.D. degreefrom St. John’s University School of Law.Michelle Sterling, age 50, has served as Executive Vice President, Human Resources since May 2015. She served as Senior Vice President, Human Resourcesfrom October 2007 to April 2015. Ms. Sterling joined Qualcomm in 1994 and throughout her tenure at Qualcomm has held several other human resources andleadership positions. Ms. Sterling holds a B.S. degree in Business Management from the University of Redlands.James H. Thompson, age 53, has served as Executive Vice President, Engineering, Qualcomm Technologies, Inc. and Chief Technology Officer since March2017. He served as Executive Vice President, Engineering, Qualcomm Technologies, Inc. from October 2012 to March 2017 and as Senior Vice President,Engineering, Qualcomm Incorporated from July 1998 to October 2012. Dr. Thompson joined Qualcomm in 1992 as a senior engineer and throughout his tenure atQualcomm held several other technical and leadership positions. Dr. Thompson holds B.S., M.S. and Ph.D. degrees in Electrical Engineering from the Universityof Wisconsin.Item 1A. Risk FactorsYou should consider each of the following factors in evaluating our business and our prospects. The risks and uncertainties described below are not the onlyones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also negatively impact our business andresults of operations, and require significant management time and attention. In that case, the trading price of our common stock could decline. You should alsoconsider the other information set forth in this Annual Report in evaluating our business and our prospects, including but not limited to our financial statements andthe related notes, and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”Risks Related to Our BusinessesOur proposed acquisition of NXP Semiconductors N.V. involves a number of risks, including, among others, the risk that we fail to complete the acquisition, ina timely manner or at all, regulatory risks, risks associated with our use of a significant portion of our cash and our taking on significant indebtedness, otherfinancial risks, integration risks, and risk associated with the reactions of customers, suppliers and employees.Our and NXP’s obligations to consummate the proposed transaction are subject to the satisfaction or waiver of certain conditions, including, among others: (i)the tender of a minimum number of NXP’s outstanding common shares in the tender offer commenced by a subsidiary of QUALCOMM Incorporated; (ii) thereceipt of regulatory clearance under European Union and certain other foreign antitrust laws; (iii) the absence of any law or order prohibiting the proposedtransaction; (iv) there being no event that would have a material adverse effect on NXP; (v) the accuracy of the representations and warranties of NXP, subject tocertain exceptions, and NXP’s material compliance with its covenants, in the definitive agreement; and (vi) the completion of certain internal reorganization stepswith respect to NXP and the disposition of certain non-core assets of NXP. We cannot provide assurance that the conditions to the completion of the proposedtransaction will be satisfied in a timely manner or at all, and if the proposed transaction is not completed, we would not realize any of the expected benefits.The regulatory approvals required in connection with the proposed transaction may not be obtained or may contain materially burdensome conditions. If anyconditions or changes to the structure of the proposed transaction are required to obtain these regulatory approvals, they may have the effect of jeopardizing ordelaying completion of the proposed transaction or reducing our anticipated benefits. If we agree to any material conditions in order to obtain any approvalsrequired to complete the proposed transaction, our business and results of operations may be adversely affected.18In addition, the use of a significant portion of our cash and the incurrence of substantial indebtedness in connection with the financing of the proposedtransaction will reduce our liquidity, and may limit our flexibility in responding to other business opportunities and increase our vulnerability to adverse economicand industry conditions. See the Risk Factor entitled “ There are risks associated with our indebtedness .”If the proposed transaction is not completed, our stock price could fall to the extent that our current price reflects an assumption that we will complete it.Furthermore, if the proposed transaction is not completed and the purchase agreement is terminated, we would not realize any of the expected benefits of theproposed transaction, and we may suffer other consequences that could adversely affect our business, results of operations and stock price, including, amongothers:•we could be required to pay a termination fee to NXP of $2.0 billion ;•we will have incurred and may continue to incur costs relating to the proposed transaction, many of which are payable by us whether or not the proposedtransaction is completed;•matters relating to the proposed transaction (including integration planning) require substantial commitments of time and resources by our managementteam and numerous others throughout our organization, which could otherwise have been devoted to other opportunities;•we may be subject to legal proceedings related to the proposed transaction or the failure to complete the proposed transaction;•the failure to consummate the proposed transaction may result in negative publicity and a negative perception of us in the investment community; and•any disruptions to our business resulting from the announcement and pendency of the proposed transaction, including any adverse changes in ourrelationships with our customers, suppliers, partners or employees, may continue or intensify in the event the proposed transaction is not consummated.The proposed transaction will be our largest acquisition to date, by a significant margin. The benefits we expect to realize from the proposed transaction willdepend, in part, on our ability to integrate the businesses successfully and efficiently. See the Risk Factor entitled “ We may engage in strategic acquisitions,transactions or make investments that could adversely affect our results of operations or fail to enhance stockholder value .”Furthermore, uncertainties about the proposed transaction may cause our and/or NXP’s current and prospective employees to experience uncertainty abouttheir futures. These uncertainties may impair our and/or NXP’s ability to retain, recruit or motivate key management, engineering, technical and other personnel.Similarly, our and/or NXP’s existing or prospective customers, licensees, suppliers and/or partners may delay, defer or cease purchasing products or services fromor providing products or services to us or NXP; delay or defer other decisions concerning us or NXP; or otherwise seek to change the terms on which they dobusiness with us or NXP. Any of the above could harm us and/or NXP, and thus decrease the benefits we expect to receive from the proposed transaction.The proposed transaction may also result in significant charges or other liabilities that could adversely affect our results of operations, such as cash expensesand non-cash accounting charges incurred in connection with our acquisition and/or integration of the business and operations of NXP. Further, our failure toidentify or accurately assess the magnitude of certain liabilities we are assuming in the proposed transaction could result in unexpected litigation or regulatoryexposure, unfavorable accounting charges, unexpected increases in taxes due, a loss of anticipated tax benefits or other adverse effects on our business, results ofoperations, financial condition or cash flows.Our revenues depend on commercial network deployments, expansions and upgrades of CDMA, OFDMA and other communications technologies; ourcustomers’ and licensees’ sales of products and services based on these technologies; and customers’ demand for our products and services.We develop, patent and commercialize technology and products based on CDMA, OFDMA and other communications technologies, which are primarilywireless. We depend on operators of wireless networks and our customers and licensees to adopt and/or implement the latest generation of these technologies foruse in their networks, devices and services. We also depend on our customers and licensees to develop devices and services based on these technologies withvalue-added features to drive consumer demand for new 3G, 3G/4G multimode and 4G devices, and in the future 5G devices, as well as establishing the sellingprices for such devices. Further, we depend on the timing of our customers’ and licensees’ deployments of new devices and services based on these technologies.Increasingly, we also depend on operators of wireless networks, our customers and licensees and other third parties to incorporate these technologies into newdevice types and into industries beyond traditional cellular communications, such as automotive, the internet of things (IoT) (including the connected home, smartcities, wearables, voice and music and robotics), data center, networking, computing, and machine19learning, among others. We are also impacted by consumers’ rates of replacement of smartphones and other computing devices.Our revenues and/or growth in revenues could be negatively impacted, our business may be harmed and our substantial investments in these technologies maynot provide us an adequate return, if:•wireless operators and industries beyond traditional cellular communications deploy alternative technologies;•wireless operators delay next-generation network deployments, expansions or upgrades and/or delay moving 2G customers to 3G, 3G/4G multimode or4G wireless devices;•LTE, an OFDMA-based 4G wireless technology, is not more widely deployed or further commercial deployment is delayed;•government regulators delay making sufficient spectrum available for 3G, 4G, new unlicensed technologies that we are developing in conjunction with3G and 4G, as well as for 5G, thereby restricting the ability of wireless operators to deploy or expand the use of these technologies;•wireless operators delay or do not drive improvements in 3G, 4G or 3G/4G multimode network performance and/or capacity;•our customers’ and licensees’ revenues and sales of products, particularly premium-tier products, and services using these technologies do not grow or donot grow as quickly as anticipated due to, for example, the maturity of smartphone penetration in developed regions;•our intellectual property and technical leadership included in the 5G standardization effort is different than in 3G and 4G standards;•the standardization and/or deployment of 5G technology is delayed; and/or•we are unable to drive the adoption of our products and services into networks and devices, including devices beyond traditional cellular applications,based on CDMA, OFDMA and other communications technologies.Our industry is subject to competition in an environment of rapid technological change that could result in decreased demand and/or declining average sellingprices for our products and/or those of our customers and/or licensees.Our products, services and technologies face significant competition. We expect competition to increase as our current competitors expand their productofferings or reduce the prices of their products as part of a strategy to attract new business and/or customers, as new opportunities develop and as new competitorsenter the industry. Competition in wireless communications is affected by various factors that include, among others: device manufacturer concentrations andvertical integration; growth in demand, consumption and competition in certain geographic regions; government intervention and/or support of national industriesand/or competitors; evolving industry standards and business models; evolving methods of transmission of voice and data communications; increasing data trafficand densification of wireless networks; convergence and aggregation of connectivity technologies (including Wi-Fi and LTE) in both devices and access points;consolidation of wireless technologies and infrastructure at the network edge; networking and connectivity trends (including cloud services); use of both licensedand unlicensed spectrum; the evolving nature of computing (including demand for always on, always connected capabilities); the speed of technological change(including the transition to smaller geometry process technologies); value-added features that drive selling prices as well as consumer demand for new 3G, 3G/4Gmultimode and 4G devices; turnkey, integrated products that incorporate hardware, software, user interface, applications and reference designs; scalability; and theability of the system technology to meet customers’ immediate and future network requirements. We anticipate that additional competitors will introduce productsas a result of growth opportunities in wireless communications, the trend toward global expansion by foreign and domestic competitors, technological and publicpolicy changes and relatively low barriers to entry in certain segments of the industry. Additionally, the semiconductor industry has experienced and may continueto experience consolidation, which could result in significant changes to the competitive landscape.We expect that our future success will depend on, among other factors, our ability to:•differentiate our integrated circuit products with innovative technologies across multiple products and features (e.g., modem, radio frequency front-end(RFFE), graphics and/or other processors, camera and connectivity) and with smaller geometry process technologies that drive performance;•develop and offer integrated circuit products at competitive cost and price points to effectively cover both emerging and developed geographic regionsand all device tiers;20•continue to drive the adoption of our integrated circuit products into the most popular device models and across a broad spectrum of devices, such assmartphones, tablets, laptops, other computing devices, automobiles, wearables and voice and music and other connected devices and infrastructureproducts;•maintain and/or accelerate demand for our integrated circuit products at the premium device tier, while increasing the adoption of our products in mid-and low-tier devices, in part by strengthening our integrated circuit product roadmap for, and developing channel relationships in, emerging geographicregions, such as China and India, and by providing turnkey products, which incorporate our integrated circuits, for low- and mid-tier smartphones, tabletsand laptops;•continue to be a leader in 4G technology evolution, including expansion of our LTE-based single mode licensing program in areas where single-modeproducts are commercialized, and continue to innovate and introduce 4G turnkey, integrated products and services that differentiate us from ourcompetition;•be a leader serving original equipment manufacturers, high level operating systems (HLOS) providers, operators, cloud providers and other industryparticipants as competitors, new industry entrants and other factors continue to affect the industry landscape;•be a preferred partner (and sustain preferred relationships) providing integrated circuit products that support multiple operating system and infrastructureplatforms to industry participants that effectively commercialize new devices using these platforms;•increase and/or accelerate demand for our semiconductor component products, including RFFE, and our wired and wireless connectivity products,including networking products for consumers, carriers and enterprise equipment and connected devices;•identify potential acquisition targets that will grow or sustain our business or address strategic needs, reach agreement on terms acceptable to us andeffectively integrate these new businesses and/or technologies;•create standalone value and/or contribute to the success of our existing businesses through acquisitions, joint ventures and other transactions (and/or bydeveloping customer, licensee and/or vendor relationships) in new industry segments and/or disruptive technologies, products and/or services (such asproducts for automotive, IoT (including the connected home, smart cities, wearables, voice and music and robotics), data center, networking, computing,and machine learning, among others);•become a leading supplier of RFFE products, which are designed to address cellular radio frequency band fragmentation while improving radio frequencyperformance and assist original equipment manufacturers in developing multiband, multimode mobile devices;•be a leader in 5G technology development, standardization, intellectual property creation and licensing and develop and commercialize 5G integratedcircuit products and services; and/or•continue to develop brand recognition to effectively compete against better known companies in computing and other consumer driven segments and todeepen our presence in significant emerging geographic regions.Competition in any or all product tiers may result in the loss of certain business or customers, which would negatively impact our revenues, results ofoperations and cash flows. Such competition may also reduce average selling prices for our chipset products and/or the products of our customers and licensees.Certain of these dynamics are particularly pronounced in emerging geographic regions where competitors may have lower cost structures and/or may have awillingness and ability to accept lower prices and/or lower or negative margins on their products (particularly in China). Reductions in the average selling prices ofour chipset products, without a corresponding increase in volumes, would negatively impact our revenues, and without corresponding decreases in average unitcosts, would negatively impact our margins. In addition, reductions in the average selling prices of our licensees’ products, unless offset by an increase in volumes,would generally decrease total royalties payable to us, negatively impacting our licensing revenues.Companies that promote standards that are neither CDMA- nor OFDMA-based (e.g., GSM) as well as companies that design integrated circuits based onCDMA, OFDMA, Wi-Fi or their derivatives are generally competitors or potential competitors. Examples (some of which are strategic partners of ours in otherareas) include Broadcom Limited, Cirrus Logic, Cypress Semiconductor Corporation, HiSilicon Technologies, Intel, Marvell Technology, Maxim IntegratedProducts, MediaTek, Microchip Technology Inc., Murata Manufacturing Co., Ltd., Nordic Semiconductor, Nvidia, Qorvo Inc., Realtek Semiconductor, RenesasElectronics Corporation, Samsung Electronics, Sequans Communications S.A., Skyworks Solutions Inc., Sony Corporation and Spreadtrum Communications(which is controlled by Tsinghua Unigroup). Some of these current and potential competitors may have advantages over us that include, among others: motivationby our customers in certain21circumstances to utilize their own internally-developed integrated circuit products, to use our competitors’ integrated circuit products and/or sell such products toothers, including by bundling with other products, or to choose alternative technologies; lower cost structures and/or a willingness and ability to accept lowerprices and lower or negative margins for their products, particularly in China; foreign government support of other technologies or competitors; better known brandnames; ownership and control of manufacturing facilities and greater expertise in manufacturing processes; more extensive relationships with local distributioncompanies and original equipment manufacturers in certain geographic regions (such as China) and/or experience in adjacent industry segments outside traditionalcellular industries (such as automotive and IoT); and/or a more established presence in certain regions.We derive a significant portion of our consolidated revenues from a small number of customers and licensees. If revenues derived from these customers orlicensees decrease or the timing of such revenues fluctuates, our business and results of operations could be negatively affected.Our QCT segment derives a significant portion of its revenues from a small number of customers, and we expect this trend to continue in the foreseeablefuture. Our industry is experiencing and may continue to experience concentration of device share among a few companies, particularly at the premium tier,contributing to this trend. In addition, certain of our largest integrated circuit customers develop their own integrated circuit products, which they have in the pastchosen, and may in the future choose, to utilize in certain of their devices rather than our integrated circuit products (and/or sell their integrated circuit products tothird parties in competition with us). Also, one of our largest integrated circuit customers has utilized products of one of our competitors in certain of their devicesrather than our products.The loss of any one of our significant customers, a reduction in the purchases of our products by such customers or the cancelation of significant purchases byany of these customers, whether due to the use of their own integrated circuit products, our competitors’ integrated circuit products or otherwise, would reduce ourrevenues and could harm our ability to achieve or sustain expected results of operations, and a delay of significant purchases, even if only temporary, would reduceour revenues in the period of the delay. Any such reduction in revenues would also impact our cash resources available for other purposes, such as research anddevelopment. Further, the concentration of device share among a few companies, and the corresponding purchasing power of these companies, may result in lowerprices for our products which, if not accompanied by a sufficient increase in the volume of purchases of our products, could have an adverse effect on our revenuesand margins. In addition, the timing and size of purchases by our significant customers may be impacted by the timing of such customers’ new or next generationproduct introductions, over which we have no control, and the timing of such introductions may cause our revenues and results of operations to fluctuate.Accordingly, if current industry dynamics and concentrations continue, our QCT segment’s revenues will continue to depend largely upon, and be impacted by,future purchases, and the timing and size of any such future purchases, by these significant customers.One of our largest customers purchases our Mobile Data Modem (MDM) products, which do not include our integrated application processor technology andwhich have lower revenue and margin contributions than our combined modem and application processor products. To the extent such customer takes device sharefrom our other customers who purchase our integrated modem and application processor products, our revenues and margins may be negatively impacted.Further, companies that develop HLOS for devices, including leading technology companies, now sell their own devices. If we fail to effectively partner orcontinue partnering with these companies, or with their partners or customers, they may decide not to purchase (either directly or through their contractmanufacturers), or to reduce or discontinue their purchases of, our integrated circuit products.In addition, there has been and continues to be litigation among certain of our customers and other industry participants, and the potential outcomes of suchlitigation, including but not limited to injunctions against devices that incorporate our products and/or intellectual property, or rulings on certain patent law orpatent licensing issues that create new legal precedent, could impact our business, particularly if such action impacts one of our larger customers.Although we have several hundred licensees, our QTL segment derives a significant portion of its licensing revenues from a limited number of licensees. Inthe event that one or more of our significant licensees fail to meet their reporting and/or payment obligations, or we are unable to renew or modify one or more ofsuch license agreements under similar terms, our revenues, results of operations and cash flows would be adversely impacted. Moreover, the future growth andsuccess of our core licensing business will depend in part on the ability of our licensees to develop, introduce and deliver high-volume products that achieve andsustain customer acceptance. We have no control over the product development, sales efforts or pricing of products by our licensees, and our licensees might not besuccessful. Reductions in the average selling prices of wireless devices sold by our significant licensees, without a sufficient increase in the volumes of suchdevices sold, would generally have an adverse effect on our licensing revenues.22We derive a significant portion of our consolidated revenues from the premium-tier device segment. If sales of premium-tier devices decrease, and/or sales ofour premium-tier integrated circuit products decrease, our results of operations could be negatively affected.We derive a significant portion of our revenues from the premium-tier device segment, and we expect this trend to continue in the foreseeable future. We haveexperienced, and expect to continue to experience, slowing growth in the premium-tier device segment due to, among other factors, lengthening replacement cyclesin developed regions, where premium-tier smartphones are common; increasing consumer demand in emerging regions, particularly China and India, wherepremium-tier smartphones are less common and replacement cycles are on average longer than in developed regions; and/or a maturing premium-tier smartphoneindustry in which demand is increasingly driven by new product launches and/or innovation cycles.In addition, as discussed in the prior risk factor, our industry is experiencing concentration of device share among a few companies at the premium tier, whichgives them significant supply chain leverage. Further, those companies may utilize their own internally-developed integrated circuit products, or our competitors’integrated circuit products, rather than our products in a portion of their devices. These dynamics may result in lower prices for and/or reduced sales of ourpremium-tier integrated circuit products.A reduction in sales of premium-tier devices, or a reduction in sales of our premium-tier integrated circuit products (which have a higher revenue and margincontribution than our lower-tier integrated circuit products), may reduce our revenues and margins and may harm our ability to achieve or sustain expectedfinancial results. Any such reduction in revenues would also impact our cash resources available for other purposes, such as research and development.Efforts by some communications equipment manufacturers or their customers to avoid paying fair and reasonable royalties for the use of our intellectualproperty may require the investment of substantial management time and financial resources and may result in legal decisions and/or actions by governments,courts, regulators or agencies, Standards Development Organizations (SDOs) or other industry organizations that harm our business.From time to time, companies initiate various strategies to attempt to renegotiate, mitigate and/or eliminate their need to pay royalties to us for the use of ourintellectual property. These strategies have included: (i) litigation, often alleging infringement of patents held by such companies, patent misuse, patent exhaustion,patent invalidity and/or unenforceability of our patents and/or licenses, that we do not license our patents on fair, reasonable and nondiscriminatory (FRAND)terms, or some form of unfair competition or competition law violation; (ii) taking positions contrary to our understanding of their contracts with us; (iii) appeals togovernmental authorities; (iv) collective action, including working with wireless operators, standards bodies, other like-minded companies and other organizations,on both formal and informal bases, to adopt intellectual property policies and practices that could have the effect of limiting returns on intellectual propertyinnovations; (v) lobbying governmental regulators and elected officials for the purpose of seeking the reduction of royalty rates or the base on which royalties arecalculated, the imposition of some form of compulsory licensing and/or to weaken a patent holder’s ability to enforce its rights or obtain a fair return for suchrights; and (vi) licensees using various strategies to attempt to shift their royalty obligation to their suppliers that results in lowering the wholesale (i.e., licensee’s)selling price on which the royalty is calculated.In addition, certain licensees have disputed, underreported, underpaid, not reported and/or not paid royalties owed to us under their license agreements orreported to us in a manner that is not in compliance with their contractual obligations, and certain companies have yet to enter into or delayed entering into orrenewing license agreements with us for their use of our intellectual property, and licensees and/or companies may continue to do so in the future. The fact that oneor more licensees dispute, underreport, underpay, do not report and/or do not pay royalties owed to us may encourage other licensees to take similar actions andmay encourage other licensees or unlicensed companies to delay entering into, or not enter into, new license agreements. Further, to the extent such licenseesand/or companies increase their device share, the negative impact of their underreporting, underpayment, non-payment and/or non-reporting on our business,revenues, results of operations, financial condition and/or cash flows will be exacerbated.We are currently subject to various litigation and governmental investigations and/or proceedings, some of which have arisen and may continue to arise out ofthe strategies described above. Certain legal matters are described more fully in this Annual Report in “Notes to Consolidated Financial Statements, Note 7.Commitments and Contingencies.” The unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results ofoperations, financial condition and/or cash flows. Depending on the type of matter, various remedies that could result from an unfavorable resolution include,among others, injunctions, monetary damages or fines or other orders to pay money and the issuance of orders to cease certain conduct and/or modify our businesspractices. Further, a governmental body in a particular country or region may assert, and may be successful in imposing, remedies with effects that extend beyondthe borders of that23country or region. See also the Risk Factor entitled “If we are required to change our patent licensing practices due to governmental investigations and/or privatelegal proceedings challenging those practices, our business and results of operations could be adversely impacted.”In addition, in connection with our participation in SDOs, we, like other patent owners, generally have made contractual commitments to such organizations tolicense those of our patents that would necessarily be infringed by standard-compliant products as set forth in those commitments. Some manufacturers and usersof standard-compliant products advance interpretations of these commitments that are adverse to our licensing business, including interpretations that would limitthe amount of royalties that we could collect on the licensing of our patent portfolio.Further, some companies or entities have proposed significant changes to existing intellectual property policies for implementation by SDOs and otherindustry organizations with the goal of significantly devaluing standard-essential patents. For example, some have put forth proposals which would require amaximum aggregate intellectual property royalty rate for the use of all standard-essential patents owned by all of the member companies to be applied to the sellingprice of any product implementing the relevant standard. They have further proposed that such maximum aggregate royalty rate be apportioned to each membercompany with standard-essential patents based upon the number of standard-essential patents held by such company. Others have proposed that injunctions not bean available remedy for infringement of standard-essential patents and/or have made proposals that could severely limit damage awards and other remedies bycourts for patent infringement (e.g., by severely limiting the base upon which the royalty percentage may be applied). A number of these strategies are purportedlybased on interpretations of the policies of certain SDOs concerning the licensing of patents that are or may be essential to industry standards and on our (and/orother companies’) alleged failure to abide by these policies.Some SDOs, courts and governmental agencies have adopted and may in the future adopt some or all of these interpretations or proposals in a manner adverseto our interests, including in litigation to which we may not be a party.We expect that such proposals, interpretations and strategies will continue in the future, and if successful, our business model would be harmed, either bylimiting or eliminating our ability to collect royalties (or by reducing the royalties we can collect) on all or a portion of our patent portfolio, limiting our return oninvestment with respect to new technologies, limiting our ability to seek injunctions against infringers of our standard-essential patents, constraining our ability tomake licensing commitments when submitting our technology for inclusion in future standards (which could make our technology less likely to be included in suchstandards) or forcing us to work outside of SDOs or other industry groups to promote our new technologies, and our revenues, results of operations and/or cashflows could be negatively impacted. In addition, the legal and other costs associated with asserting or defending our positions have been and continue to besignificant. We assume that such challenges, regardless of their merits, will continue into the foreseeable future and may require the investment of substantialmanagement time and financial resources.Our business, particularly our licensing business, may suffer as a result of adverse rulings in government investigations or proceedings.We are currently subject to various governmental investigations and/or proceedings, particularly with respect to our licensing business, and certain suchmatters are described more fully in this Annual Report in “Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.” Key allegationsin those matters include, among others, that we do not license our cellular standard-essential patents separately from our other patents, that we violate FRANDlicensing commitments by refusing to grant licenses to chipset makers, that our royalty rates are too high and/or that the base on which our royalties are calculatedshould be something less than the wholesale (i.e., licensee’s) selling price of the applicable device (minus certain permitted deductions). The unfavorableresolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition and/or cash flows.Depending on the type of matter, various remedies that could result from an unfavorable resolution include, among others, injunctions, monetary damages or finesor other orders to pay money, and the issuance of orders to cease certain conduct and/or modify our business practices. Further, a governmental body in a particularcountry or region may assert, and may be successful in imposing, remedies with effects that extend beyond the borders of that country or region. See also the RiskFactor entitled “If we are required to change our patent licensing practices due to governmental investigations and/or private legal proceedings challenging thosepractices, our business and results of operations could be adversely impacted.”If we are required to change our patent licensing practices due to governmental investigations and/or private legal proceedings challenging those practices,our business and results of operations could be adversely impacted.We are currently subject to various governmental investigations and private legal proceedings challenging our patent licensing practices as described morefully in this Annual Report in “Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.” Key allegations in those matters include,among others, that we do not license our cellular standard-essential patents separately from our other patents, that we violate FRAND licensing commitments byrefusing to24grant licenses to chipset makers, that our royalty rates are too high and/or that the base on which our royalties are calculated should be something less than thewholesale (i.e., licensee’s) selling price of the applicable device (minus certain permitted deductions). We believe that the ultimate intent of these investigationsand legal proceedings is to reduce the amount of royalties that licensees are required to pay to us for their use of our intellectual property.We have historically licensed our cellular standard-essential patents together with our other patents that may be useful to licensed products because licenseestypically have desired to obtain the commercial benefits of receiving such broad patent rights from us. However, we also have licensed only our cellular standard-essential patents to certain licensees who have requested such licenses. In addition, in connection with our resolution with the China National Development andReform Commission (NDRC) in China, our standard practice in China since 2015 is to offer licenses for our 3G and 4G standard-essential Chinese patents forbranded devices sold for use in China separately from licenses to our other patents. If we were required to separately license our cellular standard-essential patentsto all of our licensees worldwide, and more licensees chose such a license instead of a portfolio license than has historically been the case, our licensing revenuesand earnings would be negatively impacted unless we were able to license our other patents at rates that offset all or a portion of any difference between theroyalties previously received for licenses of substantially all of our patent portfolio as compared to licenses of only our cellular standard-essential patents and/orthere was a sufficient increase in the overall volume of sales of devices upon which royalties are paid.If we were required to grant patent licenses to chipset manufacturers (i.e., to implement a more complex, tiered licensing structure in which we license certainportions of our patent portfolio to chipset manufacturers and other portions to device manufacturers), we would incur additional transaction costs, which may besignificant, and we may incur delays in recognizing revenues until license negotiations were completed. In addition, our licensing revenues and earnings would benegatively impacted if we were not able to obtain, in the aggregate, equivalent revenues under such a multi-level licensing structure.If we were required to reduce the royalty rates we charge under our patent license agreements, our revenues and earnings would be negatively impacted absenta sufficient increase in the volume of sales of devices upon which royalties are paid. Similarly, if we were required to reduce the base on which our royalties arecalculated, our revenues, results of operations and/or cash flows would be negatively impacted unless there was a sufficient increase in the volume of sales ofdevices upon which royalties are paid and/or we were able to increase our royalty rates to offset the decrease in revenues resulting from such lower royalty base(assuming the absolute royalty dollars were below any relevant royalty caps).To the extent that we were required to implement any of these new licensing practices by modifying or renegotiating our existing license agreements, wewould incur additional transaction costs, which may be significant, and we may incur delays in recognizing revenues until license negotiations were completed.The impact of any such changes to our licensing practices could vary widely and by jurisdiction, depending on the specific outcomes and the geographic scope ofsuch outcomes. In addition, if we were required to make modifications to our licensing practices in one jurisdiction, licensees and/or governmental agencies inother jurisdictions may attempt to obtain similar outcomes for themselves and/or for such other jurisdictions, as applicable.The enforcement and protection of our intellectual property rights may be expensive, could fail to prevent misappropriation or unauthorized use of ourintellectual property rights, could result in the loss of our ability to enforce one or more patents, and/or could be adversely affected by changes in patent laws,by laws in certain foreign jurisdictions that may not effectively protect our intellectual property rights and/or by ineffective enforcement of laws in suchjurisdictions.We rely primarily on patent, copyright, trademark and trade secret laws, as well as nondisclosure and confidentiality agreements, international treaties andother methods, to protect our proprietary information, technologies and processes, including our patent portfolio. Policing unauthorized use of our products,technologies and proprietary information is difficult and time consuming. The steps we have taken have not always prevented, and we cannot be certain the stepswe will take in the future will prevent, the misappropriation or unauthorized use of our proprietary information and technologies, particularly in foreign countrieswhere the laws may not protect our proprietary intellectual property rights as fully or as readily as United States laws or where the enforcement of such laws maybe lacking or ineffective. Some industry participants who have a vested interest in devaluing patents in general, or standard-essential patents in particular, havemounted attacks on certain patent systems, increasing the likelihood of changes to established patent laws. In the United States, there is continued discussionregarding potential patent law changes and current and potential future litigation regarding patents, the outcomes of which could be detrimental to our licensingbusiness. The laws in certain foreign countries in which our products are or may be manufactured or sold, including certain countries in Asia, may not protect ourintellectual property rights to the same extent as the laws in the United States. We expect that the European Union will adopt a unitary patent system in the nextfew years that may broadly impact that region’s patent regime. We cannot predict with certainty the long-term effects of any25potential changes. In addition, we cannot be certain that the laws and policies of any country or the practices of any standards bodies, foreign or domestic, withrespect to intellectual property enforcement or licensing or the adoption of standards, will not be changed in the future in a way detrimental to our licensingprogram or to the sale or use of our products or technologies.We have had and may in the future have difficulty in certain circumstances in protecting or enforcing our intellectual property rights and/or contracts,including collecting royalties for use of our patent portfolio due to, among others: refusal by certain licensees to report and/or pay all or a portion of the royaltiesthey owe to us; policies of foreign governments; challenges to our licensing practices under competition laws; adoption of mandatory licensing provisions byforeign jurisdictions (either with controlled/regulated royalties or royalty free); failure of foreign courts to recognize and enforce judgments of contract breach anddamages issued by courts in the United States; and/or challenges before competition agencies to our licensing business and/or the pricing and integration ofadditional features and functionality into our chipset products. Certain licensees have disputed, underreported, underpaid, not reported and/or not paid royaltiesowed to us under their license agreements with us or reported to us in a manner that is not in compliance with their contractual obligations, and certain companieshave yet to enter into or delayed entering into or renewing license agreements for their use of our intellectual property, and such licensees and/or companies maycontinue to do so in the future. The fact that one or more licensees dispute, underreport, underpay, do not report and/or do not pay royalties owed to us mayencourage other licensees to take similar actions and may encourage other licensees or unlicensed companies to delay entering into, or not enter into, new licenseagreements. Additionally, although our license agreements provide us with the right to audit the books and records of licensees, audits can be expensive, timeconsuming, incomplete and subject to dispute. Further, certain licensees may not comply with the obligation to provide full access to their books and records. Tothe extent we do not aggressively enforce our rights under our license agreements, licensees may not comply with their existing license agreements, and to theextent we do not aggressively pursue unlicensed companies to enter into license agreements with us for their use of our intellectual property, other unlicensedcompanies may not enter into license agreements.We have entered into litigation in the past and may need to further litigate in the future to enforce our contract and/or intellectual property rights, protect ourtrade secrets or determine the validity and scope of proprietary rights of others. We are currently engaged in litigation matters related to protecting or enforcing ourcontract and/or intellectual property rights, and certain such matters are described more fully in this Annual Report in “Notes to Consolidated Financial Statements,Note 7. Commitments and Contingencies.” As a result of any such litigation, we could lose our ability to enforce one or more patents, portions of our licenseagreements could be determined to be invalid or unenforceable (which may in turn result in other licensees either not complying with their existing licenseagreements and/or initiating litigation) and/or we could incur substantial costs. Any action we take to enforce our contract or intellectual property rights could becostly and could absorb significant management time and attention, which, in turn, could negatively impact our results of operations and/or 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. See also the Risk Factor entitled “If we are required to change our patent licensing practicesdue to governmental investigations and/or private legal proceedings challenging those practices, our business and results of operations could be adverselyimpacted.”Our growth increasingly depends on our ability to extend our technologies, products and services into new and expanded product areas, such as RFFE, andadjacent industry segments outside of traditional cellular industries, such as automotive, IoT and networking, among others. Our research, development andother investments in these new and expanded product areas and industry segments, and related technologies, products and services, as well as in our existingtechnologies, products and services and new technologies, such as 5G, may not generate operating income or contribute to future results of operations thatmeet our expectations.Our industry is subject to rapid technological change, evolving industry standards and frequent new product introductions, and we must make substantialresearch, development and other investments, such as acquisitions, in new products, services and technologies to compete successfully. Technological innovationsgenerally require significant research and development efforts before they are commercially viable. While we continue to invest significant resources towardadvancements primarily in support of 4G OFDMA- and 5G-based technologies, we also innovate across a broad spectrum of opportunities to deploy new andexpanded products and enter into adjacent industry segments by leveraging our existing technical and business expertise and/or through acquisitions.In particular, our future growth significantly depends on new and expanded product areas, such as RFFE, and adjacent industry segments, such as automotive,IoT (including the connected home, smart cities, wearables, voice and music and robotics) data center, networking, computing, and machine learning, amongothers; our ability to develop leading and cost-effective technologies, products and services for new and expanded product areas and adjacent industry segments;and third26parties incorporating our technology, products and services into devices used in these product areas and industry segments. Accordingly, we intend to continue tomake substantial investments in these new and expanded product areas and adjacent industry segments, and in developing new products, services and technologiesfor these product areas and industry segments.However, our research, development and other investments in these new and expanded product areas and adjacent industry segments, and correspondingtechnologies, products and services, as well as in our existing, technologies, products and services and new technologies, such as 5G, use of both licensed andunlicensed spectrum, and convergence of cellular and Wi-Fi, may not succeed due to, among others: new industry segments and/or consumer demand may notgrow as anticipated; our strategies and/or the strategies of our customers, licensees or partners may not be successful; improvements in alternate technologies inways that reduce the advantages we anticipate from our investments; competitors’ products or services being more cost effective, having more capabilities or fewerlimitations or being brought to market faster than our new products and services; and competitors having longer operating histories in industry segments that arenew to us. We may also underestimate the costs of or overestimate the future revenues and/or margins that could result from these investments, and theseinvestments may not, or may take many years to, generate material returns. Further, the automotive industry is subject to long design-in time frames, long productlife cycles and a high degree of regulatory and safety requirements, necessitating suppliers to the industry to comply with stringent qualification processes, verylow defect rates and high reliability standards, all of which results in a significant barrier to entry and increased costs.If our new technologies, products and/or services are not successful, or are not successful in the time frame we anticipate, we may incur significant costsand/or asset impairments, our business may not grow as anticipated, our revenues and/or margins may be negatively impacted and/or our reputation may beharmed.There are numerous risks associated with our operation and control of manufacturing facilities we acquired through the formation of our joint venture withTDK, RF360 Holdings, including a higher portion of fixed costs relative to a fabless model, environmental compliance and liability, exposure to naturaldisasters, timely supply of equipment and materials and manufacturing difficulties.Manufacturing facilities are characterized by a higher portion of fixed costs relative to a fabless model. In less favorable industry environments, in particular,we may be faced with a decline in the utilization rates of our manufacturing facilities due to decreases in demand for our products. During such periods, ourmanufacturing facilities could operate at lower capacity levels, while the fixed costs associated with full capacity continue to be incurred, resulting in lower grossprofit.We are subject to many environmental, health and safety laws and regulations in each jurisdiction in which we operate our manufacturing facilities, whichgovern, among other things, emissions of pollutants into the air, wastewater discharges, the use and handling of hazardous substances, waste disposal, theinvestigation and remediation of soil and ground water contamination and the health and safety of our employees. We are also required to obtain and maintainenvironmental permits from governmental authorities for certain of our operations. We cannot make assurances that we will be at all times in compliance with suchlaws, regulations and permits. Certain environmental laws impose strict, and in certain circumstances, joint and several, liability on current or previous owners oroperators of real property for the cost of investigation, removal or remediation of hazardous substances. Certain of these laws also assess liability on persons whoarrange for hazardous substances to be sent to disposal or treatment facilities when such facilities are found to be contaminated. In addition, we could also be heldliable for consequences arising out of human exposure to hazardous substances or other environmental damage.We have manufacturing facilities in Asia and Europe. If tsunamis, flooding, earthquakes, volcanic eruptions or other natural disasters or geopolitical conflictswere to damage, destroy or disrupt our manufacturing facilities, it could disrupt our operations, delay new production and shipments of inventory or result in costlyrepairs, replacements or other costs. In addition, natural disasters or geopolitical conflicts may result in disruptions in transportation, distribution channels orsupply chains, or significant increases in the prices of raw materials.Our manufacturing operations depend on securing raw materials and other supplies in adequate quality and quantity in a timely manner from multiplesuppliers, and in some cases we rely on a limited number of suppliers, particularly in Asia. Accordingly, there may be cases where supplies of raw materials andother products are interrupted by disaster, accident or some other event at a supplier, supply is suspended due to quality or other issues, or there is a shortage ofsupply due to a rapid increase in demand, which could impact production and prevent us from supplying products to our customers. If the supply-demand balanceis disrupted, it may considerably increase costs of manufacturing due to increased prices we pay for raw materials or fuel. From time to time, suppliers may extendlead times, limit the amounts supplied to us or increase prices due to capacity constraints or other factors. Further, it may be difficult or impossible to substitute onepiece of equipment for another or replace one type of material with another. A failure by our suppliers to deliver our requirements could result in disruptions to ourmanufacturing operations.27Our manufacturing processes are highly complex, require advanced and costly equipment and must be continuously modified to improve yields andperformance. Difficulties in the production process can reduce yields or interrupt production, and as a result we may not be able to deliver products or do so in atimely, cost-effective or competitive manner. Further, to remain competitive and/or meet customer demand, we may be required to improve our facilities andprocess technologies and carry out extensive research and development, each of which may require investment of significant amounts of capital, and may have amaterial adverse effect on our results of operations, financial condition and/or cash flows.The continued and future success of our licensing programs can be impacted by the deployment of other technologies in place of technologies based onCDMA, OFDMA and their derivatives; the success of our licensing programs for 4G single mode products and emerging industry segments; and the need toextend license agreements that are expiring and/or to cover additional future patents.Although we own a very strong portfolio of issued and pending patents related to OFDM, OFDMA, WLAN and other technologies, our patent portfoliolicensing program in some of these areas may be less established and might not be as successful in generating licensing revenues as our CDMA licensing programhas been. Many wireless operators have selected or have deployed OFDMA-based LTE as their next-generation 4G technology in existing (or future if not yetdeployed) wireless spectrum bands as complementary to their existing CDMA-based networks. While 3G/4G multimode products are generally covered by ourexisting 3G licensing agreements, products that implement 4G but do not also implement 3G are generally not covered by these agreements. We believe that ourpatented technologies are essential and useful to implementation of the LTE industry standards and have granted royalty-bearing 4G single-mode licenses to themajority of the leading handset and other wireless device companies (including Huawei, LG, Microsoft, Oppo, Samsung, Sony Mobile, vivo, Xiaomi and ZTE) asthey recognize that they need a license to our patents to make and sell products implementing 4G standards but not implementing 3G standards. The royalty ratesfor single mode 4G products are lower than our royalty rates for 3G and 3G/4G multimode products. Accordingly, without a corresponding increase in volumesand/or device ASP, we will not achieve the same licensing revenues on such LTE products as on 3G and 3G/4G multimode products. In addition, new connectivityand other services are emerging that rely on devices that may or may not be used on traditional cellular networks, such as devices used in the IoT and automotiveindustry segments. We also seek to diversify and broaden our technology licensing programs to new industry segments in which we can utilize our technologyleadership, such as wireless charging and other technologies. Standards, even de facto standards, that develop as these technologies mature, in particular those thatdo not include a base level of interoperability, may impact our ability to obtain royalties at all or that are equivalent to those that we receive for 3G and 3G/4Gmultimode products used in cellular communications. Although we believe that our patented technologies are essential and useful to the commercialization of suchservices, any royalties we receive may be lower than those we receive from our current licensing program.Over the long-term, we need to continue to evolve our patent portfolio, particularly in 5G. If we do not maintain a strong portfolio that is applicable to currentand/or future standards (such as 5G), products and/or services, our future licensing revenues could be negatively impacted.The licenses granted to and from us under a number of our license agreements include only patents that are either filed or issued prior to a certain date. As aresult, there are agreements with some licensees where later patents are not licensed by or to us. Additionally, certain of our license agreements (includingessentially all of our recent agreements in China) are effective for a specified term. In order to license or to obtain a license to such later patents or after theexpiration of a specified term, or to receive royalties after the specified time period, we will need to extend or modify such license agreements or enter into newlicense agreements with such licensees. Accordingly, to the extent not renewed on their terms or by election for an additional (generally multi-year) period, ifapplicable, we will need to extend or modify such license agreements or enter into new license agreements with such licensees more frequently than we have donehistorically. We might not be able to renew those license agreements, or enter into new license agreements, in the future without affecting the material terms andconditions of our license agreements with such licensees, and such modifications or new agreements may negatively impact our revenues. If there is a delay inrenewing a license agreement prior to its expiration, there would be a delay in our ability to recognize revenues related to that licensee’s product sales. Further, ifwe are unable to reach agreement on such modifications or new agreements, it could result in patent infringement litigation with such companies.We depend on a limited number of third-party suppliers for the procurement, manufacture and testing of our products manufactured in a fabless productionmodel. If we fail to execute supply strategies that provide technology leadership, supply assurance and low cost, our business and results of operations may beharmed. We are also subject to order and shipment uncertainties that could negatively impact our results of operations.Our QCT segment primarily utilizes a fabless production model, which means that we do not own or operate foundries for the production of silicon wafersfrom which our integrated circuits are made. Other than the manufacturing facilities we now operate through our recently formed RF360 Holdings joint venture,we rely on independent third-party suppliers to28perform the manufacturing and assembly, and most of the testing, of our integrated circuits. Our suppliers are also responsible for the procurement of most of theraw materials used in the production of our integrated circuits. We employ both turnkey and two-stage manufacturing models to purchase our integrated circuits.Under the turnkey model, our foundry suppliers are responsible for delivering fully assembled and tested integrated circuits. Under the two-stage manufacturingmodel, we purchase die in singular or wafer form from semiconductor manufacturing foundries and contract with separate third-party suppliers for manufacturingservices such as wafer bump, probe, assembly and the majority of our final test requirements. The semiconductor manufacturing foundries that supply products toour QCT segment are primarily located in Asia, as are our primary warehouses where we store finished goods for fulfillment of customer orders. The followingcould have an adverse effect on our ability to meet customer demands and/or negatively impact our revenues, business operations, profitability and/or cash flows:•a reduction, interruption, delay or limitation in our product supply sources;•a failure by our suppliers to procure raw materials or to provide or allocate adequate manufacturing or test capacity for our products;•our suppliers’ inability to react to shifts in product demand or an increase in raw material or component prices;•our suppliers’ delay in developing leading process technologies, or inability to develop or maintain leading process technologies, including transitions tosmaller geometry process technologies;•the loss of a supplier or the inability of a supplier to meet performance, quality or yield specifications or delivery schedules;•additional expense and/or production delays as a result of qualifying a new supplier and commencing volume production or testing in the event of a lossof or a decision to add or change a supplier; and/or•natural disasters or geopolitical conflicts, particularly in Asia, impacting our suppliers.While we have established alternate suppliers for certain technologies, we rely on sole- or limited-source suppliers for certain products, subjecting us tosignificant risks, including: possible shortages of raw materials or manufacturing capacity; poor product performance; and reduced control over delivery schedules,manufacturing capability and yields, quality assurance, quantity and costs. To the extent we have established alternate suppliers, these suppliers may requiresignificant levels of support to bring complex technologies to production. As a result, we may invest a significant amount of effort and resources and incur highercosts to support and maintain such alternate suppliers. Further, any future consolidation of foundry suppliers could increase our vulnerability to sole- or limited-source arrangements and reduce our suppliers’ willingness to negotiate pricing, which could negatively impact our ability to achieve cost reductions and/orincrease our manufacturing costs. Our arrangements with our suppliers may obligate us to incur costs to manufacture and test our products that do not decrease atthe same rate as decreases in pricing to our customers. Our ability, and that of our suppliers, to develop or maintain leading process technologies, includingtransitions to smaller geometry process technologies, and to effectively compete with the manufacturing processes and performance of our competitors, couldimpact our ability to introduce new products and meet customer demand, could increase our costs (possibly decreasing our margins) and could subject us to the riskof excess inventories. Our inability to meet customer demand due to sole- or limited-sourcing and/or the additional costs that we incur because of these or othersupply constraints or because of the need to support alternate suppliers could negatively impact our business, our results of operations and/or cash flows.Although we have long-term contracts with our suppliers, many of these contracts do not provide for long-term capacity commitments. To the extent we donot have firm commitments from our suppliers over a specific time period or for any specific quantity, our suppliers may allocate, and in the past have allocated,capacity to the production and testing of products for their other customers while reducing or limiting capacity to manufacture or test our products. Accordingly,capacity for our products may not be available when we need it or at reasonable prices. To the extent we do obtain long-term capacity commitments, we may incuradditional costs related to those commitments and/or make non-refundable payments for capacity commitments that are not used.One or more of our suppliers or potential alternate suppliers may manufacture CDMA- or OFDMA-based integrated circuits that compete with our products.Such suppliers could elect to allocate raw materials and manufacturing capacity to their own products and reduce or limit deliveries to us to our detriment.In addition, we may not receive reasonable pricing, manufacturing or delivery terms from our suppliers. We cannot guarantee that the actions of our supplierswill not cause disruptions in our operations that could harm our ability to meet our delivery obligations to our customers or increase our cost of sales.29Additionally, we place orders with our suppliers using our forecasts of customer demand, which are based on a number of assumptions and estimates, and aregenerally only partially covered by commitments from our customers. If we overestimate customer demand, we may experience increased excess and/or obsoleteinventory, which would negatively impact our results of operations.Claims by other companies that we infringe their intellectual property could adversely affect our business.From time to time, companies have asserted, and may again assert, patent, copyright and other intellectual property rights against our products or productsusing our technologies or other technologies used in our industry. These claims have resulted and may again result in our involvement in litigation. We may notprevail in such litigation given, among other factors, the complex technical issues and inherent uncertainties in intellectual property litigation. If any of ourproducts or services were found to infringe another company’s intellectual property rights, we could be subject to an injunction or be required to redesign ourproducts or services, which could be costly, or to license such rights and/or pay damages or other compensation to such other company. If we are unable toredesign our products or services, license such intellectual property rights used in our products or services or otherwise distribute our products (e.g., through alicensed supplier), we could be prohibited from making and selling such products or providing such services. In any potential dispute involving other companies’patents or other intellectual property, our chipset foundries, semiconductor assembly and test providers and customers could also become the targets of litigation.We are contingently liable under certain product sales, services, license and other agreements to indemnify certain customers, chipset foundries and semiconductorassembly and test service providers against certain types of liability and/or damages arising from qualifying claims of patent infringement by products or servicessold or provided by us, or by intellectual property provided by us to our chipset foundries and semiconductor assembly and test service providers. Reimbursementsunder indemnification arrangements could have an adverse effect on our results of operations and/or cash flows. Furthermore, any such litigation could severelydisrupt the supply of our products and the businesses of our chipset customers and their customers, which in turn could hurt our relationships with them and couldresult in a decline in our chipset sales and/or reductions in our licensees’ sales, causing a corresponding decline in our chipset and/or licensing revenues. Anyclaims, regardless of their merit, could be time consuming to address, result in costly litigation, divert the efforts of our technical and management personnel orcause product release or shipment delays, any of which could have an adverse effect on our results of operations and cash flows.We expect that we may continue to be involved in litigation and may have to appear in front of administrative bodies (such as the United States InternationalTrade Commission) to defend against patent assertions against our products by companies, some of whom are attempting to gain competitive advantage or leveragein licensing negotiations. We may not be successful in such proceedings, and if we are not, the range of possible outcomes is very broad and may include, forexample, monetary damages or fines or other orders to pay money, royalty payments, injunctions on the sale of certain of our integrated circuit products (and/or onthe sale of our customers’ devices using such products) and/or the issuance of orders to cease certain conduct and/or modify our business practices. Further, agovernmental body in a particular country or region may assert, and may be successful in imposing, remedies with effects that extend beyond the borders of thatcountry or region. In addition, a negative outcome in any such proceeding could severely disrupt the business of our chipset customers and their wireless operatorcustomers, which in turn could harm our relationships with them and could result in a decline in our worldwide chipset sales and/or a reduction in our licensees’sales to wireless operators, causing corresponding declines in our chipset and/or licensing revenues.Certain legal matters, including certain claims by other companies that we infringe their intellectual property, are described more fully in this Annual Report in“Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.”We may engage in strategic acquisitions, transactions or make investments that could adversely affect our results of operations or fail to enhance stockholdervalue.We engage in strategic acquisitions and other transactions, including joint ventures, and make investments, which we believe are important to the future of ourbusiness, with the goal of maximizing stockholder value. We acquire businesses and other assets, including patents, technology, wireless spectrum and otherintangible assets, enter into joint ventures or other strategic transactions and purchase minority equity interests in or make loans to companies that may be privateand early-stage. Our strategic activities are generally focused on opening or expanding opportunities for our technologies and supporting the design andintroduction of new products and services (or enhancing existing products or services) for voice and data communications and new industry segments. Recentmaterial transactions include our acquisition of CSR plc, our RF360 Holdings joint venture with TDK Corporation and our proposed acquisition of NXP. Many ofour strategic activities entail a high degree of risk and require the use of domestic and/or foreign capital, and investments may not become liquid for several yearsafter the date of the investment, if at all. Our strategic activities may not generate financial returns or result in increased adoption or continued use of ourtechnologies, products or services. We may underestimate the costs and/or30overestimate the benefits, including product, revenue, cost and other synergies and growth opportunities that we expect to realize, and we may not achieve thosebenefits. In some cases, we may be required to consolidate or record our share of the earnings or losses of companies in which we have acquired ownershipinterests. In addition, we may record impairment charges related to our strategic activities. Any losses or impairment charges that we incur related to strategicactivities will have a negative impact on our financial condition and results of operations, and we may continue to incur new or additional losses related to strategicassets or investments that we have not fully impaired or exited.Achieving the anticipated benefits of business acquisitions, including joint ventures and other strategic investments in which we have management andoperational control, depends in part upon our ability to integrate the businesses in an efficient and effective manner and achieve anticipated synergies, and we maynot be successful in these efforts. Such integration is complex and time consuming and involves significant challenges, including, among others: retaining keyemployees; successfully integrating new employees, technology, products, processes, operations (including manufacturing operations), sales and distributionchannels, business models and business systems; retaining customers and suppliers of the businesses; consolidating research and development and/or supplyoperations; minimizing the diversion of management’s attention from ongoing business matters; consolidating corporate and administrative infrastructures; andmanaging the increased scale, complexity and globalization of our business, operations and employee base. We may not derive any commercial value fromassociated technologies or products or from future technologies or products based on these technologies, and we may be subject to liabilities that are not coveredby indemnification protection that we may obtain, and we may become subject to litigation. Additionally, we may not be successful in entering or expanding intonew sales or distribution channels, business or operational models (including manufacturing), geographic regions, industry segments and/or categories of productsserved by or adjacent to the associated businesses or in addressing potential new opportunities that may arise out of the combination.If we do not achieve the anticipated benefits of business acquisitions or other strategic activities, our business and results of operations may be adverselyaffected, and we may not enhance stockholder value by engaging in these transactions.We are subject to various laws, regulations, policies and standards. Our business may suffer as a result of existing, or new or amended, laws, regulations,policies or standards and/or our failure or inability to comply with laws, regulations, policies or standards.Our business, products and services, and those of our customers and licensees, are subject to various laws and regulations globally, as well as governmentpolicies and the specifications of international, national and regional communications standards bodies. Compliance with existing laws, regulations, policies andstandards, the adoption of new laws, regulations, policies or standards, changes in the interpretation of existing laws, regulations, policies or standards, changes inthe regulation of our activities by a government or standards body and/or rulings in court, regulatory, administrative or other proceedings relating to such laws,regulations, policies or standards, including, among others, those affecting licensing practices, competitive business practices, the use of our technology orproducts, protection of intellectual property, trade, foreign currency, investments or loans, spectrum availability and license issuance, adoption of standards, theprovision of device subsidies by wireless operators to their customers, taxation, export control, privacy and data protection, environmental protection, health andsafety, labor and employment, human rights, corporate governance, public disclosure or business conduct could have an adverse effect on our business and resultsof operations.Government policies, particularly in China, that restrict the timing of funds that may flow out of a country may impact the timing of our receipt of paymentsfrom our customers and/or licensees in such country, which may negatively impact our cash flows.Delays in government approvals or other governmental activities that could result from, among others, a decrease in or a lack of funding for certain agenciesor branches of the government and/or political changes, could result in our incurring higher costs, could negatively impact our ability to timely consummatestrategic transactions and/or could have other negative impacts on our business and the businesses of our customers and licensees.National, state and local environmental laws and regulations affect our operations around the world. These laws may make it more expensive to manufacture,have manufactured and sell products, and our costs could increase if our vendors (e.g., suppliers, third-party manufacturers or utility companies) pass on their coststo us. We are also subject to laws and regulations impacting the manufacturing operations we acquired through our RF360 Holdings joint venture. See the RiskFactor entitled “There are numerous risks associated with our operation and control of manufacturing facilities we acquired through the formation of our jointventure with TDK, RF360 Holdings, including high fixed costs, environmental compliance and liability, exposure to natural disasters, timely supply of equipmentand materials and manufacturing difficulties.”Regulations in the United States require that we determine whether certain materials used in our products, referred to as conflict minerals, originated in theDemocratic Republic of the Congo or an adjoining country (collectively, the Covered31Countries), or were from recycled or scrap sources. Other countries or regions may impose similar requirements in the future. The verification and reportingrequirements, in addition to customer demands for conflict free sourcing, impose additional costs on us and on our suppliers and may limit the sources or increasethe prices of materials used in our products. Further, if we are unable to determine that the conflict minerals used in our products do not directly or indirectlyfinance or benefit armed groups in the Covered Countries, we may face challenges with our customers that place us at a competitive disadvantage, and ourreputation may be harmed. Similarly, other laws and regulations have been adopted or proposed that require additional transparency regarding the employmentpractices of our suppliers, and any failure to maintain responsible sourcing practices could also adversely affect our relationships with customers and ourreputation.Laws, regulations, policies and standards are complex and changing and may create uncertainty regarding compliance. Laws, regulations, policies andstandards are subject to varying interpretations in many cases, and their application in practice may evolve over time. As a result, our efforts to comply may fail,particularly if there is ambiguity as to how they should be applied in practice. Failure to comply with any law, regulation, policy or standard may adversely affectour business, results of operations and/or cash flows. New laws, regulations, policies and standards or evolving interpretations of legal requirements may cause usto incur higher costs as we revise current practices, policies and/or procedures and may divert management time and attention to compliance activities.Our use of open source software may harm our business.Certain of our software and our suppliers’ software may contain or may be derived from “open source” software, and we have seen, and believe we willcontinue to see, an increase in customers requesting that we develop products, including software associated with our integrated circuit products, that incorporateopen source software elements and operate in an open source environment, which, under certain open source licenses, may offer accessibility to a portion of aproduct’s source code and may expose related intellectual property to adverse licensing conditions. Licensing of such software may impose certain obligations onus if we were to distribute derivative works of the open source software. For example, these obligations may require us to make source code for the derivativeworks available to our customers in a manner that allows them to make such source code available to their customers or license such derivative works under aparticular type of license that is different than what we customarily use to license our software. Developing open source products, while adequately protecting theintellectual property rights upon which our licensing business depends, may prove burdensome and time-consuming under certain circumstances, thereby placingus at a competitive disadvantage, and we may not adequately protect our intellectual property rights. Also, our use and our customers’ use of open source softwaremay subject our products and our customers’ products to governmental scrutiny and delays in product certification, which could cause customers to view ourproducts as less desirable than our competitors’ products. While we believe we have taken appropriate steps and employ adequate controls to protect ourintellectual property rights, our use of open source software presents risks that could have an adverse effect on these rights and on our business.Our stock price, earnings and the fair value of our investments are subject to substantial quarterly and annual fluctuations and to market downturns.Our stock price and earnings have fluctuated in the past and are likely to fluctuate in the future. Factors that may have a significant impact on the market priceof our stock and/or earnings include those identified throughout this Risk Factors section, volatility of the stock market in general and technology-based companiesin particular, announcements concerning us, our suppliers, our competitors or our customers or licensees and variations between our actual financial results orguidance and expectations of securities analysts or investors, among others. Further, increased volatility in the financial markets and/or overall economicconditions may reduce the amounts that we realize in the future on our cash equivalents and/or marketable securities and may reduce our earnings as a result of anyimpairment charges that we record to reduce recorded values of marketable securities to their fair values.In the past, securities class action litigation has been brought against a company following periods of volatility in the market price of its securities. Due tochanges in our stock price, we are and may in the future be the target of securities litigation. Securities litigation could result in substantial uninsured costs anddivert management’s attention and our resources. Certain legal matters, including certain securities litigation brought against us, are described more fully in thisAnnual Report in “Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.”We maintain an extensive investment portfolio of varied holdings, which are generally classified as available-for-sale and are therefore recorded on ourconsolidated balance sheet at fair value, with unrealized gains or losses reported as a component of accumulated other comprehensive income. The fair values ofour investments are subject to fluctuation based primarily on market price volatility, as well as the underlying operations of the associated investment, among otherthings. If the fair value of such investments decreases below their cost basis, as some of our previous investments have, we may be required in certaincircumstances to recognize a loss in our results of operations. The sensitivity of and risks associated with32the market value of our investment portfolio are described more fully in this Annual Report in “Part II, Item 7A. Quantitative and Qualitative Disclosures AboutMarket Risk.”There are risks associated with our indebtedness.Our outstanding indebtedness and any additional indebtedness we incur, including in connection with our proposed acquisition of NXP, may have negativeconsequences on our business, including, among others:•requiring us to use cash to pay the principal of and interest on our indebtedness, thereby reducing the amount of cash available for other purposes;•limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions, stock repurchases, dividends or other generalcorporate and other purposes;•limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and/or•increasing our vulnerability to interest rate fluctuations to the extent a portion of our debt has variable interest rates.Our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which is subject to general economicconditions, industry cycles and financial, business and other factors, including factors which negatively impact our cash flows, such as licensees withholding someor all of the royalty payments they owe to us or paying fines in connection with regulatory investigations, many of which are beyond our control. If we are unableto generate sufficient cash flow from operations in the future to service our debt, we may be required to, among other things: repatriate funds to the United States atsubstantial tax cost; refinance or restructure all or a portion of our indebtedness; reduce or delay planned capital or operating expenditures; or sell selected assets.Such measures might not be sufficient to enable us to service our debt. In addition, any such refinancing, restructuring or sale of assets might not be available oneconomically favorable terms or at all, and if prevailing interest rates at the time of any such refinancing and/or restructuring are higher than our current rates,interest expense related to such refinancing and/or restructuring would increase. If there are adverse changes in the ratings assigned to our debt securities by creditrating agencies, our borrowing costs, our ability to access debt in the future and/or the terms of such debt could be adversely affected.Our business and operations could suffer in the event of security breaches or other misappropriation of our intellectual property or proprietary or confidentialinformation.Attempts by others to gain unauthorized access to our information technology systems are increasingly more sophisticated. These attempts, which might berelated to industrial or other espionage, include covertly introducing malware to our computers and networks, including those in our manufacturing operations, andimpersonating authorized users, among others. In addition, employees and former employees, in particular former employees who become employees of ourcompetitors, customers or licensees, may misappropriate, use, publish or provide to our competitors, customers or licensees our intellectual property and/orproprietary or confidential business information. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases, wemight be unaware of an incident or its magnitude and effects. The theft, unauthorized use or publication of our intellectual property and/or proprietary orconfidential business information could harm our competitive position, reduce the value of our investment in research and development and other strategicinitiatives and/or otherwise adversely affect our business. To the extent any security breach results in inappropriate disclosure of our customers’ or licensees’proprietary or confidential information, we may incur liability. We expect to continue to devote significant resources to the security of our information technologysystems.Potential tax liabilities could adversely affect our results of operations.We are subject to income taxes in the United States and numerous foreign jurisdictions, including Singapore where our QCT segment’s non-United Statesheadquarters is located. Significant judgment is required in determining our provision for income taxes. We regularly are subject to examination of our tax returnsand reports by taxing authorities in the United States federal jurisdiction and various state and foreign jurisdictions, most notably in countries where we earn aroutine return and the tax authorities believe substantial value-add activities are performed. Our current examinations are at various stages with respect toassessments, claims, deficiencies and refunds. We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision,income taxes payable and deferred taxes in the period in which the facts give rise to a revision become known. Although we believe that our tax estimates arereasonable at September 24, 2017, the final determination of tax audits and any related legal proceedings could materially differ from amounts reflected in ourhistorical income tax provisions and accruals. In such case, our income tax provision, results of operations and/or cash flows in the period or periods in which thatdetermination is made could be negatively affected.We have tax incentives in Singapore provided that we meet specified employment and other criteria, and as a result of the expiration of these incentives, ourSingapore tax rate increased in fiscal 2017 and is expected to increase again in fiscal332027. If we do not meet the criteria required to retain such incentives, our Singapore tax rate could increase prior to fiscal 2027, and our results of operations andcash flows could be adversely affected.Tax rules may change in a manner that adversely affects our future reported results of operations or the way we conduct our business. For example, weconsider the operating earnings of certain non-United States subsidiaries to be indefinitely reinvested outside the United States based on our current needs for thoseearnings to be reinvested offshore as well as estimates that future domestic cash generated from operations and/or borrowings will be sufficient to meet futuredomestic cash needs for the foreseeable future. No provision has been made for United States federal, state or foreign taxes that may result from future remittancesof the undistributed earnings of these foreign subsidiaries. Our future results of operations and liquidity may be adversely affected if tax rules regardingunrepatriated earnings change, if domestic cash needs require us to repatriate foreign earnings, if the shares of these foreign subsidiaries were sold or otherwisetransferred or if the United States international tax rules change as part of comprehensive tax reform or other tax legislation.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 theOrganization for Economic Co-operation and Development (OECD). The OECD, which represents a coalition of member countries, recommended changes tonumerous long-standing tax principles related to transfer pricing. These changes, if adopted by countries, could increase tax uncertainty and may adversely affectour provision for income taxes, results of operations and/or cash flow. We have not yet determined what changes, if any, may be needed to our operations orstructure to address BEPS. If our effective tax rates were to increase, particularly in the United States or Singapore, our results of operations, cash flows and/orfinancial condition could be adversely affected.Global, regional or local economic conditions that impact the mobile communications industry or the other industries in which we operate could negativelyaffect the demand for our products and services and our customers’ or licensees’ products and services, which may negatively affect our revenues.A decline in global, regional or local economic conditions or a slow-down in economic growth, particularly in geographic regions with high concentrations ofwireless voice and data users or high concentrations of our customers or licensees, could have adverse, wide-ranging effects on demand for our products and forthe products and services of our customers or licensees, particularly equipment manufacturers or others in the wireless communications industry who buy theirproducts, such as wireless operators. Any prolonged economic downturn may result in a decrease in demand for our products or technologies; the insolvency ofkey suppliers, customers or licensees; delays in reporting and/or payments from our licensees and/or customers; failures by counterparties; and negative effects onwireless device inventories. In addition, our customers’ ability to purchase or pay for our products and services and network operators’ ability to upgrade theirwireless networks could be adversely affected by economic conditions, leading to a reduction, cancelation or delay of orders for our products or services.We may not be able to attract and retain qualified employees.Our future success depends largely upon the continued service of our executive officers and other key management and technical personnel, and on our abilityto continue to identify, attract, retain and motivate them. Implementing our business strategy requires specialized engineering and other talent, as our revenues arehighly dependent on technological and product innovations. The market for employees in our industry is extremely competitive. Further, existing immigration lawsmake it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the United States, making the pool of available talenteven smaller. If we are unable to attract and retain qualified employees, our business may be harmed.Currency fluctuations could negatively affect future product sales or royalty revenues, harm our ability to collect receivables or increase the U.S. dollar cost ofour products.Our customers sell their products throughout the world in various currencies. Our consolidated revenues from international customers and licensees as apercentage of our total revenues were greater than 90% in each of the last three fiscal years. Adverse movements in currency exchange rates may negatively affectour business, revenues, results of operations and/or cash flows due to a number of factors, including, among others:•Our products and those of our customers and licensees that are sold outside the United States may become less price-competitive, which may result inreduced demand for those products and/or downward pressure on average selling prices;•Certain of our revenues, such as royalties, that are derived from licensee or customer sales denominated in foreign currencies could decrease;34•Our foreign suppliers may raise their prices if they are impacted by currency fluctuations, resulting in higher than expected costs and lower margins;•Certain of our costs that are derived from supply contracts denominated in foreign currencies could increase; and/or•Foreign exchange hedging transactions that we engage in to reduce the impact of currency fluctuations may require the payment of structuring fees, limitthe U.S. dollar value of royalties from licensees’ sales that are denominated in foreign currencies, cause earnings volatility if the hedges do not qualify forhedge accounting and expose us to counterparty risk if the counterparty fails to perform.Failures in our products or services or in the products or services of our customers or licensees, including those resulting from security vulnerabilities, defectsor errors, could harm our business.The use of devices containing our products to access untrusted content creates a risk of exposing the system software in those devices to viral or maliciousattacks. While we continue to focus on this issue and are taking measures to safeguard our products from cybersecurity threats, device capabilities continue toevolve, enabling more data and processes, such as computing, and increasing the risk of security failures. Further, our products are inherently complex and maycontain defects or errors that are detected only when the products are in use. The design process interface in new domains of technology and the migration tointegrated circuit technologies with smaller geometric feature sizes are complex and add risk to manufacturing yields and reliability. Further, manufacturing,testing, marketing and use of our products and those of our customers and licensees entail the risk of product liability. Because our products and services areresponsible for critical functions in our customers’ products and/or networks, security failures, defects or errors in our products or services could have an adverseimpact on us, on our customers and/or on the end users of our customers’ products. Such adverse impact could include product liability claims or recalls, write-offsof our inventories, property, plant and equipment and/or intangible assets; unfavorable purchase commitments; a shift of business to our competitors; a decrease indemand for connected devices and wireless services; damage to our reputation and to our customer relationships; and other financial liability or harm to ourbusiness. Further, security failures, defects or errors in the products of our customers or licensees could have an adverse impact on our results of operations and/orcash flows due to a delay or decrease in demand for our products or services generally, and our premium-tier products in particular, among other factors.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesAt September 24, 2017 , we occupied the following facilities (square footage in millions): United States Other Countries TotalOwned facilities4.6 0.2 4.8Leased facilities1.6 4.6 6.2Total6.2 4.8 11.0Our headquarters as well as certain research and development, manufacturing and network management hub operations are located in San Diego, California.Additionally, our QCT segment’s non-United States headquarters is located in Singapore. Our consolidated RF360 Holdings joint venture with TDK leasesmanufacturing facilities in Germany, China and Singapore. We also own and lease properties around the world for use as sales and administrative offices andresearch and development centers, primarily in the United States and India. Our facility leases expire at varying dates through 2025, not including renewals thatwould be at our option. Several other owned and leased facilities are under construction totaling approximately 128,000 additional square feet.We believe that our facilities are suitable and adequate for our present purposes and that the productive capacity in facilities that are not under construction issubstantially utilized. We do not identify or allocate facilities by operating segment. Additional information on net property, plant and equipment by geography isprovided in this Annual Report in “Notes to Consolidated Financial Statements, Note 8. Segment Information.” In the future, we may need to purchase, build orlease additional facilities to meet the requirements projected in our long-term business plan.35Item 3. Legal and Regulatory ProceedingsInformation regarding legal and regulatory proceedings is provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 7.Commitments and Contingencies.” We are also engaged in numerous other legal actions arising in the ordinary course of our business and, while there can be noassurance, we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financialcondition or cash flows.Item 4. Mine Safety DisclosuresNot applicable.36Part IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket Information and DividendsOur common stock is traded on the NASDAQ Global Select Market (NASDAQ) under the symbol “QCOM.” The following table sets forth the range of highand low sales prices of our common stock as reported by NASDAQ and cash dividends announced per share of common stock, for the fiscal periods presented.Quotations of our stock price represent inter-dealer prices without retail markup, markdown or commission and may not necessarily represent actual transactions. High ($) Low ($) Dividends ($)2017 First quarter71.62 61.86 0.53Second quarter67.58 52.37 0.53Third quarter59.89 51.05 0.57Fourth quarter57.69 48.92 0.572016 First quarter61.19 45.93 0.48Second quarter53.52 42.24 0.48Third quarter56.27 49.67 0.53Fourth quarter64.00 50.84 0.53At October 30, 2017 , there were 7,310 holders of record of our common stock. On October 30, 2017 , the last sale price reported on the NASDAQ for ourcommon stock was $54.66 per share. On October 10, 2017 , we announced a cash dividend of $0.57 per share on our common stock, payable on December 15,2017 to stockholders of record as of the close of business on November 29, 2017 . We intend to continue to pay quarterly dividends, subject to capital availabilityand our view that cash dividends are in the best interests of our stockholders. Future dividends may be affected by, among other items, our views on potentialfuture capital requirements, including those relating to research and development, creation and expansion of sales distribution channels, investments andacquisitions, legal risks, withholding of payments by one or more of our significant licensees and/or customers, fines by government agencies and/or adverserulings by a court or arbitrator in a legal matter, stock repurchase programs, debt issuance, changes in federal and state income tax law and changes to our businessmodel.Share-Based CompensationWe primarily issue restricted stock units under our equity compensation plans, which are part of a broad-based, long-term retention program that is intended toattract and retain talented employees and directors and align stockholder and employee interests.Our 2016 Long-Term Incentive Plan (2016 Plan) provides for the grant of both incentive and nonstatutory stock options, stock appreciation rights, restrictedstock, unrestricted stock, restricted stock units, performance units, performance shares, deferred compensation awards and other stock-based awards. Restrictedstock units generally vest over periods of three years from the date of grant. Stock options vest over periods not exceeding five years and are exercisable for up toten years from the grant date. The Board of Directors may amend or terminate the 2016 Plan at any time, with certain amendments also requiring stockholderapproval.Additional information regarding our share-based compensation plans and plan activity for fiscal 2017 , 2016 and 2015 is provided in this Annual Report in“Notes to Consolidated Financial Statements, Note 5. Employee Benefit Plans” and additional information regarding our share-based compensation plans for fiscal2017 will be provided in our 2018 Proxy Statement under the heading “Equity Compensation Plan Information.”Issuer Purchases of Equity SecuritiesIssuer purchases of equity securities during the fourth quarter of fiscal 2017 were:37 Total Number ofShares Purchased Average PricePaid Per Share(1) Total Number ofShares Purchased asPart of PubliclyAnnounced Plans orPrograms Approximate Dollar Valueof Shares that May Yet BePurchased Under the Plansor Programs(2) (In thousands) (In thousands) (In millions)June 26, 2017 to July 23, 2017— $— — $1,959July 24, 2017 to August 20, 20172,854 52.54 2,854 1,809August 21, 2017 to September 24, 20173,268 50.47 3,268 1,644Total6,122 6,122 (1)Average Price Paid Per Share excludes cash paid for commissions.(2)On March 9, 2015 , we announced a repurchase program authorizing us to repurchase up to $15 billion of our common stock. At September 24, 2017 , $1.6 billion remainedauthorized for repurchase. The stock repurchase program has no expiration date.38Item 6. Selected Financial DataThe following data should be read in conjunction with the annual consolidated financial statements, related notes and other financial information appearingelsewhere herein. Years Ended (1) September 24, 2017 September 25, 2016 September 27, 2015 September 28, 2014 September 29, 2013 (In millions, except per share data)Statement of Operations Data: Revenues$22,291 $23,554 $25,281 $26,487 $24,866Operating income2,614 6,495 5,776 7,550 7,230Income from continuing operations (2)2,465 5,702 5,268 7,534 6,845Discontinued operations, net of income taxes— — — 430 —Net income attributable to Qualcomm2,466 5,705 5,271 7,967 6,853 Per Share Data: Basic earnings per share attributable to Qualcomm: Continuing operations$1.67 $3.84 $3.26 $4.48 $3.99Discontinued operations— — — 0.25 —Net income1.67 3.84 3.26 4.73 3.99Diluted earnings per share attributable to Qualcomm: Continuing operations1.65 3.81 3.22 4.40 3.91Discontinued operations— — — 0.25 —Net income1.65 3.81 3.22 4.65 3.91Dividends per share announced2.20 2.02 1.80 1.54 1.20 Balance Sheet Data: Cash, cash equivalents and marketable securities$38,578 $32,350 $30,947 $32,022 $29,406Total assets65,486 52,359 50,796 48,574 45,516Short-term debt (3)2,495 1,749 1,000 — —Long-term debt (4)19,398 10,008 9,969 — —Other long-term liabilities (5)2,432 895 817 428 550Total stockholders’ equity30,746 31,768 31,414 39,166 36,087(1)Our fiscal year ends on the last Sunday in September. The fiscal years ended September 24, 2017 , September 25, 2016 , September 27, 2015 , September 28, 2014 andSeptember 29, 2013 each included 52 weeks.(2)Revenues in fiscal 2017 were negatively impacted by actions taken by Apple and its contract manufacturers as well as the previously disclosed dispute with anotherlicensee, who did not fully report or fully pay royalties due in the last three quarters of fiscal 2017, as well as the $940 million reduction to revenues recorded related to theBlackBerry arbitration. Operating income was further negatively impacted by $927 million and $778 million in charges related to the fines imposed by the KFTC and theTFTC, respectively.(3)Short-term debt was comprised of outstanding commercial paper and, in fiscal 2017, the current portion of long-term debt.(4)Long-term debt was comprised of floating- and fixed-rate notes.(5)Other long-term liabilities in this balance sheet data exclude unearned revenues.39Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of OperationsIn addition to historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual resultsmay differ materially from those referred to herein due to a number of factors, including but not limited to risks described in “Part I, Item 1A. Risk Factors” andelsewhere in this Annual Report.The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financialstatements and related notes included in “Part II, Item 8. Financial Statements and Supplementary Data” of this Annual Report.Fiscal 2017 OverviewRevenues were $22.3 billion with net income attributable to Qualcomm of $2.5 billion , a decrease of 5% and 57% from fiscal 2016, respectively. Highlightsand other events from fiscal 2017 included:•The transition of wireless networks and devices to 3G/4G (CDMA-single mode, OFDMA-single mode and CDMA/OFDMA multi-mode) continuedaround the world. 3G/4G connections increased to approximately 4.7 billion, up 16% year-over-year, and represent approximately 60% of total mobileconnections at the end of fiscal 2017, up from 54% at the end of fiscal 2016. (1) •We continue to invest significant resources toward advancements primarily in support of 4G OFDMA- and 5G-based technologies as well as othertechnologies to extend the demand for our products and generate new or expanded licensing opportunities, including within adjacent industry segmentsoutside traditional cellular industries, such as automotive, the Internet of Things (IoT) and networking.•QCT results were positively impacted by growth in revenues related to adjacent industry segments outside traditional cellular industries, results from ourrecently formed RF360 Holdings joint venture and cost reduction initiatives achieved under the Strategic Realignment Plan, partially offset by a decline inshare at Apple.•QTL results were negatively impacted by actions taken by Apple and its contract manufacturers, as well as the previously disclosed dispute with anotherlicensee, who underpaid royalties due in the second quarter of fiscal 2017 and did not report or pay royalties due in the third or fourth quarter of fiscal2017.•In January 2017, we received a formal written decision from the Korea Fair Trade Commission (KFTC) in connection with its investigation of us, whichordered certain remedial actions and imposed a fine of approximately 1.03 trillion Korean Won (approximately $927 million). The fine was paid in March2017.•On October 11, 2017, the Taiwan Fair Trade Commission (TFTC) announced that it had reached a decision in its investigation of us and found us to be inviolation of the Taiwan Fair Trade Act. On October 23, 2017, we received the TFTC’s written decision, which prohibits certain conduct, allows forcertain competing chip companies and handset manufacturers to request to amend or enter into patent license and other relevant agreements, and imposesa fine of approximately 23.4 billion Taiwan Dollars (approximately $778 million based on the exchange rate at September 24, 2017), which was recordedas a charge to other expense in the fourth quarter of fiscal 2017.•In May 2017, in connection with the arbitration decision, we entered into a Joint Stipulation Regarding Final Award Agreement with BlackBerry Limited(BlackBerry) and paid to BlackBerry $940 million to cover the award amount, prejudgment interest and attorney’s fees. This amount, which was recordedas a reduction to revenues, also reflected certain amounts that were owed to us by BlackBerry.•On October 27, 2016 , we announced a definitive agreement under which Qualcomm River Holdings, B.V. (Qualcomm River Holdings), an indirect,wholly owned subsidiary of QUALCOMM Incorporated, will acquire NXP Semiconductors N.V. (NXP). Pursuant to the definitive agreement,Qualcomm River Holdings has commenced a tender offer to acquire all of the issued and outstanding common shares of NXP for $110 per share in cash,for estimated total cash consideration to be paid to NXP’s shareholders of $38 billion . NXP is a leader in high-performance, mixed-signal semiconductorelectronics in automotive, broad-based microcontrollers, secure identification, network processing and RF power products. The transaction is subject toreceipt of regulatory approvals in various jurisdictions and other closing conditions. While we continue to work to close by the end of calendar 2017, thetransaction may close in early 2018.•In May 2017 , we issued an aggregate principal amount of $11.0 billion in nine tranches of unsecured floating- and fixed-rate notes, with maturity datesstarting in 2019 through 2047 and effective interest rates between 1.80% and 4.47% . The proceeds are intended to be used to finance, in part, ourproposed acquisition of NXP and other related transactions and for general corporate purposes.40(1)According to GSMA Intelligence estimates as of October 30, 2017 (estimates excluded Wireless Local Loop).Our Business and Operating SegmentsWe develop and commercialize foundational technologies and products used in mobile devices and other wireless products, including network equipment,broadband gateway equipment and consumer electronics devices. We derive revenues principally from sales of integrated circuit products and licensing ourintellectual property, including patents, software and other rights.We are organized on the basis of products and services and have three reportable segments. We conduct business primarily through our QCT (QualcommCDMA Technologies) semiconductor business and our QTL (Qualcomm Technology Licensing) licensing business. QCT develops and supplies integrated circuitsand system software based on CDMA, OFDMA and other technologies for use in mobile devices, wireless networks, devices used in IoT, broadband gatewayequipment, consumer electronic devices and automotive telematics and infotainment systems. QTL grants licenses to use portions of its intellectual propertyportfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. Our QSI (Qualcomm StrategicInitiatives) reportable segment makes strategic investments. We also have nonreportable segments, including our mobile health, data center, small cell and otherwireless technology and service initiatives.Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries. Substantially all of our products and servicesbusinesses, including QCT, and substantially all of our engineering, research and development functions, are operated by Qualcomm Technologies, Inc. (QTI), awholly-owned subsidiary of QUALCOMM Incorporated, and QTI’s subsidiaries. QTL is operated by QUALCOMM Incorporated, which owns the vast majority ofour patent portfolio. Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights under or to any patents owned byQUALCOMM Incorporated.Further information regarding our business and operating segments is provided in “Part I, Item 1. Business” of this Annual Report.Seasonality. Many of our products and/or intellectual property are incorporated into consumer wireless devices, which are subject to seasonality and otherfluctuations in demand. As a result, QCT has tended historically to have stronger sales toward the end of the calendar year as manufacturers prepare for majorholiday selling seasons; and because QTL recognizes royalty revenues when royalties are reported by licensees, QTL has tended to record higher royalty revenuesin the first calendar quarter when licensees report their sales made in the fourth calendar quarter. We have also experienced fluctuations in revenues due to thetiming of conversions and expansions of 3G and 4G networks by wireless operators and the timing of launches of flagship wireless devices that incorporate ourproducts and/or intellectual property. These trends may or may not continue in the future. These seasonal trends for QTL may be impacted by disputes and/orresolutions with licensees.Results of OperationsRevenues (in millions) 2017 2016 2015 2017 vs. 2016Change 2016 vs. 2015ChangeEquipment and services$16,647 $15,467 $17,079 $1,180 $(1,612)Licensing5,644 8,087 8,202 (2,443) (115) $22,291 $23,554 $25,281 $(1,263) $(1,727)The increase in equipment and services revenues in fiscal 2017 is primarily due to an increase in QCT revenues of $1.13 billion and an increase in QSIrevenues of $66 million. The decrease in equipment and services revenues in fiscal 2016 was primarily due to a decrease in QCT revenues of $1.76 billion,partially offset by increases in revenues of one of our nonreportable segments and our QSI segment of $56 million and $43 million, respectively. The decrease inlicensing revenues in fiscal 2017 was primarily due to the decrease in QTL revenues, the reduction to licensing revenues of $962 million related to the BlackBerryarbitration and a $103 million decrease in revenues of one of our nonreportable segments. The decrease in licensing revenues in fiscal 2016 was primarily due tothe decrease in QTL revenues, partially offset by a $143 million increase in revenues of one our nonreportable segments.In fiscal 2017 , 2016 and 2015 , revenues from suppliers to Apple Inc. and from Samsung Electronics each comprised more than 10% of consolidatedrevenues. Combined revenues from GuangDong OPPO Mobile Telecommunications Corp. Ltd. and vivo Communication Technology Co., Ltd., and theirrespective affiliates, also comprised more than 10% of consolidated revenues in fiscal 2017 . QCT and QTL segment revenues related to the products of thesecustomers/licensees comprised 51%, 49% and 47% of total consolidated revenues in fiscal 2017 , 2016 and 2015 , respectively.41Revenues from customers in China (including Hong Kong) and South Korea comprised 65% and 16% , respectively, of total consolidated revenues for fiscal2017 , compared to 57% and 17% , respectively, for fiscal 2016 , and 53% and 16% , respectively, for fiscal 2015 . We report revenues from external customers bycountry based on the location to which our products or services are delivered, which for QCT is generally the country in which our customers manufacture theirproducts, or for licensing revenues, the invoiced addresses of our licensees. As a result, the revenues by country presented herein are not necessarily indicative ofeither the country in which the devices containing our products and/or intellectual property are ultimately sold to consumers or the country in which the companiesthat sell the devices are headquartered. For example, China revenues would include revenues related to shipments of integrated circuits to a company that isheadquartered in South Korea but that manufactures devices in China, which devices are then sold to consumers in Europe and/or the United States.Costs and Expenses (in millions) 2017 2016 2015 2017 vs. 2016Change 2016 vs. 2015ChangeCost of revenues$9,792 $9,749 $10,378 $43 $(629)Gross margin56% 59% 59% The margin percentage decreased in fiscal 2017 primarily due to the decrease in higher margin QTL licensing revenues as a proportion of total revenues,partially offset by an increase in QCT margin percentage. The margin percentage in fiscal 2017 was also negatively impacted by the reduction to licensingrevenues related to the BlackBerry arbitration. The margin percentage in fiscal 2016 remained flat primarily due to the effect of $163 million in additional chargesrelated to the amortization of intangible assets and the recognition of the step-up of inventories to fair value primarily related to the acquisition of CSR plc in thefourth quarter of fiscal 2015 , offset by the impact of higher-margin segment mix primarily related to QTL. Our margin percentage may continue to fluctuate infuture periods depending on the mix of segment results as well as products sold, competitive pricing, new product introduction costs and other factors, includingdisputes and/or resolutions with licensees. 2017 2016 2015 2017 vs. 2016Change 2016 vs. 2015ChangeResearch and development$5,485 $5,151 $5,490 $334 $(339)% of revenues25% 22% 22% Selling, general, and administrative$2,658 $2,385 $2,344 $273 $41% of revenues12% 10% 9% Other$1,742 $(226) $1,293 $1,968 $(1,519)The dollar increase in research and development expenses in fiscal 2017 was primarily attributable to an increase of $372 million in costs related to thedevelopment of integrated circuit technologies, including 5G technology and RFFE technologies from our recently formed RF360 Holdings joint venture, andrelated software products, partially offset by cost decreases driven by actions initiated under our Strategic Realignment Plan, which was substantially completed bythe end of fiscal 2016 . The dollar decrease in research and development expenses in fiscal 2016 was primarily attributable to a decrease of $228 million in costrelated to the development of integrated circuit technologies and related software products. Such decrease was primarily driven by actions initiated under theStrategic Realignment Plan, partially offset by increased research and development costs resulting from acquisitions. The decrease in research and developmentexpenses in fiscal 2016 also included decreases of $67 million in development costs of display technologies and $45 million in share-based compensation expense.The dollar increase in selling, general and administrative expenses in fiscal 2017 was primarily attributable to increases of $136 million in professionalservices fees, primarily related to third-party acquisition and integration services resulting from the proposed acquisition of NXP, $70 million in costs related tolitigation and other legal matters and $33 million in employee-related expenses, primarily related to our recently formed RF360 Holdings joint venture, whichclosed in February 2017. The dollar increase in selling, general and administrative expenses in fiscal 2016 was primarily attributable to increases of $65 million incosts related to litigation and other legal matters, $39 million in employee-related expenses and $27 million in depreciation and amortization expense, partiallyoffset by decreases of $36 million in share-based compensation expense, $21 million in selling and marketing expenses, $19 million in professional services and$17 million in patent-related costs.42Other expenses in fiscal 2017 consisted of a $927 million charge related to the KFTC fine, including related foreign currency losses, a $778 million chargerelated to the TFTC fine and $37 million in restructuring and restructuring-related charges related to our Strategic Realignment Plan. Other income in fiscal 2016was attributable to a $380 million gain on the sale of wireless spectrum, partially offset by net charges related to our Strategic Realignment Plan, which included$202 million in restructuring and restructuring-related charges, partially offset by a $48 million gain on the sale of our business that provided augmented realityapplications. Other expenses in fiscal 2015 were attributable to a $975 million charge resulting from the resolution reached with the NDRC, charges of $255million and $11 million for impairment of goodwill and intangible assets, respectively, related to our content and push-to-talk services and display businesses and$190 million in restructuring and restructuring-related charges related to our Strategic Realignment Plan, partially offset by $138 million in gains on sales ofcertain property plant and equipment.Interest Expense and Investment and Other Income, Net (in millions) 2017 2016 2015 2017 vs. 2016Change 2016 vs. 2015ChangeInterest expense$494 $297 $104 $197 $193 Investment and other income, net Interest and dividend income$619 $611 $527 $8 $84Net realized gains on marketable securities456 239 451 217 (212)Net realized gains on other investments74 49 49 25 —Impairment losses on marketable securities and otherinvestments(177) (172) (200) (5) 28Equity in net losses of investees(74) (84) (32) 10 (52)Net losses on foreign currency transactions(30) — — (30) —Net gains (losses) on derivative instruments32 (8) 17 40 (25)Net gains on deconsolidation of subsidiaries— — 3 — (3) $900 $635 $815 $265 $(180)The increase in interest expense in fiscal 2017 was primarily due to the issuance of an aggregate principal amount of $11.0 billion of unsecured floating- andfixed-rate notes in May 2017 and fees related to the Bridge and Term Loan Facilities entered into during the first quarter of fiscal 2017. The increase in net realizedgains on marketable securities in fiscal 2017 was primarily attributable to certain marketable securities that we sold to fund, in part, our proposed acquisition ofNXP. The net losses on foreign currency transactions in fiscal 2017 were primarily attributable to the impact of currency exchange rate movements on certainmonetary assets and liabilities of our recently formed RF360 Holdings joint venture.The increase in interest expense in fiscal 2016 was primarily due to the issuance of an aggregate principal amount of $10.0 billion of unsecured floating- andfixed-rate notes in May 2015 .Income Tax Expense (in millions) 2017 2016 2015 2017 vs. 2016Change 2016 vs. 2015ChangeIncome tax expense$555 $1,131 $1,219 $(576) $(88)Effective tax rate18% 17% 19% 1% (2%)43The following table summarizes the primary factors that caused our annual effective tax rates to be less than the United States federal statutory rate: 2017 2016 2015Expected income tax provision at federal statutory tax rate35% 35% 35%Benefits from foreign income taxed at other than U.S. rates(32%) (16%) (14%)Benefits related to the research and development tax credits(3%) (2%) (2%)Worthless stock deduction of domestic subsidiary— (1%) —Nondeductible charges related to the KFTC and TFTC investigations12% — —Impact of changes in tax reserves and audit settlements for prior year tax positions4% — (1%)Other2% 1% 1%Effective tax rate18% 17% 19%In fiscal 2017 , we recorded charges of $927 million and $778 million related to the fines imposed by the KFTC and the TFTC, respectively, which are notdeductible for tax purposes and are each attributable to both the United States and a foreign jurisdiction. Additionally, the effective tax rate of 18% for fiscal 2017was impacted by lower United States revenues primarily related to decreased royalty revenues from Apple’s contract manufacturers and the BlackBerry arbitration.The effective tax rate of 18% for fiscal 2017 also reflected the increase in our Singapore tax rate as a result of the expiration of certain of our tax incentives inMarch 2017, which was substantially offset by tax benefits resulting from the increase in our Singapore tax rate that will be in effect when certain deferred taxassets are scheduled to reverse. The effective tax rate for our state income tax provision, net of federal benefit, was negligible for all years presented.The effective tax rate of 17% for fiscal 2016 reflected a $101 million tax benefit recorded discretely in the third quarter of fiscal 2016 resulting from aworthless stock deduction on a domestic subsidiary of one of our former display businesses and a $79 million benefit recorded discretely in the first quarter offiscal 2016 related to fiscal 2015 resulting from the retroactive and permanent reinstatement of the United States federal research and development tax credit.During fiscal 2015 , the NDRC imposed a fine of $975 million, which was not deductible for tax purposes and was substantially attributable to a foreignjurisdiction. Additionally, during fiscal 2015 , we recorded a tax benefit of $101 million related to fiscal 2014 resulting from the retroactive reinstatement of theUnited States federal research and development tax credit to January 1, 2014 through December 31, 2014. The effective tax rate for fiscal 2015 also reflected theUnited States federal research and development tax credit generated through December 31, 2014, the date on which the credit expired and a $61 million tax benefitas a result of a favorable tax audit settlement with the Internal Revenue Service (IRS) related to Qualcomm Atheros, Inc.’s pre-acquisition 2010 and 2011 taxreturns.The effective tax rate for fiscal 2017 , 2016 and 2015 also reflected tax benefits for certain tax incentives obtained in Singapore that commenced in March2012, including a tax exemption for the first five years, provided that we meet specified employment and other criteria. Our Singapore tax rate increased in fiscal2017 as a result of the expiration of certain of these incentives and will increase again in fiscal 2027 upon the expiration of the remaining incentives.Unrecognized tax benefits were $372 million and $271 million at September 24, 2017 and September 25, 2016 , respectively. The increase in unrecognized taxbenefits in fiscal 2017 was primarily due to tax positions related to transfer pricing. We believe that it is reasonably possible that the total amounts of unrecognizedtax benefits at September 24, 2017 may increase or decrease in the next 12 months.We are subject to income taxes in the United States and numerous foreign jurisdictions and are currently under examination by various tax authoritiesworldwide, most notably in countries where we earn a routine return and tax authorities believe substantial value-add activities are performed. These examinationsare at various stages with respect to assessments, claims, deficiencies and refunds. We continually assess the likelihood and amount of potential adjustments andadjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts give rise to a revision become known. As of September24, 2017, we believe that adequate amounts have been reserved for based on facts known. However, the final determination of tax audits and any related legalproceedings could materially differ from amounts reflected in our income tax provision and the related accruals.44Our Segment ResultsThe following should be read in conjunction with the fiscal 2017 , 2016 and 2015 results of operations for each reportable segment included in this AnnualReport in “Notes to Consolidated Financial Statements, Note 8. Segment Information.”(in millions)2017 2016 2015Revenues QCT$16,479 $15,409 $17,154QTL6,445 7,664 7,947QSI113 47 4EBT (1) QCT$2,747 $1,812 $2,465QTL5,175 6,528 6,882QSI65 386 (74)EBT as a % of revenues QCT17% 12% 14%QTL80% 85% 87%(1)Earnings (loss) before taxes.QCT Segment. QCT revenues increased in fiscal 2017 and decreased in fiscal 2016 due to corresponding fluctuations in equipment and services revenues.Equipment and services revenues, mostly related to sales of MSM and accompanying RF, Power Management (PM) and wireless connectivity integrated circuits,were $16.31 billion , $15.18 billion and $16.95 billion in fiscal 2017 , 2016 and 2015 , respectively. Approximately 804 million , 842 million and 932 millionMSM integrated circuits were sold during fiscal 2017 , 2016 and 2015 , respectively.Equipment and services revenues increased in fiscal 2017 primarily due to an increase in revenues related to RFFE products, including $676 million from theformation of our RF360 Holdings joint venture, a $492 million increase resulting from higher shipments of connectivity products primarily related to adjacentindustry segments outside of traditional cellular industries and a $469 million increase resulting from the net impact of higher-priced product mix and loweraverage selling prices. These increases were partially offset by a decrease of $553 million primarily related to lower MSM and accompanying RF and PM unitshipments driven primarily by a decline in share at Apple, partially offset by higher demand from OEMs in China. The decrease in equipment and servicesrevenues in fiscal 2016 resulted primarily from decreases of $1.35 billion related to lower MSM and accompanying RF and PM unit shipments and $1.14 billionfrom lower average selling prices and lower-priced product mix, partially offset by a net increase of $753 million in revenues related to other products, primarilyrelated to higher connectivity shipments resulting from the acquisition of CSR in the fourth quarter of fiscal 2015.QCT EBT as a percentage of revenues increased in fiscal 2017 primarily due to an increase in gross margin percentage, partially offset by a combined increaseof 1% in research and development and selling, general and administrative expenses primarily from our RF360 Holdings joint venture. QCT gross marginpercentage increased in fiscal 2017 primarily as a result of higher-margin product mix and lower average unit costs, partially offset by lower average selling pricesand higher excess inventory charges. QCT EBT as a percentage of revenues decreased in fiscal 2016 primarily due to the impact of lower revenues relative tooperating expenses. QCT gross margin percentage remained flat in fiscal 2016 primarily as a result of lower average selling prices and lower-margin product mix,offset by lower average unit costs and lower excess inventory charges.QCT accounts receivable increased by 24% in fiscal 2017 from $1.46 billion to $1.81 billion, primarily due to the accounts receivable related to our RF360Holdings joint venture and increased revenues related to integrated circuits. QCT inventories increased by 31% in fiscal 2017 from $1.54 billion to $2.02 billiondue to inventories relating to our RF360 Holdings joint venture and an increase in the overall quantity of units on hand, partially offset by lower average unit costs.QTL Segment. QTL results were negatively impacted by actions taken by Apple and its contract manufacturers as well as the previously disclosed disputewith another licensee, who did not report or pay royalties due in the third or fourth quarter of fiscal 2017. Revenues related to the products of Apple’s contractmanufacturers and the other licensee in dispute comprised a total of approximately $1.35 billion in the third and fourth quarters of fiscal 2016. Additionally, QTLrevenues were negatively impacted by an estimated amount in excess of $150 million related to the dispute with the other licensee who45underpaid royalties due in the second quarter of fiscal 2017. In addition to the above, the decrease in QTL revenues during fiscal 2017 was also attributable to therecognition of revenues in fiscal 2016 relating to the termination of an infrastructure license agreement resulting from the merger of two licensees and decreasedrecognition of unearned license fees, partially offset by an increase in revenues per unit and higher royalty revenues recognized related to devices sold in priorperiods. QTL EBT as a percentage of revenues decreased in fiscal 2017 as compared to fiscal 2016 primarily due to the decrease in QTL revenues. QTL revenuesand EBT in fiscal 2016 and 2017 also continued to be impacted negatively by units that we believe are not being reported by certain other licensees and sales ofcertain unlicensed products. While we have reached agreements with many licensees, negotiations with certain other licensees and unlicensed companies areongoing, particularly in emerging regions, including China, and additional litigation may become necessary if negotiations fail to resolve the relevant issues.The decrease in QTL revenues in fiscal 2016 of $283 million was primarily attributable to decreases in revenues per reported unit and recognition of unearnedlicense fees, partially offset by an increase in reported sales of CDMA-based products (including multimode products that also implement OFDMA) and $266million in licensing revenues recorded in the second quarter of fiscal 2016 due to the termination of an infrastructure license agreement resulting from the mergerof two licensees.QTL accounts receivable increased by more than 100% in fiscal 2017 from $644 million to $1.74 billion, primarily due to the short payment of royaltiesreported in the second quarter of fiscal 2017 by, and deemed collectible from, Apple’s contract manufacturers and the timing of the collection of payments fromcertain of our other licensees.QSI Segment . The decrease in QSI EBT in fiscal 2017 of $321 million was primarily due to the effect of a $380 million gain on the sale of wireless spectrumrecorded in fiscal 2016, partially offset by the net impact of $41 million resulting from higher revenues and costs associated with certain development contractswith one of our equity method investees. The increase in QSI EBT in fiscal 2016 of $460 million was primarily due to a $380 million gain on the sale of wirelessspectrum, an increase of $47 million in net realized gains on investments and a decrease of $21 million in impairment losses on investments.Looking ForwardWe expect continued growth in the coming years in consumer demand for 3G, 3G/4G multimode and 4G products and services around the world, drivenprimarily by smartphones. We also expect growth in new device categories and industries, driven by the expanding adoption of certain technologies that arealready commonly used in smartphones by industry segments outside traditional cellular industries, such as automotive, IoT and networking. As we look forwardto the next several months and beyond, we expect our business to be impacted by the following key items:•On October 27, 2016, we announced a definitive agreement under which Qualcomm River Holdings, an indirect, wholly owned subsidiary ofQUALCOMM Incorporated, will acquire NXP. Pursuant to the definitive agreement, Qualcomm River Holdings has commenced a tender offer to acquireall of the issued and outstanding common shares of NXP for $110 per share in cash, for estimated total cash consideration to be paid to NXP’sshareholders of $38 billion . NXP is a leader in high-performance, mixed-signal semiconductor electronics in automotive, broad-based microcontrollers,secure identification, network processing and RF power products. The transaction is subject to receipt of regulatory approvals in various jurisdictions andother closing conditions, including the tender of at least 80% of the issued and outstanding common shares of NXP in the offer (provided that theminimum tender threshold may be reduced to a percentage not less than 70% with the prior written consent of NXP). While we continue to work to closeby the end of calendar 2017, the transaction may close in early 2018. We intend to fund the transaction with cash generated from our recent debt offeringas well as cash held by our foreign entities and use of a Term Loan, which we expect to draw on at close. We expect that this acquisition will continue torequire us to devote significant resources and management time and attention and utilize a substantial portion of our cash, cash equivalents andmarketable securities.•Regulatory authorities in certain jurisdictions continue to investigate our business practices, and other regulatory authorities may do so in the future.Unfavorable resolutions of one or more of these matters have had and could in the future have a material adverse effect on our business with remedies thatinclude, among others, injunctions, monetary damages or fines or other orders to pay money, and the issuance of orders to cease certain conduct and/ormodify our business practices. Additionally, certain of our direct and indirect customers and licensees, including BlackBerry Limited and Apple Inc., havepursued, and others may in the future pursue, litigation or arbitration against us related to our business. Unfavorable resolutions of one or more of thesematters have had and could in the future have a material adverse effect on our business, including monetary damages. These activities have required andwe expect that they will continue to require the investment of significant management time and attention, and46have resulted and we expect that they will continue to result in increased legal costs. See “Notes to Consolidated Financial Statements, Note 7.Commitments and Contingencies” included in this Annual Report.•We are currently in dispute with Apple surrounding what we believe is an attempt by Apple to reduce the amount of royalties that its contractmanufacturers are required to pay to us for use of our intellectual property. QTL revenues and EBT in fiscal 2017 were negatively impacted as a result ofactions taken by Apple and its contract manufacturers. Such contract manufacturers did not fully report and did not pay royalties due on sales of Appleproducts for a portion of the fiscal year. We have taken action against Apple’s contract manufacturers to compel such licensees to pay the requiredroyalties, and against Apple. Additionally, QTL revenues and EBT in fiscal 2017 were negatively impacted by the previously disclosed dispute withanother licensee, who did not fully report or fully pay royalties due in the last three quarters of fiscal 2017. We expect these companies will continue totake such actions in the future, resulting in increased legal costs and negatively impacting our future revenues, as well as our financial condition, results ofoperations and cash flows until the respective disputes are resolved.•We continue to believe that certain licensees, particularly in China, are not fully complying with their contractual obligations to report their sales oflicensed products to us, and certain companies, including unlicensed companies, particularly in emerging regions, including China, are delaying executionof new license agreements. We have made substantial progress in reaching agreements with many companies, primarily in China. However, negotiationswith certain licensees and unlicensed companies are ongoing. We believe that the conclusion of new agreements with these companies will result inimproved reporting by these licensees, including with respect to sales of three-mode devices (i.e., devices that implement GSM, TD-SCDMA and LTE-TDD) sold in China. Additionally, we believe our increased efforts in the areas of compliance will improve reporting, but will also result in increasedcosts to the business. Litigation and/or other actions, such as those recently taken against Apple and its contract manufacturers, may be necessary tocompel licensees to report and pay the required royalties for sales they have not previously reported and/or to compel unlicensed companies to executelicenses. Such litigation or other actions would result in increased legal costs.•We expect our business, particularly QCT, to continue to be impacted by industry dynamics, including:•Concentration of device share among a few companies within the premium tier, resulting in significant supply chain leverage for thosecompanies;•Decisions by companies to utilize their own internally-developed integrated circuit products and/or sell such products to others, including bybundling with other products, increasing competition;•Decisions by certain companies to utilize our competitors’ integrated circuit products in all or a portion of their devices. For example,commencing with the iPhone 7 (which was released in September 2016), we are no longer the sole supplier of modems for new iPhone productlaunches, as Apple utilizes modems from one of our competitors in a portion of such devices. We expect that in the future Apple will utilize ourcompetitors’ modems in a portion of (or potentially all) iPhones. Accordingly, QCT revenues from modem sales for iPhones declined in fiscal2017 and may continue to decline in the future, in part depending on the extent of Apple’s utilization of competitors’ modems and the mix of thevarious versions that are sold. Overall QCT revenues, as well as profitability, may similarly decline unless offset by sales of integrated circuitproducts to other customers, including those outside of traditional cellular industries, such as automotive, IoT and networking. Apple’s dualsourcing does not impact our licensing revenues since our licensing revenues from Apple products are not dependent upon whether suchproducts include our chipsets;•Intense competition, particularly in China, as our competitors expand their product offerings and/or reduce the prices of their products as part ofa strategy to attract new and/or retain existing customers; and•Lengthening replacement cycles in developed regions, where the smartphone industry is mature, premium-tier smartphones are common andconsumer demand is increasingly driven by new product launches and/or innovation cycles, and from increasing consumer demand in emergingregions where premium-tier smartphones are less common and replacement cycles are on average longer than in developed regions.•Consumer demand for 3G/4G smartphone products is increasing in emerging regions driven by availability of lower-tier 3G/4G devices. We expect theongoing rollout of 4G services in emerging regions will encourage competition and growth, bringing the benefits of 3G/4G LTE multimode to consumers.•We continue to invest significant resources toward advancements in 4G LTE and 5G technologies, OFDM-based WLAN technologies, wireless basebandchips, our converged computing/communications (Snapdragon) chips, radio47RFFE, connectivity, power management, graphics, audio and video codecs, multimedia products and software, which contribute to the expansion of ourintellectual property portfolio. We are also investing in targeted opportunities that leverage our existing technical and business expertise to deploy newbusiness models and enter and/or expand into new industry segments, such as products for automotive, IoT (including the connected home, smart cities,wearables, voice and music and robotics), data center, networking, computing and machine learning, among others.In addition to the foregoing business and market-based matters, we continue to devote resources to working with and educating participants in the wirelessvalue chain and governments as to the benefits of our business model and our extensive technology investments in promoting a highly competitive and innovativewireless industry. However, we expect that certain companies may continue to be dissatisfied with the need to pay reasonable royalties for the use of ourtechnology and not welcome the success of our business model in enabling new, highly cost-effective competitors to their products. We expect that suchcompanies, and/or governments or regulators, will continue to challenge our business model in various forums throughout the world.Further discussion of risks related to our business is presented in “Part I, Item 1A. Risk Factors” included in this Annual Report.Liquidity and Capital ResourcesOn October 27, 2016 , we announced a definitive agreement under which Qualcomm River Holdings will acquire NXP. Pursuant to the definitive agreement,Qualcomm River Holdings has commenced a tender offer to acquire all of the issued and outstanding common shares of NXP for $110 per share in cash, forestimated total cash consideration to be paid to NXP’s shareholders of $38 billion . The transaction is subject to receipt of regulatory approvals in variousjurisdictions and other closing conditions. While we continue to work to close by the end of calendar 2017, the transaction may close in early 2018. In May 2017,we issued an aggregate principal amount of $11.0 billion of unsecured floating- and fixed-rate notes with varying maturities, of which a portion will be used tofund the purchase price and other related transactions. In addition, we have secured $4.0 billion in committed financing through a Term Loan Facility, which isexpected to be drawn on at the close of the NXP transaction. The remaining amount will be funded with cash held by our foreign entities, which will result in theuse of a substantial portion of our cash, cash equivalents and marketable securities.Qualcomm River Holdings and NXP may terminate the definitive agreement under certain circumstances. If the definitive agreement is terminated by NXP incertain circumstances, NXP will be required to pay Qualcomm River Holdings a termination fee of $1.25 billion . If the definitive agreement is terminated byQualcomm River Holdings under certain circumstances involving the failure to obtain the required regulatory approvals or the failure of NXP to complete certainpre-closing reorganization steps in all material respects, Qualcomm River Holdings will be required to pay NXP a termination fee of $2.0 billion . In November2016, as required by the definitive agreement, we entered into four letters of credit for an aggregate amount of $2.0 billion pursuant to which NXP will have theright to draw amounts to fund the potential termination fee payable to NXP. Each letter of credit is required to be fully cash collateralized in an amount equal to100% of its face value through deposits with the issuers of the letters of credit. We are restricted from using the funds deposited as collateral while the letters ofcredit are outstanding. At September 24, 2017, the letters of credit were fully collateralized through bank time deposits and money market funds.Our principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from operations, cash provided by our debtprograms and proceeds from the issuance of common stock under our stock option and employee stock purchase plans. The following table presents selectedfinancial information related to our liquidity as of and for the years ended September 24, 2017 and September 25, 2016 (in millions):48 2017 2016 $ Change % ChangeCash, cash equivalents and marketable securities$38,578 $32,350 $6,228 19%Accounts receivable, net3,632 2,219 1,413 64%Inventories2,035 1,556 479 31%Short-term debt2,495 1,749 746 43%Long-term debt19,398 10,008 9,390 94%Net cash provided by operating activities4,693 7,400 (2,707) (37%)Net cash provided (used) by investing activities18,463 (3,488) 21,951 N/MNet cash provided (used) by financing activities5,879 (5,522) 11,401 N/MN/M = Not meaningfulThe net increase in cash, cash equivalents and marketable securities was primarily due to the proceeds from the issuance of unsecured floating-rate and fixed-rate notes in May 2017 of approximately $10.95 billion, net of underwriting discounts and offering expenses, and net cash provided by operating activities,partially offset by $3.3 billion in cash dividends paid, the deposit of $2.0 billion that was used to collateralize the letters of credit related to our proposedacquisition of NXP, $1.5 billion in payments to fund acquisitions and other investments, primarily related to our recently formed RF360 Holdings joint venture,$1.3 billion in payments to repurchase shares of our common stock and $751 million of net repayments of our outstanding commercial paper debt. Total cashprovided by operating activities decreased primarily due to the $940 million payment in connection with the BlackBerry arbitration and the $927 million paymentof the fine imposed by the KFTC, as well as changes in working capital related to an increase in accounts receivable and inventories and the timing of relatedpayments. Total cash provided by operating activities was also impacted by actions taken by Apple and its contract manufacturers, as well as the previouslydisclosed dispute with another licensee, who did not report or pay royalties due in the third or fourth quarter of fiscal 2017.Our da ys sales outstanding, on a consolidated basis, increased to 56 days at September 24, 2017 compared to 33 days at September 25, 2016 . The increase inaccounts receivable and the related days sales outstanding were primarily due to the short payment in the second quarter of fiscal 2017 of royalties reported by anddeemed collectible from Apple’s contract manufacturers. We expect these receivables to remain outstanding until we resolve our dispute with Apple. The increasein accounts receivable also resulted from the accounts receivable relating to our RF360 Holdings joint venture, increased revenues related to integrated circuits andthe timing of the collection of payments from certain of our other licensees. The increase in inventories was primarily due to inventories relating to our RF360Holdings joint venture and an increase in the overall quantity of units on hand, partially offset by lower average unit costs.Our cash, cash equivalents and marketable securities at September 24, 2017 consisted of $9.2 billion held by our United States-based entities and $29.4 billionheld by our foreign entities. Most of our cash, cash equivalents and marketable securities held by our foreign entities are indefinitely reinvested and would besubject to material tax effects if repatriated. However, we believe that our United States sources of cash and liquidity are sufficient to meet our business needs inthe United States and do not expect that we will need to repatriate the funds.We believe our current cash, cash equivalents and marketable securities, our expected cash flow generated from operations and our expected financingactivities will satisfy our working and other capital requirements for at least the next 12 months based on our current business plans. Recent and expected workingand other capital requirements, in addition to our proposed acquisition of NXP, also include the items described below.•Our purchase obligations at September 24, 2017 , some of which relate to research and development activities and capital expenditures, totaled $4.3billion and $1.0 billion for fiscal 2018 and 2019, respectively, and $0.5 billion thereafter.•Our research and development expenditures were $5.5 billion and $5.2 billion during fiscal 2017 and 2016 , respectively, and we expect to continue toinvest heavily in research and development for new technologies, applications and services for voice and data communications.•Cash outflows for capital expenditures were $690 million and $539 million during fiscal 2017 and 2016 , respectively. We anticipate that capitalexpenditures will be higher in fiscal 2018 as compared to fiscal 2017, primarily due to an increase in estimated capital expenditures of approximately$150 million for the full year impact of capital expenditures related to the manufacturing operations of our RF360 Holdings joint venture. We expect to49continue to incur capital expenditures in the future to support our business, including research and development activities. Future capital expendituresmay be impacted by transactions that are currently not forecasted.•The TFTC imposed a fine on us of approximately 23.4 billion Taiwan Dollars (approximately $778 million based on exchange rates at September 24,2017), which is due on or before November 7, 2017.•We expect to continue making strategic investments and acquisitions, the amounts of which could vary significantly, to open new opportunities for ourtechnologies, obtain development resources, grow our patent portfolio or pursue new businesses.Debt. In November 2016, we amended and restated our existing Revolving Credit Facility that provides for unsecured revolving facility loans, swing lineloans and letters of credit to increase the aggregate amount available to $5.0 billion , of which $530 million and $4.47 billion will expire in February 2020 andNovember 2021 , respectively. At September 24, 2017 , no amounts were outstanding under the Amended and Restated Revolving Credit Facility.We have an unsecured commercial paper program, which provides for the issuance of up to $5.0 billion of commercial paper. Net proceeds from this programare used for general corporate purposes. At September 24, 2017 , we had $999 million of commercial paper outstanding with weighted-average net interest rates of1.19% and weighted-average remaining days to maturity of 45 days .In May 2017 , we issued an aggregate principal amount of $11.0 billion in nine tranches of unsecured floating- and fixed-rate notes, with maturity datesstarting in 2019 through 2047 and effective interest rates between 1.80% and 4.47% . Net proceeds from the issuance of the notes of $10.95 billion areintended to be used to fund a portion of the purchase price of our planned acquisition of NXP and other related transactions and also for general corporatepurposes. Our 2019 floating-rate notes, 2020 floating-rate notes, 2019 fixed-rate notes and 2020 fixed-rate notes issued in May 2017 for an aggregate principalamount of $4.0 billion are subject to a special mandatory redemption at a price equal to 101% of the aggregate principal amount, plus accrued and unpaid interestto, but excluding, the date of such mandatory redemption. The redemption is required on the first to occur of (i) the termination of the NXP purchase agreement or(ii) January 25, 2018 (which reflects the automatic extension of the original expiration date of October 27, 2017 in accordance with the NXP purchase agreement,and as such date may be further extended in accordance with the NXP purchase agreement to a date on or prior to June 1, 2018).In May 2015 , we issued an aggregate principal amount of $10.0 billion in eight tranches of unsecured floating- and fixed-rate notes, with maturity dates in2018 through 2045 and effective interest rates between 1.65% and 4.74% . Interest is payable in arrears quarterly for the floating-rate notes and semi-annually forthe fixed-rate notes.In November 2016, we entered into a Term Loan Facility that provides for senior unsecured delayed-draw term facility loans in an aggregate amount of $4.0billion . Proceeds from the Term Loan Facility, if drawn, will be used to finance, in part, the proposed acquisition of NXP. At September 24, 2017 , no amountswere outstanding under the Term Loan Facility.We may issue additional debt in the future. The amount and timing of such additional borrowings will be subject to a number of factors, including the cashflow generated by United States-based entities, acquisitions and strategic investments, acceptable interest rates and changes in corporate income tax law, amongother factors. Additional information regarding our outstanding debt at September 24, 2017 is provided in this Annual Report in “Notes to Consolidated FinancialStatements, Note 6. Debt.”Capital Return Program. The following table summarizes stock repurchases and dividends paid during fiscal 2017, 2016 and 2015 (in millions, except per-share amounts): Stock Repurchase Program Dividends Total Shares Average Price Paid PerShare Amount Per Share Amount Amount2017 22.8 $58.87 $1,342 $2.20 $3,252 $4,5942016 73.8 53.16 3,922 2.02 2,990 6,9122015 172.4 65.21 11,245 1.80 2,880 14,125On March 9, 2015, we announced that we had been authorized to repurchase up to $15 billion of our common stock. At September 24, 2017 , $1.6 billionremained authorized for repurchase under our stock repurchase program. As a result of our proposed acquisition of NXP and the pending use of a substantialportion of our cash, cash equivalents and marketable securities, we currently expect to repurchase shares in the next few years to offset dilution from the issuanceof common stock under our employee benefit plans. We periodically evaluate repurchases as a means of returning capital to stockholders to determine when and ifrepurchases are in the best interests of our stockholders.50On October 10, 2017 , we announced a cash dividend of $0.57 per share on our common stock, payable on December 15, 2017 to stockholders of record asof the close of business on November 29, 2017 . We intend to continue to use cash dividends as a means of returning capital to stockholders, subject to capitalavailability and our view that cash dividends are in the best interests of our stockholders, among other factors.Contractual Obligations/Off-Balance Sheet ArrangementsWe have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidatedfinancial statements. We have no material off-balance sheet arrangements as defined in Regulation S-K 303(a)(4)(ii).The following table summarizes the payments due by fiscal period for our outstanding contractual obligations at September 24, 2017 (in millions): Total 2018 2019-2020 2021-2022 Beyond2022 NoExpirationDatePurchase obligations (1)$5,874 $4,348 $1,379 $147 $— $—Operating lease obligations445 98 184 108 55 —Capital lease obligations (2)44 14 27 3 — —Equity funding and financing commitments (3)514 69 — 69 — 376Long-term debt (4)21,000 1,500 6,000 2,000 11,500 —Other long-term liabilities (5)(6)1,957 308 1,448 62 15 124Total contractual obligations$29,834 $6,337 $9,038 $2,389 $11,570 $500(1)Total purchase obligations included commitments to purchase integrated circuit product inventories of $3.5 billion , $846 million , $286 million , $72 million and $27million for each of the subsequent five years from fiscal 2018 through 2022, respectively; there were no such purchase commitments thereafter. Integrated circuit productinventory obligations represent purchase commitments for raw materials, semiconductor die, finished goods and manufacturing services, such as wafer bump, probe,assembly and final test. Under our manufacturing relationships with our foundry suppliers and assembly and test service providers, cancelation of outstanding purchaseorders is generally allowed but requires payment of all costs incurred through the date of cancelation, and in some cases, incremental fees related to capacityunderutilization.(2)Amounts represent future minimum lease payments including interest payments. Capital lease obligations are included in other liabilities in the consolidated balance sheetat September 24, 2017 .(3)Certain of these commitments do not have fixed funding dates and are subject to certain conditions and have, therefore, been presented as having no expiration date.Commitments represent the maximum amounts to be funded under these arrangements; actual funding may be in lesser amounts or not at all.(4)The amounts noted herein represent contractual payments of principal only.(5)Certain long-term liabilities reflected on our balance sheet, such as unearned revenues, are not presented in this table because they do not require cash settlement in thefuture. Other long-term liabilities as presented in this table include the related current portions, as applicable.(6)Our consolidated balance sheet at September 24, 2017 included $138 million in noncurrent liabilities for uncertain tax positions, some of which may result in cash payment.The future payments related to uncertain tax positions recorded as noncurrent liabilities have not been presented in the table above due to the uncertainty of the amounts andtiming of cash settlement with the taxing authorities.Additional information regarding our financial commitments at September 24, 2017 is provided in this Annual Report in “Notes to Consolidated FinancialStatements, Note 3. Income Taxes,” “Note 6. Debt” and “Note 7. Commitments and Contingencies.”Critical Accounting EstimatesThe preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to makeestimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. We baseour estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, includingassumptions as to future events. By their nature, estimates are subject to an inherent degree of uncertainty. Although we believe that our estimates and theassumptions supporting our assessments are reasonable, actual results that differ from our estimates could be material to our consolidated financial statements. Asummary of our significant accounting policies is included in this51Annual Report in “Notes to Consolidated Financial Statements, Note 1. The Company and Its Significant Accounting Policies.” We consider the followingaccounting estimates to be critical in the preparation of our consolidated financial statements.Impairment of Marketable Securities and Other Investments. We hold investments in marketable securities, with increases and decreases in fair valuegenerally recorded through stockholders’ equity as other comprehensive income or loss. We record impairment losses in earnings when we believe an investmenthas experienced a decline that is other than temporary. During fiscal 2017 , 2016 and 2015 , we recorded $131 million , $112 million and $163 million ,respectively, in impairment losses on our investments in marketable securities. In connection with the proposed NXP transaction, during fiscal 2017, we divested asubstantial portion of our marketable securities portfolio in order to finance, in part, that transaction. Given the change in our intention to sell certain marketablesecurities, we recognized other-than-temporary impairment losses in fiscal 2017 for such marketable securities and may recognize additional losses prior to the saleof such marketable securities still held at September 24, 2017 . For the available-for-sale securities that are not expected to be sold to finance the NXP transaction,we concluded that the gross unrealized losses of $1 million were temporary at September 24, 2017 .We also hold investments in non-marketable equity instruments in privately held companies that are accounted for using either the cost or the equity method.Many of these investments are in early-stage companies, which are inherently risky because the markets for the technologies or products of these companies areuncertain and may never develop. We monitor our investments for events or circumstances that could indicate the investments are impaired, such as a deteriorationin the investee’s financial condition and business forecasts and lower valuations in recently completed or proposed financings, and we record impairment losses inearnings when we believe an investment has experienced a decline in value that is other than temporary.Valuation of Inventories. Inventories are valued at the lower of cost or market (replacement cost, not to exceed net realizable value) using the first-in, first-outmethod. Recoverability of inventories is assessed based on review of future customer demand that considers multiple factors, including committed purchase ordersfrom customers as well as purchase commitment projections provided by customers, among other things. This valuation also requires us to make judgments andassumptions based on information currently available about market conditions, including competition, product pricing, product life cycle and development plans. Ifwe overestimate demand for our products, the amount of our loss will be impacted by our contractual ability to reduce inventory purchases from our suppliers. Ourassumptions of future product demand are inherently uncertain, and changes in our estimates and assumptions may cause us to realize material write-downs in thefuture.Valuation of Goodwill and Other Indefinite-Lived and Long-Lived Assets . Our business combinations typically result in the recording of goodwill, otherintangible assets and property, plant and equipment, and the recorded values of those assets may become impaired in the future. We also acquire intangible assetsand property, plant and equipment in other types of transactions. The determination of the recorded value of intangible assets acquired in a business combinationrequires management to make estimates and assumptions that affect our consolidated financial statements. For intangible assets acquired in a non-monetaryexchange, the estimated fair values of the assets transferred (or the estimated fair values of the assets received, if more clearly evident) are used to establish theirrecorded values, unless the values of neither the assets received nor the assets transferred are determinable within reasonable limits, in which case the assetsreceived are measured based on the carrying values of the assets transferred. Valuation techniques consistent with the market approach, income approach and/orcost approach are used to measure fair value. An estimate of fair value can be affected by many assumptions that require significant judgment. For example, theincome approach generally requires us to use assumptions to estimate future cash flows including those related to total addressable market, pricing and shareforecasts, competition, technology obsolescence, future tax rates and discount rates. Our estimate of the fair value of certain assets may differ materially from thatdetermined by others who use different assumptions or utilize different business models and from the future cash flows actually realized.Goodwill and other indefinite-lived intangible assets are tested annually for impairment and in interim periods if certain events occur indicating that thecarrying amounts may be impaired. Long-lived assets, such as property, plant and equipment and intangible assets subject to amortization, are reviewed forimpairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Ourjudgments regarding the existence of impairment indicators and future cash flows related to goodwill and other indefinite-lived intangible assets and long-livedassets may be based on operational performance of our businesses, market conditions, expected selling price and/or other factors. Although there are inherentuncertainties in this assessment process, the estimates and assumptions we use, including estimates of future cash flows and discount rates, are consistent with ourinternal planning, when appropriate. If these estimates or their related assumptions change in the future, we may be required to record an impairment charge on a52portion or all of our goodwill, other indefinite-lived intangible assets and/or long-lived assets. Furthermore, we cannot predict the occurrence of future impairment-triggering events nor the impact such events might have on our reported asset values. Future events could cause us to conclude that impairment indicators exist andthat goodwill or other intangible assets associated with our acquired businesses are impaired. Any resulting impairment loss could have an adverse impact on ourfinancial condition and results of operations. During fiscal 2017 , 2016 and 2015 , we recorded $76 million , $107 million and $317 million , respectively, inimpairment charges for goodwill, other indefinite-lived intangible assets and long-lived assets. The estimated fair values of our QCT and QTL reporting units weresubstantially in excess of their respective carrying values at September 24, 2017 .Legal and Regulatory Proceedings. We are currently involved in certain legal and regulatory proceedings, and we intend to continue to vigorously defendourselves. However, the unfavorable resolution of one or more of these proceedings could have a material adverse effect on our business, results of operations,financial condition and/or cash flows. A broad range of remedies with respect to our business practices that are deemed to violate applicable laws are potentiallyavailable. These remedies may include, among others, injunctions, monetary damages or fines or other orders to pay money and the issuance of orders to ceasecertain conduct and/or to modify our business practices. We disclose a loss contingency if there is at least a reasonable possibility that a material loss has beenincurred. We record our best estimate of a loss related to pending legal or regulatory proceedings when the loss is considered probable and the amount can bereasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, we record the minimum estimated liability. Asadditional information becomes available, we assess the potential liability, including the probability of loss related to pending legal or regulatory proceedings, andrevise our estimates and update our disclosures accordingly. Significant judgment is required in both the determination of probability and the determination as towhether a loss is reasonably estimable. Revisions in our estimates of the potential liability could materially impact our results of operations.Income Taxes. We are subject to income taxes in the United States and numerous foreign jurisdictions, and the assessment of our income tax positionsinvolves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. In addition, the application of tax lawsand regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result ofchanges in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Significant judgments and estimates are required in determining ourprovision for income taxes, including those related to tax incentives, intercompany research and development cost-sharing arrangements, transfer pricing and taxcredits. While we believe we have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcomes of examinations bytaxing authorities in determining the adequacy of our provision for income taxes. Therefore, the actual liability for United States or foreign taxes may be materiallydifferent from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. We areparticipating in the Internal Revenue Service (IRS) Compliance Assurance Process program whereby we endeavor to agree with the IRS on the treatment of allissues prior to filing our federal return. A benefit of participation in this program is that post-filing adjustments by the IRS are less likely to occur.Our QCT segment’s non-United States headquarters is located in Singapore. We obtained tax incentives in Singapore that commenced in March 2012,including a tax exemption for the first five years, provided that we meet specified employment and incentive criteria, and as a result of the expiration of certain ofthese incentives, our Singapore tax rate increased in fiscal 2017 and will increase again in fiscal 2027 upon the expiration of the remaining incentives. Our failureto meet these criteria could adversely impact our provision for income taxes.We consider the operating earnings of certain non-United States subsidiaries to be indefinitely reinvested outside the United States based on our plans for useand/or investment outside of the United States and our belief that our sources of cash and liquidity in the United States will be sufficient to meet future domesticcash needs. On a regular basis, we consider projected cash needs for, among other things, potential acquisitions, such as our proposed acquisition of NXP,investments in our existing businesses, future research and development and capital transactions, including repurchases of our common stock, dividends and debtrepayments. We estimate the amount of cash or other liquidity that is available or needed in the jurisdictions where these investments are expected as well as ourability to generate cash in those jurisdictions and our access to capital markets. This analysis enables us to conclude whether or not we will indefinitely reinvest thecurrent period’s foreign earnings. We have not recorded a deferred tax liability of approximately $13.7 billion related to the United States federal and state incometaxes and foreign withholding taxes on approximately $39.0 billion of undistributed earnings of certain non-United States subsidiaries indefinitely reinvestedoutside the United States. Should we decide to no longer indefinitely reinvest such earnings outside the United States, for example, if we determine that suchearnings are needed to fund future domestic operations or there is not a sufficient need for such earnings outside of the United States, we would have to adjust theincome tax provision in the period we make such determination.53Recent Accounting PronouncementsInformation regarding recent accounting pronouncements and the impact of those pronouncements, if any, on our consolidated financial statements is providedin this Annual Report in “Notes to Consolidated Financial Statements, Note 1. The Company and Its Significant Accounting Policies.”Item 7A. Quantitative and Qualitative Disclosures about Market RiskMarketable SecuritiesWe have made investments in marketable equity securities of companies of varying size, style, industry and geography and changes in investment allocationsmay affect the price volatility of our investments. On October 27, 2016, we announced a definitive agreement under which Qualcomm River Holdings will acquireNXP for estimated total cash consideration to be paid to NXP’s shareholders of $38 billion . We intend to fund the transaction with cash held by our foreignentities as well as funds raised in connection with our May 2017 debt issuance, which will result in the use of a substantial portion of our cash, cash equivalentsand marketable securities, as well as committed financing through a Term Loan Facility, which is expected to be drawn on at the close of the NXP transaction. Asa result, during fiscal 2017, we divested a substantial portion of our marketable securities portfolio, including our equity securities and fund shares.Equity Price Risk. The recorded values of our marketable equity securities and fund shares decreased to $36 million at September 24, 2017 from $1.7 billionat September 25, 2016 . A 10% decrease in the market price of our marketable equity securities and fund shares at September 24, 2017 would have caused anegligible decrease in the carrying amounts of these securities. A 10% decrease in the market price of our marketable equity securities and fund shares atSeptember 25, 2016 would have caused a decrease in the carrying amounts of these securities of $175 million. At September 24, 2017 , there were no grossunrealized losses of our marketable equity securities and fund shares.Interest Rate Risk. We invest a portion of our cash in a number of diversified fixed- and floating-rate securities consisting of cash equivalents, marketabledebt securities, debt funds and time deposits that are subject to interest rate risk. Changes in the general level of interest rates can affect the fair value of ourinvestment portfolio. If interest rates in the general economy were to rise, our holdings could lose value. As a result of divesting a substantial portion of ourmarketable securities portfolio and changes in portfolio allocation, the fair value of our investment portfolio is subject to lower interest rate risk. At September 24,2017 , a hypothetical increase in interest rates of 100 basis points across the entire yield curve on our holdings would have resulted in a decrease of $26 million inthe fair value of our holdings. At September 25, 2016 , a hypothetical increase in interest rates of 100 basis points across the entire yield curve on our holdingswould have resulted in a decrease of $501 million in the fair value of our holdings.Other InvestmentsEquity Price Risk. We hold investments in non-marketable equity instruments in privately held companies that may be impacted by equity price risks.Volatility in the equity markets could negatively affect our investees’ ability to raise additional capital as well as our ability to realize value from our investmentsthrough initial public offerings, mergers and private sales. Consequently, we could incur other-than-temporary impairment losses or realized losses on all or a partof the values of our non-marketable equity investments. At September 24, 2017 , the aggregate carrying value of our non-marketable equity investments was $982million and was included in other noncurrent assets. At September 25, 2016 , the aggregate carrying value of our non-marketable equity investments was $855million and was included in other noncurrent assets.Debt and Interest Rate Swap AgreementsInterest Rate Risk. In May 2017, we issued an aggregate principal amount of $11.0 billion of unsecured floating- and fixed-rate notes with varying maturitydates. In 2015, we issued an aggregate principal amount of $10.0 billion of unsecured floating- and fixed-rate notes with varying maturity dates and entered intointerest rate swaps with an aggregate notional amount of $3.0 billion to effectively convert certain fixed-rate interest payments into floating-rate payments. Theinterest rates on our floating-rate notes and interest rate swaps are based on LIBOR. By issuing additional floating-rate notes in fiscal 2017, our assumed risksassociated with variable interest rates based on LIBOR have increased. At September 24, 2017 , a hypothetical increase in LIBOR-based interest rates of 100 basispoints would cause our interest expense to increase by $46 million on an annualized basis as it relates to our floating-rate notes and interest rate swap agreements.At September 25, 2016 , a hypothetical increase in LIBOR-based interest rates of 100 basis points would have caused our interest expense to increase by $30million on an annualized basis as it relates to our floating-rate notes and interest rate swap agreements.Additionally, we have a commercial paper program that provides for the issuance of up to $5.0 billion of commercial paper. At September 24, 2017 , we had$999 million of commercial paper outstanding, with original maturities of less than54three months. Changes in interest rates could affect the amounts of interest that we pay if we refinance the current outstanding commercial paper with new debt.Additional information regarding our notes and related interest rate swap agreements and commercial paper program is provided in this Annual Report in“Notes to Consolidated Financial Statements, Note 1. The Company and Its Significant Accounting Policies” and “Notes to Consolidated Financial Statements,Note 6. Debt.”Foreign Exchange RiskWe manage our exposure to foreign exchange market risks, when deemed appropriate, through the use of derivative financial instruments, including foreigncurrency forward and option contracts with financial counterparties. We utilize such derivative financial instruments for hedging or risk management purposesrather than for speculative purposes. Counterparties to our derivative contracts are all major banking institutions. In the event of the financial insolvency or distressof a counterparty to our derivative financial instruments, we may be unable to settle transactions if the counterparty does not provide us with sufficient collateral tosecure its net settlement obligations to us, which could have a negative impact on our results. A description of our foreign currency accounting policies is providedin this Annual Report in “Notes to Consolidated Financial Statements, Note 1. The Company and Its Significant Accounting Policies.”At September 24, 2017 , our net liability related to foreign currency options designated as hedges of foreign currency risk on royalties earned from certainlicensees was $15 million. If our forecasted royalty revenues for currencies in which we hedge were to decline by 20% and foreign exchange rates were to changeunfavorably by 20% in our hedged foreign currency, we would not incur a loss as our hedge positions would continue to be fully effective.At September 24, 2017 , our net asset related to foreign currency option and forward contracts designated as hedges of foreign currency risk on certainoperating expenditure transactions was negligible. If our forecasted operating expenditures for currencies in which we hedge were to decline by 20% and foreignexchange rates were to change unfavorably by 20% in our hedged foreign currency, we would incur a negligible loss.Financial assets and liabilities held by consolidated subsidiaries that are not denominated in the functional currency of those entities are subject to the effectsof currency fluctuations and may affect reported earnings. As a global company, we face exposure to adverse movements in foreign currency exchange rates. Wemay hedge currency exposures associated with certain assets and liabilities denominated in nonfunctional currencies and certain anticipated nonfunctional currencytransactions. As a result, we could experience unanticipated gains or losses on anticipated foreign currency cash flows, as well as economic loss with respect to therecoverability of investments. While we may hedge certain transactions with non-United States customers, declines in currency values in certain regions may, ifnot reversed, adversely affect future product sales because our products may become more expensive to purchase in the countries of the affected currencies.At September 24, 2017 , our net liability related to foreign currency option and forward contracts not designated as hedging instruments used to manageforeign currency risk on certain receivables and payables was negligible. If the foreign exchange rates were to change unfavorably by 20% in our hedged foreigncurrency, we would not incur a loss as the change in the fair value of the foreign currency option and forward contracts would be offset by the change in fair valueof the related receivables and payables being economically hedged.Our analysis methods used to assess and mitigate the risks discussed above should not be considered projections of future risks.Item 8. Financial Statements and Supplementary DataOur consolidated financial statements at September 24, 2017 and September 25, 2016 and for each of the three years in the period ended September 24, 2017and the Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, are included in this Annual Report on pages F-1 through F-44.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresConclusion Regarding the Effectiveness of Disclosure Controls and ProceduresUnder the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted anevaluation of our disclosure controls and procedures, as such terms are defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, asamended (the Exchange Act). Based on this55evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end ofthe period covered by this Annual Report.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange ActRule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, weconducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under this framework, our managementconcluded that our internal control over financial reporting was effective as of September 24, 2017 .PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this AnnualReport, has also audited the effectiveness of our internal control over financial reporting as of September 24, 2017 , as stated in its report which appears on page F-1.Inherent Limitations over Internal ControlsOur internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation ofconsolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reportingincludes those policies and procedures that:i.pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;ii.provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance withgenerally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of ourmanagement and directors; andiii.provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on the consolidated financial statements.Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations,including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may notprevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controlsmay become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2017 that have materially affected, or are reasonablylikely to materially affect, our internal control over financial reporting.Item 9B. Other InformationNone.Part IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item regarding directors is incorporated by reference to our Definitive Proxy Statement to be filed with the Securities andExchange Commission in connection with our 2018 Annual Meeting of Stockholders (the 2018 Proxy Statement) under the headings “Nominees for Election” and“Section 16(a) Beneficial Ownership Reporting Compliance.” Certain information required by this item regarding executive officers is set forth in Item 1 of Part Iof this Report under the caption “Executive Officers,” and certain information is incorporated by reference to the 2018 Proxy Statement under the heading “Section16(a) Beneficial Ownership Reporting Compliance.” The information required by this item regarding corporate governance is incorporated by reference to the2018 Proxy Statement under the headings “Code of Ethics and Corporate Governance Principles and Practices,” “Director Nominations” and “Board Meetings,Committees and Attendance.”56Item 11. Executive CompensationThe information required by this item is incorporated by reference to the 2018 Proxy Statement under the headings “Executive Compensation and RelatedInformation,” “Compensation Tables and Narrative Disclosures,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation inCompensation Decisions” and “Compensation Committee Report.”Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item is incorporated by reference to the 2018 Proxy Statement under the headings “Equity Compensation Plan Information”and “Stock Ownership of Certain Beneficial Owners and Management.”Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item is incorporated by reference to the 2018 Proxy Statement under the headings “Certain Relationships and Related-PersonTransactions” and “Director Independence.”Item 14. Principal Accounting Fees and ServicesThe information required by this item is incorporated by reference to the 2018 Proxy Statement under the heading “Fees for Professional Services” and“Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Public Accountants.”PART IVItem 15. Exhibits and Financial Statement SchedulesThe following documents are filed as part of this report:(a) Financial Statements: Page Number (1) Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets at September 24, 2017 and September 25, 2016 F-2 Consolidated Statements of Operations for Fiscal 2017, 2016 and 2015 F-3 Consolidated Statements of Comprehensive Income for Fiscal 2017, 2016 and 2015 F-4 Consolidated Statements of Cash Flows for Fiscal 2017, 2016 and 2015 F-5 Consolidated Statements of Stockholders’ Equity for Fiscal 2017, 2016 and 2015 F-6 Notes to Consolidated Financial Statements F-7 (2) Schedule II - Valuation and Qualifying Accounts S-1 Financial statement schedules other than those listed above have been omitted because they are either not required, not applicable or the information isotherwise included in the notes to the consolidated financial statements.(b) ExhibitsExhibitNumber Exhibit Description Form File No./ FilmNo. Date of FirstFiling ExhibitNumber FiledHerewith2.1 Rule 2.7 Announcement, Recommended Cash Acquisition of CSR plc byQualcomm Global Trading Pte. Ltd. 8-K 000-19528/141156425 10/15/2014 2.1 2.2 Master Transaction Agreement, dated January 13, 2016, by and amongQualcomm Global Trading Pte. Ltd., each other Purchaser Group member,TDK Japan, each other Seller Group member, and, solely for purposes ofSection 10.9 thereof, QUALCOMM Incorporated. (1) 8-K 000-19528/161339867 1/13/2016 2.1 57ExhibitNumber Exhibit Description Form File No./ FilmNo. Date of FirstFiling ExhibitNumber FiledHerewith2.3 Amendment #1, dated December 20, 2016, to Master TransactionAgreement, dated January 13, 2016, by and among Qualcomm GlobalTrading Pte. Ltd., each other Purchaser Group member, TDK Japan, eachother Seller Group member, and, solely for purposes of Section 10.9 thereof,QUALCOMM Incorporated. (1) 10-Q 000-19528/17546539 1/25/2017 2.3 2.4 Amendment #2, dated January 19, 2017, to Master Transaction Agreement,dated January 13, 2016, by and among Qualcomm Global Trading Pte. Ltd.,each other Purchaser Group member, TDK Japan, each other Seller Groupmember, and, solely for purposes of Section 10.9 thereof, QUALCOMMIncorporated. (1) 10-Q 000-19528/17546539 1/25/2017 2.4 2.5 Amendment #3, dated February 3, 2017, to Master Transaction Agreement,dated January 13, 2016, by and among Qualcomm Global Trading Pte. Ltd.,each other Purchaser Group member, TDK Japan, each other Seller Groupmember, and, solely for purposes of Section 10.9 thereof, QUALCOMMIncorporated. (1) 10-Q 000-19528/17770305 4/19/2017 2.6 2.6 Purchase Agreement dated as of October 27, 2016 by and betweenQualcomm River Holdings, B.V. and NXP Semiconductors N.V. (1) 8-K 000-19528/161956228 10/27/2016 2.1 3.1 Restated Certificate of Incorporation, as amended. 10-Q 000-19528/161775595 7/20/2016 3.1 3.2 Amended and Restated Bylaws. 8-K 000-19528/161769723 7/15/2016 3.2 4.1 Indenture, dated May 20, 2015, between the Company and U.S. BankNational Association, as trustee. 8-K 000-19528/15880967 5/21/2015 4.1 4.2 Officers’ Certificate, dated May 20, 2015, for the Floating Rate Notes due2018, the Floating Rate Notes due 2020, the 1.400% Notes due 2018, the2.250% Notes due 2020, the 3.000% Notes due 2022, the 3.450% Notes due2025, the 4.650% Notes due 2035 and the 4.800% Notes due 2045. 8-K 000-19528/15880967 5/21/2015 4.2 4.3 Form of Floating Rate Notes due 2018. 8-K 000-19528/15880967 5/21/2015 4.3 4.4 Form of Floating Rate Notes due 2020. 8-K 000-19528/15880967 5/21/2015 4.4 4.5 Form of 1.400% Notes due 2018. 8-K 000-19528/15880967 5/21/2015 4.5 4.6 Form of 2.250% Notes due 2020. 8-K 000-19528/15880967 5/21/2015 4.6 4.7 Form of 3.000% Notes due 2022. 8-K 000-19528/15880967 5/21/2015 4.7 4.8 Form of 3.450% Notes due 2025. 8-K 000-19528/15880967 5/21/2015 4.8 4.9 Form of 4.650% Notes due 2035. 8-K 000-19528/15880967 5/21/2015 4.9 4.10 Form of 4.800% Notes due 2045. 8-K 000-19528/15880967 5/21/2015 4.10 4.11 Officers’ Certificate, dated May 26, 2017, for the Floating Rate Notes due2019, the Floating Rate Notes due 2020, the Floating Rate Notes due 2023,the 1.850% Notes due 2019, the 2.100% Notes due 2020, the 2.600% Notesdue 2023, the 2.900% Notes due 2024, the 3.250% Notes due 2027 and the4.300% Notes due 2047. 8-K 000-19528/17882336 5/31/2017 4.2 4.12 Form of Floating Rate Notes due 2019. 8-K 000-19528/17882336 5/31/2017 4.3 4.13 Form of Floating Rate Notes due 2020. 8-K 000-19528/17882336 5/31/2017 4.4 4.14 Form of Floating Rate Notes due 2023. 8-K 000-19528/17882336 5/31/2017 4.5 58ExhibitNumber Exhibit Description Form File No./ FilmNo. Date of FirstFiling ExhibitNumber FiledHerewith4.15 Form of 1.850% Notes due 2019. 8-K 000-19528/17882336 5/31/2017 4.6 4.16 Form of 2.100% Notes due 2020. 8-K 000-19528/17882336 5/31/2017 4.7 4.17 Form of 2.600% Notes due 2023. 8-K 000-19528/17882336 5/31/2017 4.8 4.18 Form of 2.900% Notes due 2024. 8-K 000-19528/17882336 5/31/2017 4.9 4.19 Form of 3.250% Notes due 2027. 8-K 000-19528/17882336 5/31/2017 4.10 4.20 Form of 4.300% Notes due 2047. 8-K 000-19528/17882336 5/31/2017 4.11 10.1 Form of Indemnity Agreement between the Company and its directors andofficers. (2) 10-K 000-19528/151197257 11/4/2015 10.1 10.2 Form of Grant Notice and Stock Option Agreement under the 2006 Long-Term Incentive Plan. (2) 10-K 000-19528/091159213 11/5/2009 10.84 10.3 Atheros Communications, Inc. 2004 Stock Incentive Plan, as amended. (2) S-8 333-174649/11886141 6/1/2011 99.1 10.4 Resolutions Amending Atheros Communications, Inc. Equity Plans. (2) S-8 333-174649/11886141 6/1/2011 99.6 10.5 Form of Grant Notices and Global Employee Stock Option Agreement underthe 2006 Long-Term Incentive Plan. (2) 10-K 000-19528/121186937 11/7/2012 10.104 10.6 Form of Grant Notices and Global Employee Restricted Stock UnitAgreement under the 2006 Long-Term Incentive Plan. (2) 10-K 000-19528/121186937 11/7/2012 10.105 10.7 2006 Long-Term Incentive Plan, as amended and restated. (2) 10-Q 000-19528/13779468 4/24/2013 10.112 10.8 Form of Aircraft Time Sharing Agreement. (2) 10-Q 000-19528/13983769 7/24/2013 10.114 10.9 Form of Grant Notices and Non-Employee Director Restricted Stock UnitAgreements under the 2006 Long-Term Incentive Plan for non-employeedirectors residing in the United Kingdom and Hong Kong. (2) 10-K 000-19528/131196747 11/6/2013 10.117 10.10 Form of Grant Notices and Non-Employee Director Deferred Stock UnitAgreements under the 2006 Long-Term Incentive Plan for non-employeedirectors residing in the United States and Spain. (2) 10-K 000-19528/131196747 11/6/2013 10.119 10.11 Form of Non-Employee Director Deferred Stock Unit Grant Notices andDeferred Stock Unit Agreement under the 2006 Long-Term Incentive Planfor non-employee directors residing in Singapore. (2) 10-Q 000-19528/14988939 7/23/2014 10.122 10.12 Form of Executive Restricted Stock Unit Grant Notice and ExecutiveRestricted Stock Unit Agreements under the 2006 Long-Term IncentivePlan, which includes a September 29, 2014 to March 29, 2015 performanceperiod. (2) 10-Q 000-19528/14988939 7/23/2014 10.123 10.13 Non-Qualified Deferred Compensation Plan, as amended, effective January1, 2016. (2) 8-K 000-19528/151134109 9/30/2015 10.1 10.14 Amendment to 2006 Long-Term Incentive Plan, as amended and restated. (2) 10-Q 000-19528/15555092 1/28/2015 10.126 10.15 Amended and Restated QUALCOMM Incorporated 2001 Employee StockPurchase Plan, as amended. (2) 10-Q 000-19528/151000141 7/22/2015 10.128 10.16 Revolving Credit Agreement among Qualcomm Incorporated, the lendersparty thereto and Bank of America, N.A., as Administrative Agent, SwingLine Lender and Letter of Credit Issuer, dated as of February 18, 2015. 8-K 000-19528/15628813 2/18/2015 10.1 10.17 Form of Executive Performance Stock Unit Grant Notice and ExecutivePerformance Stock Unit agreement under the 2006 Long-Term IncentivePlan, which includes a September 29, 2014 to September 24, 2017performance period. (2) 10-K 000-19528/151197257 11/4/2015 10.27 59ExhibitNumber Exhibit Description Form File No./ FilmNo. Date of FirstFiling ExhibitNumber FiledHerewith10.18 Form of Executive Performance Stock Unit Award Grant Notice andExecutive Performance Stock Unit Award Grant Agreement under the 2006Long-Term Incentive Plan, which includes a September 28, 2015 toSeptember 28, 2018 performance period. (2) 10-K 000-19528/151197257 11/4/2015 10.28 10.19 Form of 2016 Annual Cash Incentive Plan Performance Unit Agreement. (2) 10-Q 000-19528/161365251 1/27/2016 10.29 10.20 2016 Long-Term Incentive Plan. (2) DEF 14A 000-19528/161353677 1/21/2016 Appendix 5 10.21 Form of Executive Performance Stock Unit Award Grant Notice under the2006 Long-Term Incentive Plan, which includes a March 28, 2016 to March28, 2019 performance period. (2) 10-Q 000-19528/161581558 4/20/2016 10.31 10.22 Form of Non-Employee Director Deferred Stock Unit Grant Notices andNon-Employee Director Deferred Stock Unit Agreements under the 2016Long-Term Incentive Plan for non-employee directors residing in the UnitedStates. (2) 10-Q 000-19528/161581558 4/20/2016 10.32 10.23 Form of Non-Employee Director Deferred Stock Unit Grant Notices andNon-Employee Director Deferred Stock Unit Agreements under the 2016Long-Term Incentive Plan for non-employee directors residing in Spain. (2) 10-Q 000-19528/161581558 4/20/2016 10.33 10.24 Form of Non-Employee Director Deferred Stock Unit Grant Notices andNon-Employee Director Deferred Stock Unit Agreements under the 2016Long-Term Incentive Plan for non-employee directors residing in Singapore.(2) 10-Q 000-19528/161581558 4/20/2016 10.34 10.25 Qualcomm Incorporated 2017 Director Compensation Plan. (2) 8-K 000-19528/161931217 10/11/2016 99.1 10.26 Form of Executive Restricted Stock Unit Grant Notice and ExecutiveRestricted Stock Unit Agreement under the 2016 Long-Term Incentive Plan.(2) 10-K 000-19528/161967933 11/2/2016 10.36 10.27 Form of Executive Performance Stock Unit Award Grant Notice andExecutive Performance Stock Unit Award Agreement under the 2016 Long-Term Incentive Plan. (2) 10-K 000-19528/161967933 11/2/2016 10.37 10.28 Executive Performance Unit AwardGrant Notice and Executive Performance Unit AwardAgreement under the 2016 Long-Term Incentive Plan for Derek K. Aberle.(2) (3) 10-K 000-19528/161967933 11/2/2016 10.38 10.29 Letter Agreement, dated as of October 27, 2016, by and betweenQUALCOMM Incorporated and Qualcomm River Holdings B.V. 8-K 000-19528/161956228 10/27/2016 10.1 10.30 Credit Agreement among QUALCOMM Incorporated, the lenders partythereto and Goldman Sachs Bank USA, as Administrative Agent, dated as ofNovember 8, 2016. 8-K 000-19528/161985209 11/9/2016 10.1 10.31 Amended and Restated Credit Agreement among QUALCOMMIncorporated, the lenders party thereto and Bank of America, N.A., asAdministrative Agent, dated as of November 8, 2016. 8-K 000-19528/161985209 11/9/2016 10.2 10.32 Letter of Credit and Reimbursement Agreement between Qualcomm RiverHoldings B.V. and Mizuho Bank, Ltd., dated as of November 22, 2016. 8-K 000-19528/162023573 11/29/2016 10.1 10.33 First Amendment to Letter of Credit and Reimbursement Agreementbetween Qualcomm River Holdings B.V. and Mizuho Bank, Ltd., dated as ofNovember 23, 2016. 8-K 000-19528/162023573 11/29/2016 10.2 10.34 Continuing Agreement for Standby Letters of Credit between QualcommRiver Holdings B.V. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., dated asof November 22, 2016. 8-K 000-19528/162023573 11/29/2016 10.3 10.35 Reimbursement and Security Agreement between Qualcomm River HoldingsB.V. and Sumitomo Mitsui Banking Corporation, dated as of November 22,2016. 8-K 000-19528/162023573 11/29/2016 10.4 60ExhibitNumber Exhibit Description Form File No./ FilmNo. Date of FirstFiling ExhibitNumber FiledHerewith10.36 Letter of Credit Application by QUALCOMM Incorporated to Bank ofAmerica, N.A., dated as of November 23, 2016. 8-K 000-19528/162023573 11/29/2016 10.5 10.37 Form of 2017 Annual Cash Incentive Plan Performance Unit Agreement (2) 10-Q 000-19528/17546539 1/25/2017 10.47 10.38 Qualcomm Incorporated 2018 Director Compensation Plan. (2) X10.39 Form of Executive Restricted Stock Unit Grant Notice and ExecutiveRestricted Stock Unit Agreement under the 2016 Long-Term Incentive Plan,which includes a September 25, 2017 to March 25, 2018 performance period.(2) X10.40 Form of Executive Performance Stock Unit Award Grant Notice andExecutive Performance Stock Unit Award Agreement under the 2016 Long-Term Incentive Plan, which includes a September 25, 2017 to September 27,2020 performance period. (2) X12.1 Computation of Ratio of Earnings to Fixed Charges. X21 Subsidiaries of the Registrant. X23.1 Consent of Independent Registered Public Accounting Firm. X31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 forSteve Mollenkopf. X31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 forGeorge S. Davis. X32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, for Steve Mollenkopf. X32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, for George S. Davis. X101.INS XBRL Instance Document. X101.SCH XBRL Taxonomy Extension Schema. X101.CAL XBRL Taxonomy Extension Calculation Linkbase. X101.LAB XBRL Taxonomy Extension Labels Linkbase. X101.PRE XBRL Taxonomy Extension Presentation Linkbase. X101.DEF XBRL Taxonomy Extension Definition Linkbase. X(1)The Company shall furnish supplementally a copy of any omitted schedule to the Commission upon request.(2)Indicates management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a).(3)Confidential treatment has been requested with respect to certain portions of this exhibit.Item 16. Form 10-K SummaryNone.61SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.November 1, 2017 QUALCOMM Incorporated By/s/ Steve Mollenkopf Steve Mollenkopf Chief Executive Officer62Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated:Signature Title Date /s/ Steve Mollenkopf Chief Executive Officer and Director November 1, 2017Steve Mollenkopf (Principal Executive Officer) /s/ George S. Davis Executive Vice President and Chief Financial Officer November 1, 2017George S. Davis (Principal Financial and Accounting Officer) /s/ Barbara T. Alexander Director November 1, 2017Barbara T. Alexander /s/ Jeffrey W. Henderson Director November 1, 2017Jeffrey W. Henderson /s/ Thomas W. Horton Director November 1, 2017Thomas W. Horton /s/ Paul E. Jacobs Chairman November 1, 2017Paul E. Jacobs /s/ Ann M. Livermore Director November 1, 2017Ann M. Livermore /s/ Harish Manwani Director November 1, 2017Harish Manwani /s/ Mark D. McLaughlin Director November 1, 2017Mark D. McLaughlin /s/ Clark T. Randt, Jr. Director November 1, 2017Clark T. Randt, Jr. /s/ Francisco Ros Director November 1, 2017Francisco Ros /s/ Anthony J. Vinciquerra Director November 1, 2017Anthony J. Vinciquerra 63Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of QUALCOMM Incorporated:In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financialposition of QUALCOMM Incorporated and its subsidiaries as of September 24, 2017 and September 25, 2016 , and the results of their operations and their cashflows for each of the three years in the period ended September 24, 2017 in conformity with accounting principles generally accepted in the United States ofAmerica. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, theinformation set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of September 24, 2017 , based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible forthese financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express opinions on these financial statements, on the financial statement schedule and on the Company’s internal control over financialreporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of materialmisstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements includedexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in thecircumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPSan Diego, CaliforniaNovember 1, 2017F-1QUALCOMM IncorporatedCONSOLIDATED BALANCE SHEETS(In millions, except per share data) September 24, 2017 September 25, 2016ASSETSCurrent assets: Cash and cash equivalents$35,029 $5,946Marketable securities2,279 12,702Accounts receivable, net3,632 2,219Inventories2,035 1,556Other current assets618 558Total current assets43,593 22,981Marketable securities1,270 13,702Deferred tax assets2,900 2,030Property, plant and equipment, net3,216 2,306Goodwill6,623 5,679Other intangible assets, net3,737 3,500Other assets4,147 2,161Total assets$65,486 $52,359 LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities: Trade accounts payable$1,971 $1,858Payroll and other benefits related liabilities1,183 934Unearned revenues502 509Short-term debt2,495 1,749Other current liabilities4,756 2,261Total current liabilities10,907 7,311Unearned revenues2,003 2,377Long-term debt19,398 10,008Other liabilities2,432 895Total liabilities34,740 20,591 Commitments and contingencies (Note 7) Stockholders’ equity: Qualcomm stockholders’ equity: Preferred stock, $0.0001 par value; 8 shares authorized; none outstanding— —Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,474 and 1,476 shares issued andoutstanding, respectively274 414Retained earnings30,088 30,936Accumulated other comprehensive income384 428Total Qualcomm stockholders’ equity30,746 31,778Noncontrolling interests— (10)Total stockholders’ equity30,746 31,768Total liabilities and stockholders’ equity$65,486 $52,359See accompanying notes.F-2QUALCOMM IncorporatedCONSOLIDATED STATEMENTS OF OPERATIONS(In millions, except per share data) Year Ended September 24, 2017 September 25, 2016 September 27, 2015Revenues: Equipment and services$16,647 $15,467 $17,079Licensing5,644 8,087 8,202Total revenues22,291 23,554 25,281Costs and expenses: Cost of revenues9,792 9,749 10,378Research and development5,485 5,151 5,490Selling, general and administrative2,658 2,385 2,344Other (Note 2)1,742 (226) 1,293Total costs and expenses19,677 17,059 19,505Operating income2,614 6,495 5,776Interest expense(494) (297) (104)Investment and other income, net (Note 2)900 635 815Income before income taxes3,020 6,833 6,487Income tax expense(555) (1,131) (1,219)Net income2,465 5,702 5,268Net loss attributable to noncontrolling interests1 3 3Net income attributable to Qualcomm$2,466 $5,705 $5,271 Basic earnings per share attributable to Qualcomm$1.67 $3.84 $3.26Diluted earnings per share attributable to Qualcomm $1.65 $3.81 $3.22Shares used in per share calculations: Basic1,477 1,484 1,618Diluted1,490 1,498 1,639 Dividends per share announced$2.20 $2.02 $1.80See accompanying notes.F-3QUALCOMM IncorporatedCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(In millions) Year Ended September 24, 2017 September 25, 2016 September 27, 2015Net income$2,465 $5,702 $5,268Other comprehensive (loss) income, net of income taxes: Foreign currency translation gains (losses)309 (22) (47)Reclassification of foreign currency translation (gains) losses included in net income(1) 21 —Noncredit other-than-temporary impairment losses and subsequent changes in fair value related tocertain available-for-sale debt securities, net of tax (expense) benefit of ($3), $23 and $19,respectively6 (43) (35)Reclassification of net other-than-temporary losses on available-for-sale securities included in netincome, net of tax benefit of $46, $71 and $66, respectively85 130 121Net unrealized (losses) gains on other available-for-sale securities, net of tax benefit (expense) of$59, ($166) and $114, respectively(102) 306 (215)Reclassification of net realized gains on available-for-sale securities included in net income, net oftax expense of $156, $85 and $173, respectively(286) (156) (317)Net unrealized (losses) gains on derivative instruments, net of tax benefit of $0, $2 and $0,respectively(49) (4) 54Reclassification of net realized (gains) losses on derivative instruments included in net income, net oftax expense (benefit) of $4, ($2) and $0, respectively(10) 1 —Other gains4 — —Total other comprehensive (loss) income(44) 233 (439)Total comprehensive income2,421 5,935 4,829Comprehensive loss attributable to noncontrolling interests1 3 3Comprehensive income attributable to Qualcomm$2,422 $5,938 $4,832See accompanying notes.F-4QUALCOMM IncorporatedCONSOLIDATED STATEMENTS OF CASH FLOWS(In millions) Year Ended September 24, 2017 September 25, 2016 September 27, 2015Operating Activities: Net income$2,465 $5,702 $5,268Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense1,461 1,428 1,214Indefinite and long-lived asset impairment charges76 107 317Income tax provision (less than) in excess of income tax payments(400) (200) 47Gain on sale of wireless spectrum— (380) —Non-cash portion of share-based compensation expense914 943 1,026Incremental tax benefits from share-based compensation(40) (8) (103)Net realized gains on marketable securities and other investments(530) (288) (500)Impairment losses on marketable securities and other investments177 172 200Other items, net146 77 (16)Changes in assets and liabilities: Accounts receivable, net(1,104) (232) 550Inventories(200) (49) 93Other assets169 246 (793)Trade accounts payable(45) 541 (908)Payroll, benefits and other liabilities1,835 (352) (328)Unearned revenues(231) (307) (561)Net cash provided by operating activities4,693 7,400 5,506Investing Activities: Capital expenditures(690) (539) (994)Purchases of available-for-sale securities(19,062) (18,015) (15,400)Proceeds from sales and maturities of available-for-sale securities41,715 14,386 15,080Purchases of trading securities— (177) (1,160)Proceeds from sales and maturities of trading securities— 779 1,658Purchases of other marketable securities(710) — —Proceeds from sales and maturities of other marketable securities706 450 —Deposits of investments designated as collateral(2,000) — —Acquisitions and other investments, net of cash acquired(1,544) (812) (3,019)Proceeds from sale of wireless spectrum— 232 —Proceeds from sales of property, plant and equipment28 16 266Other items, net20 192 (3)Net cash provided (used) by investing activities18,463 (3,488) (3,572)Financing Activities: Proceeds from short-term debt8,558 8,949 4,083Repayment of short-term debt(9,309) (8,200) (3,083)Proceeds from long-term debt10,953 — 9,937Proceeds from issuance of common stock497 668 787Repurchases and retirements of common stock(1,342) (3,923) (11,246)Dividends paid(3,252) (2,990) (2,880)Incremental tax benefits from share-based compensation40 8 103Other items, net(266) (34) 38Net cash provided (used) by financing activities5,879 (5,522) (2,261)Effect of exchange rate changes on cash and cash equivalents48 (4) (20)Net increase (decrease) in cash and cash equivalents29,083 (1,614) (347)Cash and cash equivalents at beginning of period5,946 7,560 7,907Cash and cash equivalents at end of period$35,029 $5,946 $7,560See accompanying notes.F-5QUALCOMM IncorporatedCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(In millions) CommonStockShares CommonStock andPaid-InCapital RetainedEarnings AccumulatedOtherComprehensiveIncome Total QualcommStockholders’Equity Noncontrolling Interests TotalStockholders’EquityBalance at September 28, 20141,669 $7,736 $30,799 $634 $39,169 $(3) $39,166Total comprehensive income— — 5,271 (439) 4,832 (3) 4,829Common stock issued under employeebenefit plans and the related tax benefits32 871 — — 871 — 871Repurchases and retirements of commonstock(172) (9,334) (1,912) — (11,246) — (11,246)Share-based compensation— 1,078 — — 1,078 — 1,078Tax withholdings related to vesting ofshare-based payments(5) (351) — — (351) — (351)Dividends— — (2,932) — (2,932) — (2,932)Other— — — — — (1) (1)Balance at September 27, 20151,524 — 31,226 195 31,421 (7) 31,414Total comprehensive income— — 5,705 233 5,938 (3) 5,935Common stock issued under employeebenefit plans and the related tax benefits30 615 — — 615 — 615Repurchases and retirements of commonstock(73) (974) (2,949) — (3,923) — (3,923)Share-based compensation— 997 — — 997 — 997Tax withholdings related to vesting ofshare-based payments(5) (224) — — (224) — (224)Dividends— — (3,046) — (3,046) — (3,046)Balance at September 25, 20161,476 414 30,936 428 31,778 (10) 31,768Total comprehensive income— — 2,466 (44) 2,422 (1) 2,421Common stock issued under employeebenefit plans and the related tax benefits25 499 — — 499 — 499Repurchases and retirements of commonstock(23) (1,342) — — (1,342) — (1,342)Share-based compensation— 975 — — 975 — 975Tax withholdings related to vesting ofshare-based payments(4) (268) — — (268) — (268)Dividends— — (3,314) — (3,314) — (3,314)Other— (4) — — (4) 11 7Balance at September 24, 20171,474 $274 $30,088 $384 $30,746 $— $30,746See accompanying notes.F-6QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1. The Company and Its Significant Accounting PoliciesThe Company. QUALCOMM Incorporated, a Delaware corporation, and its subsidiaries (collectively the Company or Qualcomm) develop, design,manufacture, have manufactured on its behalf and market digital communications products, which principally consist of integrated circuits and system softwarebased on CDMA, OFDMA and other technologies, for use in mobile devices, wireless networks, devices used in the Internet of Things (IoT), broadband gatewayequipment, consumer electronic devices and automotive telematics and infotainment systems. The Company also grants licenses to use portions of its intellectualproperty portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products and receives fixed licensefees (payable in one or more installments) as well as ongoing royalties based on sales by licensees of wireless products incorporating its patented technologies.Principles of Consolidation. The Company’s consolidated financial statements include the assets, liabilities and operating results of majority-ownedsubsidiaries, including its joint venture RF360 Holdings Singapore Pte. Ltd (RF360 Holdings) (Note 9). In addition, the Company consolidated its investment in animmaterial less than majority-owned variable interest entity as the Company was the primary beneficiary until the end of fiscal 2017. The ownership of the otherinterest holders of consolidated subsidiaries and the immaterial less than majority-owned variable interest entity is presented separately in the consolidated balancesheets and statements of operations. All significant intercompany accounts and transactions have been eliminated.Financial Statement Preparation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica (GAAP) requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in theCompany’s consolidated financial statements and the accompanying notes. Examples of the Company’s significant accounting estimates that may involve a higherdegree of judgment and complexity than others include: the determination of other-than-temporary impairments of marketable securities and other investments; thevaluation of inventories; the valuation and assessment of the recoverability of goodwill and other indefinite-lived and long-lived assets; the recognition,measurement and disclosure of loss contingencies related to legal and regulatory proceedings; and the calculation of tax liabilities, including the recognition andmeasurement of uncertain tax positions. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to thecurrent year presentation.Fiscal Year. The Company operates and reports using a 52-53 week fiscal year ending on the last Sunday in September. The fiscal years ended September 24,2017 , September 25, 2016 and September 27, 2015 included 52 weeks.Cash Equivalents. The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Cash equivalentsare comprised of money market funds, certificates of deposit, commercial paper, government agencies’ securities, corporate bonds and notes, certain bank timedeposits and repurchase agreements fully collateralized by government agencies’ securities. The carrying amounts approximate fair value due to the shortmaturities of these instruments.Marketable Securities. Marketable securities include available-for-sale securities and certain time deposits for which classification is determined at the time ofpurchase and reevaluated at each balance sheet date. The Company also held trading securities and securities for which the Company had elected the fair valueoption that would have otherwise been recorded using the equity method. These investments were exited during fiscal 2016, and the related changes in fair valueassociated with these investments were recognized in investment and other income, net and were negligible in fiscal 2016 and 2015. The Company classifiesmarketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations. Marketable securities arestated at fair value. The net unrealized gains or losses on available-for-sale securities are recorded as a component of accumulated other comprehensive income, netof income taxes. The realized gains and losses on marketable securities are determined using the specific identification method.At each balance sheet date, the Company assesses available-for-sale securities in an unrealized loss position to determine whether the unrealized loss is otherthan temporary. The Company considers factors including: the significance of the decline in value as compared to the cost basis; underlying factors contributing toa decline in the prices of securities in a single asset class; how long the market value of the security has been less than its cost basis; the security’s relativeperformance versus its peers, sector or asset class; expected market volatility; the market and economy in general; analyst recommendations and price targets;views of external investment managers; news or financial information that has been released specific to the investee; and the outlook for the overall industry inwhich the investee operates.If a debt security’s market value is below amortized cost and the Company either intends to sell the security or it is more likely than not that the Company willbe required to sell the security before its anticipated recovery, the Company records an other-than-temporary impairment charge to investment and other income,net for the entire amount of the impairment. For theF-7QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSremaining debt securities, if an other-than-temporary impairment exists, the Company separates the other-than-temporary impairment into the portion of the lossrelated to credit factors, or the credit loss portion, which is recorded as a charge to investment and other income, net, and the portion of the loss that is not related tocredit factors, or the noncredit loss portion, which is recorded as a component of other accumulated comprehensive income, net of income taxes.For equity securities, the Company considers the loss relative to the expected volatility and the likelihood of recovery over a reasonable period of time. Ifevents and circumstances indicate that a decline in the value of an equity security has occurred and is other than temporary, the Company records a charge toinvestment and other income, net for the difference between fair value and cost at the balance sheet date. Additionally, if the Company has either the intent to sellthe equity security or does not have both the intent and the ability to hold the equity security until its anticipated recovery, the Company records a charge toinvestment and other income, net for the difference between fair value and cost at the balance sheet date.Equity and Cost Method Investments. The Company generally accounts for non-marketable equity investments either under the equity or the cost method.Equity investments over which the Company has significant influence, but not control over the investee and is not the primary beneficiary of the investee’sactivities are accounted for under the equity method. Other non-marketable equity investments are accounted for under the cost method. The Company’s share ofgains and losses in equity method investments are recorded in investment and other income, net. The Company monitors non-marketable equity investments forevents or circumstances that could indicate the investments are impaired, such as a deterioration in the investee’s financial condition and business forecasts andlower valuations in recently completed or proposed financings, and records a charge to investment and other income, net for the difference between the estimatedfair value and the carrying value.The carrying values of the Company’s non-marketable equity investments are recorded in other noncurrent assets and were as follows (in millions): September 24, 2017 September 25, 2016Equity method investments$379 $324Cost method investments603 531 $982 $855Transactions with equity method investees are considered related party transactions. Revenues from certain licensing and services contracts with two of theCompany’s equity method investees were $165 million , $196 million and negligible in fiscal 2017 , 2016 and 2015, respectively. The Company eliminatesunrealized profit or loss related to such transactions in relation to its ownership interest in the investee, which is recorded as a component of equity in net losses ininvestees in investment and other income, net. Aggregate accounts receivable from these equity method investees were $29 million and $73 million atSeptember 24, 2017 and September 25, 2016 , respectively.Derivatives. The Company’s primary objectives for holding derivative instruments are to manage interest rate risk on its long-term debt and to manage foreignexchange risk for certain foreign currency revenues, operating expenses, receivables and payables. Derivative instruments are recorded at fair value and included inother current or noncurrent assets or other current or noncurrent liabilities based on their maturity dates. Counterparties to the Company’s derivative instrumentsare all major banking institutions.Interest Rate Swaps: The Company manages its exposure to certain interest rate risks related to its long-term debt through the use of interest rate swaps. Suchswaps allow the Company to effectively convert fixed-rate payments into floating-rate payments based on LIBOR. These transactions are designated as fair valuehedges, and the gains and losses related to changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion ofthe underlying debt that are attributable to changes in the market interest rates. The net gains and losses on the interest rate swaps, as well as the offsetting gains orlosses on the related fixed-rate debt attributable to the hedged risks, are recognized in earnings as interest expense in the current period. The interest settlementpayments associated with the interest rate swap agreements are classified as cash flows from operating activities in the consolidated statements of cash flows.At September 24, 2017 and September 25, 2016 , the aggregate fair value of the Company’s interest rate swaps related to its long-term debt issued in May2015 was negligible and $65 million , respectively. The fair values of the swaps were recorded in noncurrent assets, other current liabilities and other noncurrentliabilities at September 24, 2017 and in noncurrent assets at September 25, 2016 . The swaps had an aggregate notional amount of $3.0 billion , which effectivelyconverted all of the fixed-rate debt due in 2018 and approximately 43% and 50% of the fixed-rate debt due in 2020 and 2022,F-8QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSrespectively, into floating-rate debt. The maturities of the swaps match the Company’s fixed-rate debt due in 2018, 2020 and 2022.Foreign Currency Hedges: The Company manages its exposure to foreign exchange market risks, when deemed appropriate, through the use of derivativeinstruments, including foreign currency forward and option contracts with financial counterparties, that may or may not be designated as hedging instruments.These derivative instruments mature between one and twelve months. Gains and losses arising from the effective portion of such contracts that are designated ascash flow hedging instruments are recorded as a component of accumulated other comprehensive income as gains and losses on derivative instruments, net ofincome taxes. The hedging gains and losses in accumulated other comprehensive income are subsequently reclassified to revenues or costs and expenses, asapplicable, in the consolidated statements of operations in the same period in which the underlying transactions affect the Company’s earnings. Gains and lossesarising from the ineffective portion of such contracts are recorded in investment and other income, net as gains and losses on derivative instruments. The cashflows associated with derivative instruments designated as cash flow hedging instruments are classified as cash flows from operating activities in the consolidatedstatements of cash flows, which is the same category as the hedged transaction. The cash flows associated with the ineffective portion of such derivativeinstruments are classified as cash flows from investing activities in the consolidated statements of cash flows. The fair values of the Company’s foreign currencyforward and option contracts used to hedge foreign currency risk designated as cash flow hedges recorded in total assets and in total liabilities were $10 million and$22 million , respectively, at September 24, 2017 and negligible at September 25, 2016 .For foreign currency forward and option contracts not designated as hedging instruments, the changes in fair value are recorded in investment and otherincome, net in the period of change. The cash flows associated with derivative instruments not designated as hedging instruments are classified as cash flows fromoperating activities in the consolidated statements of cash flows, which is the same category as the hedged transaction. The fair value of the Company’s foreigncurrency forward and option contracts not designated as hedging instruments was negligible at September 24, 2017 . There were no foreign currency forward andoption contracts not designated as hedging instruments at September 25, 2016 .Gross Notional Amounts: The gross notional amounts of the Company’s interest rate and foreign currency derivatives by instrument type were as follows (inmillions):September 24, 2017 September 25, 2016Forwards$163 $108Options2,333 929Swaps3,000 3,061 $5,496 $4,098The gross notional amounts by currency were as follows (in millions): September 24, 2017 September 25, 2016Chinese renminbi$1,460 $325Euro146 31Indian rupee772 433Japanese yen68 97Korean won50 85United States dollar3,000 3,045Other— 82 $5,496 $4,098Fair Value Measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in theprincipal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicableaccounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use ofunobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use invaluing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs thatreflect the Company’s assumptions about the factors thatF-9QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSmarket participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:•Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.•Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument.•Level 3 includes financial instruments for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable,including the Company’s own assumptions.Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair valuehierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities withinthe fair value hierarchy.Cash Equivalents and Marketable Securities: With the exception of auction rate securities, the Company obtains pricing information from quoted marketprices, pricing vendors or quotes from brokers/dealers. The Company conducts reviews of its primary pricing vendors to determine whether the inputs used in thevendor’s pricing processes are deemed to be observable. The fair value for interest-bearing securities includes accrued interest.The fair value of U.S. Treasury securities and government-related securities, corporate bonds and notes and common and preferred stock is generallydetermined using standard observable inputs, including reported trades, quoted market prices, matrix pricing, benchmark yields, broker/dealer quotes, issuerspreads, two-sided markets and/or benchmark securities.The fair value of debt and equity funds is reported at published net asset values. The Company assesses the daily frequency and size of transactions atpublished net asset values and/or the funds’ underlying holdings to determine whether fair value is based on observable or unobservable inputs.The fair value of mortgage- and asset-backed securities is derived from the use of matrix pricing (prices for similar securities) or, in some cases, cash flowpricing models with observable inputs, such as contractual terms, maturity, credit rating and/or securitization structure to determine the timing and amount offuture cash flows. Certain mortgage- and asset-backed securities may require the use of significant unobservable inputs to estimate fair value, such as defaultlikelihood, recovery rates and prepayment speed.The fair value of auction rate securities is estimated by the Company using a discounted cash flow model that incorporates transaction details, such ascontractual terms, maturity and timing and amount of future cash flows, as well as assumptions related to liquidity, default likelihood and recovery, the future stateof the auction rate market and credit valuation adjustments of market participants. Though most of the securities held by the Company are pools of student loansguaranteed by the U.S. government, prepayment speeds and illiquidity discounts are considered significant unobservable inputs. These additional inputs aregenerally unobservable, and therefore, auction rate securities are included in Level 3.Derivative Instruments: Derivative instruments that are traded on an exchange are valued using quoted market prices and are included in Level 1. Derivativeinstruments that are not traded on an exchange are valued using conventional calculations/models that are primarily based on observable inputs, such as foreigncurrency exchange rates, volatilities and interest rates, and therefore, such derivative instruments are included in Level 2.Other Investments and Other Liabilities: Other investments and other liabilities included in Level 1 are comprised of the Company’s deferred compensationplan liability and related assets, which consist of mutual funds classified as trading securities, and are included in other assets. Other investments and otherliabilities included in Level 3 are comprised of convertible debt instruments issued by private companies and contingent consideration related to businesscombinations, respectively. The fair value of convertible debt instruments is estimated by the Company based on the estimated timing and amount of future cashflows, as well as assumptions related to liquidity, default likelihood and recovery. The fair value of contingent consideration related to business combinations isestimated by the Company using a real options approach, which includes inputs, such as projected financial information, market volatility, discount rates andtiming of contractual payments. The inputs used by the Company to estimate the fair values of the convertible debt instruments and contingent consideration aregenerally unobservable, and therefore, they are included in Level 3.Allowances for Doubtful Accounts. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of theCompany’s customers to make required payments. The Company considers the following factors when determining if collection of required payments isreasonably assured: customer credit-worthiness; pastF-10QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTStransaction history with the customer; current economic industry trends; changes in customer payment terms; and bank credit-worthiness for letters of credit. If theCompany has no previous experience with the customer, the Company may request financial information, including financial statements or other documents, todetermine that the customer has the means of making payment. The Company may also obtain reports from various credit organizations to determine that thecustomer has a history of paying its creditors. If these factors do not indicate collection is reasonably assured, revenue is deferred as a reduction to accountsreceivable until collection becomes reasonably assured, which is generally upon receipt of cash. If the financial condition of the Company’s customers was todeteriorate, adversely affecting their ability to make payments, additional allowances would be required.Inventories. Inventories are valued at the lower of cost or market (replacement cost, not to exceed net realizable value) using the first-in, first-out method.Recoverability of inventories is assessed based on review of future customer demand that considers multiple factors, including committed purchase orders fromcustomers as well as purchase commitment projections provided by customers, among other things.Property, Plant and Equipment. Property, plant and equipment are recorded at cost and depreciated or amortized using the straight-line method over theirestimated useful lives. Upon the retirement or disposition of property, plant and equipment, the related cost and accumulated depreciation or amortization areremoved, and a gain or loss is recorded, when appropriate. Buildings on owned land are depreciated over 30 years , and building improvements are depreciatedover their useful lives ranging from 7 to 15 years . Leasehold improvements are amortized over the shorter of their estimated useful lives, not to exceed 15 years ,or the remaining term of the related lease. Other property, plant and equipment have useful lives ranging from 2 to 25 years . Leased property meeting certaincapital lease criteria is capitalized, and the net present value of the related lease payments is recorded as a liability. Amortization of assets under capital leases isrecorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. Maintenance, repairs and minor renewals or betterments arecharged to expense as incurred.Goodwill and Other Intangible Assets. Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangibleassets of businesses acquired. Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite.For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values. For intangibleassets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated fair values of the assets received, if more clearlyevident) are used to establish their recorded values, unless the values of neither the assets received nor the assets transferred are determinable within reasonablelimits, in which case the assets received are measured based on the carrying values of the assets transferred. Valuation techniques consistent with the marketapproach, income approach and/or cost approach are used to measure fair value.Impairment of Goodwill, Other Indefinite-Lived Assets and Long-Lived Assets. Goodwill and other indefinite-lived intangible assets are tested annually forimpairment in the fourth fiscal quarter and in interim periods if certain events occur indicating that the carrying amounts may be impaired. If a qualitativeassessment is used and the Company determines that the fair value of a reporting unit or indefinite-lived intangible asset is more likely than not (i.e., a likelihood ofmore than 50%) less than its carrying amount, a quantitative impairment test will be performed. If goodwill is quantitatively assessed for impairment, a two-stepapproach is applied. First, the Company compares the estimated fair value of the reporting unit in which the goodwill resides to its carrying value. The second step,if necessary, measures the amount of impairment, if any, by comparing the implied fair value of goodwill to its carrying value. Other indefinite-lived intangibleassets are quantitatively assessed for impairment, if necessary, by comparing their estimated fair values to their carrying values. If the carrying value exceeds thefair value, the difference is recorded as an impairment.Long-lived assets, such as property, plant and equipment and intangible assets subject to amortization, are reviewed for impairment when there is evidencethat events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held andused is measured by comparing the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset orasset group. If the carrying amount of an asset or asset group exceeds its estimated future cash flows, an impairment charge is recognized for the amount by whichthe carrying amount of the asset or asset group exceeds the estimated fair value of the asset or asset group. Long-lived assets to be disposed of by sale are reportedat the lower of their carrying amounts or their estimated fair values less costs to sell and are not depreciated.Revenue Recognition. The Company derives revenues principally from sales of integrated circuit products and licensing of its intellectual property and alsogenerates revenues through sales of products that connect medical devices and by performing software hosting, software development and other services. Thetiming of revenue recognition and the amount ofF-11QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSrevenue actually recognized in each case depends upon a variety of factors, including the specific terms of each arrangement and the nature of the Company’sdeliverables and obligations. Unearned revenues consist primarily of license fees for intellectual property with continuing performance obligations.Revenues from sales of the Company’s products are recognized at the time of shipment, or when title and risk of loss pass to the customer and all other criteriafor revenue recognition are met, if later. Revenues from providing services are recognized when earned. Revenues from providing services were less than 10% oftotal revenues for all periods presented.The Company grants licenses or otherwise provides rights to use portions of its intellectual property portfolio, which, among other rights, includes certainpatent rights essential to and/or useful in the manufacture and sale of certain wireless products. Licensees typically pay a fixed license fee in one or moreinstallments and royalties based on their sales of products incorporating or using the Company’s licensed intellectual property. License fees are recognized over theestimated period of benefit of the license to the licensee, typically 5 to 15 years. Royalties are generally based upon a percentage of the wholesale (i.e., licensee’s)selling price of complete licensed products, net of certain permissible deductions (including transportation, insurance, packing costs and other items). TheCompany broadly provides per unit running royalty caps that apply to certain categories of complete wireless devices, namely smartphones, tablets and laptops,which in general, effectively provide for a maximum running royalty amount per device (i.e., the royalty caps limit the running royalties due on a per unit basis).The Company earns royalties on such licensed products sold worldwide by its licensees at the time that the licensees’ sales occur. The Company’s licensees,however, do not report and pay royalties owed for sales in any given quarter until after the conclusion of that quarter, which is generally the following quarter. TheCompany recognizes royalty revenues based on royalties reported by licensees during the quarter and when all other revenue recognition criteria are met.The Company records reductions to revenues for customer incentive arrangements, including volume-related and other pricing rebates and costreimbursements for marketing and other activities involving certain of the Company’s products and technologies. The charges for such arrangements are recordedas a reduction to accounts receivable or as other current liabilities based on whether the Company has the contractual right of offset. The Company recognizes theliability based on the estimated amount of the incentive, or if not reasonably estimated, the maximum potential liability, at the later of the date at which theCompany records the related revenues or the date at which the Company offers the incentive or, if payment is contingent, when the contingency is resolved. Incertain arrangements, the liabilities are based on customer forecasts. The Company reverses accruals for unclaimed incentive amounts to revenues when theunclaimed amounts are no longer subject to payment.Concentrations. Revenues in fiscal 2017 were negatively impacted by the actions of Apple Inc. and Hon Hai Precision Industry Co., Ltd./Foxconn, itsaffiliates and other suppliers to Apple as well as the dispute with another licensee, who did not report or pay royalties due in the third or fourth quarter of fiscal2017. Apple’s contract manufacturers did not fully report and did not pay royalties due on sales of Apple products for a portion of the fiscal year, which resulted inhigher accounts receivable from those suppliers (Note 2). A significant portion of the Company’s revenues is concentrated with a small number ofcustomers/licensees of the Company ’ s QCT and QTL segments. Revenues related to the products of two customers/licensees comprised 18% and 17% of totalconsolidated revenues in fiscal 2017 , compared to 24% and 16% in fiscal 2016 and 25% and 20% in fiscal 2015 . Excluding the unpaid royalty receivables duefrom suppliers to Apple (Note 2), aggregate accounts receivable from one customer/licensee comprised 10% and 14% of accounts receivable at September 24,2017 and September 25, 2016 , respectively.The Company relies on sole- or limited-source suppliers for some products, particularly products in the QCT segment, subjecting the Company to possibleshortages of raw materials or manufacturing capacity. While the Company has established alternate suppliers for certain technologies that the Company considerscritical, the loss of a supplier or the inability of a supplier to meet performance or quality specifications or delivery schedules could harm the Company’s ability tomeet its delivery obligations and/or negatively impact the Company’s revenues, business operations and ability to compete for future business.Shipping and Handling Costs. Costs incurred for shipping and handling are included in cost of revenues. Amounts billed to a customer for shipping andhandling are reported as revenues.Share-Based Compensation. Share-based compensation expense for equity-classified awards, principally related to restricted stock units (RSUs), is measuredat the grant date, or at the acquisition date for awards assumed in business combinations, based on the estimated fair value of the award and is recognized over theemployee’s requisite service period. Share-based compensation expense is adjusted to exclude amounts related to share-based awards that are expected to beforfeited.F-12QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe fair values of RSUs are estimated based on the fair market values of the underlying stock on the dates of grant or dates the RSUs are assumed. If RSUs donot have the right to participate in dividends, the fair values are discounted by the dividend yield. The weighted-average estimated fair values of employee RSUsgranted during fiscal 2017 , 2016 and 2015 were $66.54 , $53.56 and $68.77 per share, respectively. Upon vesting, the Company issues new shares of commonstock. For the majority of RSUs, shares are issued on the vesting dates net of the amount of shares needed to satisfy statutory tax withholding requirements to bepaid by the Company on behalf of the employees. As a result, the actual number of shares issued will be fewer than the number of RSUs outstanding. The annualpre-vest forfeiture rate for RSUs was estimated to be approximately 5% , 4% and 3% in fiscal 2017 , 2016 and 2015 , respectively.Total share-based compensation expense, related to all of the Company’s share-based awards, was comprised as follows (in millions): 2017 2016 2015Cost of revenues$38 $40 $42Research and development588 614 659Selling, general and administrative288 289 325Share-based compensation expense before income taxes914 943 1,026Related income tax benefit(161) (190) (190) $753 $753 $836Legal and Regulatory Proceedings. The Company is currently involved in certain legal and regulatory proceedings. The Company discloses a losscontingency if there is at least a reasonable possibility that a material loss has been incurred. The Company records its best estimate of a loss related to pendinglegal and regulatory proceedings when the loss is considered probable and the amount can be reasonably estimated. Where a range of loss can be reasonablyestimated with no best estimate in the range, the Company records the minimum estimated liability. As additional information becomes available, the Companyassesses the potential liability related to pending legal and regulatory proceedings and revises its estimates and updates its disclosures accordingly. The Company’slegal costs associated with defending itself are recorded to expense as incurred.Foreign Currency. Certain foreign subsidiaries use a local currency as the functional currency. Resulting translation gains or losses are recognized as acomponent of accumulated other comprehensive income. Transaction gains or losses related to balances denominated in a currency other than the functionalcurrency are recognized in the consolidated statements of operations.Income Taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporarydifferences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes areenacted. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company includesinterest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. The Company classifies all deferred tax assets andliabilities as noncurrent in the consolidated balance sheets.The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other taxauthorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. TheCompany recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determiningif the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals orlitigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes ofexaminations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount ofpotential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revisionbecome known.The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders’ equity when realized. A windfall tax benefitoccurs when the actual tax benefit realized by the Company upon an employee’s disposition of a share-based award exceeds the deferred tax asset, if any,associated with the award that the Company had recorded. The Company records windfall tax benefits to stockholders’ equity. A shortfall occurs when the actualtax benefit realized by theF-13QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCompany upon an employee’s disposition of a share-based award is less than the deferred tax asset, if any, associated with the award that the Company hasrecorded. The Company records shortfall tax detriments when realized to stockholders’ equity to the extent that previous windfall tax benefits exist (referred to asthe APIC windfall pool), with any remainder recognized in income tax expense. The Company had a sufficient APIC windfall pool to absorb all shortfalls thatoccurred in fiscal 2017 . When assessing whether a tax benefit relating to share-based compensation has been realized, the Company follows the tax law orderingmethod, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.Earnings Per Common Share. Basic earnings per common share are computed by dividing net income attributable to Qualcomm by the weighted-averagenumber of common shares outstanding during the reporting period. Diluted earnings per common share are computed by dividing net income attributable toQualcomm by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s share-based compensation plans andshares subject to written put options and/or accelerated share repurchase agreements, if any, and the weighted-average number of common shares outstandingduring the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated based on theaverage share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an award, if any, the amount ofcompensation cost for future service that the Company has not yet recognized, if any, and the estimated tax benefits that would be recorded in paid-in capital whenan award is settled, if any, are assumed to be used to repurchase shares in the current period. The dilutive common share equivalents, calculated using the treasurystock method, for fiscal 2017 , 2016 and 2015 were 12,989,000 , 13,864,000 and 20,724,000 , respectively. Shares of common stock equivalents outstanding thatwere not included in the computation of diluted earnings per common share because the effect would be anti-dilutive or certain performance conditions were notsatisfied at the end of the period were 2,955,000 , 2,435,000 and 4,652,000 during fiscal 2017 , 2016 and 2015 , respectively.Recent Accounting Pronouncements. In May 2014, the FASB issued new guidance related to revenue recognition, which outlines a comprehensive revenuerecognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue as control of goods orservices transfers to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. It defines a five-stepapproach for recognizing revenue, which may require a company to use more judgment and make more estimates than under the current guidance. The Companywill adopt the new guidance in the first quarter of fiscal 2019 and currently expects to apply the modified retrospective approach, which means that the cumulativeeffect of applying the new guidance is recognized as an adjustment to the opening retained earnings balance. Given the scope of work required to implement therecognition and disclosure requirements under the new guidance, the Company has made progress in the identification of changes to policy, processes, systems andcontrols, and the Company continues to assess data availability and presentation necessary to meet the additional disclosure requirements of the guidance in thenotes to the consolidated financial statements.The Company currently expects the adoption of this new guidance to most significantly impact its licensing business. Specifically, the Company expects achange in the timing of revenues recognized from sales-based royalties. The Company currently recognizes sales-based royalties as revenues in the period in whichsuch royalties are reported by licensees, which is after the conclusion of the quarter in which the licensees’ sales occur and when all other revenue recognitioncriteria are met. Under the new guidance, the Company will be required to estimate and recognize sales-based royalties in the period in which the associated salesoccur, resulting in an acceleration of revenue recognition compared to the current method. Upon adoption of the new guidance, licenses to use portions of theCompany’s intellectual property portfolio will be considered one performance obligation, and license fees will be recognized as revenues on a straight-line basisover the term of the license agreement, which is similar to the recognition of license revenues under the current guidance. The Company currently accounts forcustomer incentive arrangements in its licensing and semiconductor businesses, including volume-related and other pricing rebates or cost reimbursements formarketing and other activities involving certain of the Company’s products and technologies in part based on the maximum potential liability. Under the newguidance, the Company expects to estimate the amount of all customer incentives. The Company does not otherwise expect the adoption of the new guidance willhave a material impact on its businesses.In January 2016, the FASB issued new guidance on classifying and measuring financial instruments, which requires that (i) all equity investments, other thanequity-method investments, in unconsolidated entities generally be measured at fair value through earnings and (ii) when the fair value option has been elected forfinancial liabilities, changes in fair value due to instrument-specific credit risk be recognized separately in other comprehensive income. Additionally, it changesthe disclosure requirements for financial instruments. The new guidance will be effective for the Company starting in the first quarter of fiscal 2019. Early adoptionis permitted for certain provisions. The Company does not intend adopt any of theF-14QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSprovisions early and is in the process of determining the effects the adoption will have on its consolidated financial statements.In February 2016, the FASB issued new guidance related to leases that outlines a comprehensive lease accounting model and supersedes the current leaseguidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. The new guidance must be adopted using themodified retrospective approach. The Company will adopt the new guidance in the first quarter of fiscal 2020 and is in the process of determining the effects theadoption will have on its consolidated financial statements.In March 2016, the FASB issued new guidance that changes the accounting for share-based payments, including income taxes, classification of awards andclassification in the statement of cash flows. The new guidance will increase the number of shares an employer can withhold to cover income taxes on share-basedpayment awards and still qualify for the exemption to liability classification. In addition, under the new guidance, excess tax benefits or deficiencies associatedwith share-based payment awards will be recognized through earnings when the awards vest or settle, rather than in stockholders’ equity. As a result, subsequent toadoption, the Company’s income tax expense and associated effective tax rate will be impacted by fluctuations in stock price between the grant dates and vestingdates of equity awards. The new guidance will be effective for the Company starting in the first quarter of fiscal 2018.In June 2016, the FASB issued new guidance that changes the accounting for recognizing impairments of financial assets. Under the new guidance, creditlosses for certain types of financial instruments will be estimated based on expected losses. The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The new guidance will be effective for the Companystarting in the first quarter of fiscal 2021. Early adoption is permitted starting in the first quarter of fiscal 2020. The Company is in the process of determining theeffects the adoption will have on its consolidated financial statements as well as whether to adopt the new guidance early.In August 2016, the FASB issued new guidance related to the classification of certain cash receipts and cash payments on the statement of cash flows. Thenew guidance will be effective for the Company beginning in the first quarter of fiscal 2019 on a retrospective basis, and early adoption is permitted. The Companydoes not intend to adopt the new guidance early and is currently evaluating the impact of this accounting standard update on its consolidated financial statements.In October 2016, the FASB issued new guidance that changes the accounting for income tax effects of intra-entity transfers of assets other than inventory.Under the new guidance, the selling (transferring) entity is required to recognize a current tax expense or benefit upon transfer of the asset. Similarly, thepurchasing (receiving) entity is required to recognize a deferred tax asset or deferred tax liability, as well as the related deferred tax benefit or expense, uponreceipt of the asset. The new guidance will be effective for the Company starting in the first quarter of fiscal 2019 on a modified retrospective basis, and earlyadoption is permitted. The Company does not intend to adopt the new guidance early and is currently evaluating the impact of this accounting standard update onits consolidated financial statements.In August 2017, the FASB issued new guidance that expands and refines hedge accounting for both financial and non-financial risks, aligns the recognitionand presentation of the effects of hedging instruments and hedged items in the financial statements, and includes targeted improvements related to the assessmentof hedge effectiveness. The new guidance also modifies disclosure requirements for hedging activities. The new guidance will be effective for the Companystarting in the first quarter of fiscal 2020, and early adoption is permitted in any interim period. The Company is currently evaluating the impact of the newguidance on its consolidated financial statements as well as whether to adopt the new guidance early.Note 2. Composition of Certain Financial Statement ItemsAccounts Receivable (in millions) September 24, 2017 September 25, 2016Trade, net of allowances for doubtful accounts of $11 and $1, respectively$3,576 $2,194Long-term contracts40 20Other16 5 $3,632 $2,219F-15QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSApproximately 70% of the increase in accounts receivable was due to the short payment in the second quarter of fiscal 2017 of royalties reported by anddeemed collectible from Apple’s contract manufacturers. This same amount is recorded in customer-related liabilities for Apple, since the Company does not havethe contractual right to offset these amounts. The remaining increase in accounts receivable resulted from the accounts receivable relating to the Company’srecently formed RF360 Holdings joint venture (Note 9), increased revenues related to integrated circuits and the timing of the collection of payments from certainof the Company’s other licensees.Inventories (in millions) September 24, 2017 September 25, 2016Raw materials$103 $1Work-in-process799 847Finished goods1,133 708 $2,035 $1,556Property, Plant and Equipment (in millions)September 24, 2017 September 25, 2016Land$195 $192Buildings and improvements1,595 1,545Computer equipment and software1,609 1,426Machinery and equipment3,528 2,454Furniture and office equipment109 77Leasehold improvements310 254Construction in progress73 92 7,419 6,040Less accumulated depreciation and amortization(4,203) (3,734) $3,216 $2,306Depreciation and amortization expense related to property, plant and equipment for fiscal 2017 , 2016 and 2015 was $684 million , $624 million and $625million , respectively. The gross book values of property under capital leases included in buildings and improvements were negligible at September 24, 2017 andSeptember 25, 2016 .Goodwill and Other Intangible Assets. The Company allocates goodwill to its reporting units for annual impairment testing purposes. The following tablepresents the goodwill allocated to the Company’s reportable and nonreportable segments, as described in Note 8, as well as the changes in the carrying amounts ofgoodwill during fiscal 2017 and 2016 (in millions): QCT QTL NonreportableSegments TotalBalance at September 27, 2015$4,461 $718 $300 $5,479Acquisitions172 — — 172Impairments— — (17) (17)Other (1)41 — 4 45Balance at September 25, 2016 (2)4,674 718 287 5,679Acquisitions841 23 11 875Impairments— — — —Other (1)66 — 3 69Balance at September 24, 2017 (2)$5,581 $741 $301 $6,623(1)Includes changes in goodwill amounts resulting from foreign currency translation, purchase accounting adjustments and, in fiscal 2016, the sale of the Company’s businessthat provided augmented reality applications.F-16QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(2)Cumulative goodwill impairments were $537 million at both September 24, 2017 and September 25, 2016 .The components of other intangible assets, net were as follows (in millions): September 24, 2017 September 25, 2016 Gross CarryingAmount AccumulatedAmortization Weighted-averageamortizationperiod(years) Gross CarryingAmount AccumulatedAmortization Weighted-averageamortizationperiod(years)Wireless spectrum$1 $— 20 $2 $(2) 5Marketing-related77 (52) 4 119 (77) 8Technology-based6,413 (2,818) 10 5,900 (2,459) 10Customer-related149 (33) 9 21 (4) 7 $6,640 $(2,903) 10 $6,042 $(2,542) 10All of these intangible assets are subject to amortization, other than acquired in-process research and development with carrying values of $74 million and $83million at September 24, 2017 and September 25, 2016 , respectively. Amortization expense related to these intangible assets was $777 million , $804 million and$ 591 million for fiscal 2017 , 2016 and 2015 , respectively. Amortization expense related to these intangible assets and acquired in-process research anddevelopment, beginning upon the expected completion of the underlying projects, is expected to be $780 million , $734 million , $622 million , $507 million and$415 million for each of the subsequent five years from fiscal 2018 through 2022, respectively, and $679 million thereafter.Other Current Liabilities (in millions) September 24, 2017 September 25, 2016Customer incentives and other customer-related liabilities$2,804 $1,710Accrual for TFTC fine (Note 7)778 —Other1,174 551 $4,756 $2,261Customer incentives and other customer-related liabilities substantially consist of amounts payable to customers for incentive and other arrangements,including volume-related and other pricing rebates and cost reimbursements for marketing and other activities involving certain of the Company’s products andtechnologies. The corresponding charges for such arrangements were recorded as a reduction to revenues.Accumulated Other Comprehensive Income. Changes in the components of accumulated other comprehensive income, net of income taxes, in Qualcommstockholders’ equity during fiscal 2017 were as follows (in millions):F-17QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTS Foreign CurrencyTranslationAdjustment Noncredit Other-than-TemporaryImpairment Lossesand SubsequentChanges in Fair Valuefor Certain Available-for-Sale DebtSecurities Net UnrealizedGain (Loss) onOtherAvailable-for-Sale Securities Net UnrealizedGain (Loss) onDerivativeInstruments Other Gains Total AccumulatedOther ComprehensiveIncomeBalance at September 25, 2016$(161) $6 $532 $51 $— $428Other comprehensive (loss)income before reclassifications309 6 (102) (49) 4 168Reclassifications fromaccumulated othercomprehensive income(1) 11 (212) (10) — (212)Other comprehensive (loss)income308 17 (314) (59) 4 (44)Balance at September 24, 2017$147 $23 $218 $(8) $4 $384Reclassifications from accumulated other comprehensive income related to net gains on available-for-sale securities of $201 million , $83 million and $212million during fiscal 2017 , 2016 and 2015 , respectively, were recorded in investment and other income, net (Note 2). Reclassifications from accumulated othercomprehensive income related to foreign currency translation losses of $21 million during fiscal 2016 were recorded in selling, general and administrativeexpenses and other operating expenses. Reclassifications from accumulated other comprehensive income related to foreign currency translation adjustments duringfiscal 2017 and 2015 were negligible. Reclassifications from accumulated other comprehensive income related to derivative instruments of $10 million for fiscal2017 were recorded in revenues, cost of revenues, research and development expenses and selling, general and administrative expenses. Reclassifications fromaccumulated other comprehensive income related to derivative instruments during fiscal 2016 and 2015 were negligible.Other Income, Costs and Expenses. Other expenses in fiscal 2017 consisted of a $927 million charge related to the KFTC fine (Note 7), including relatedforeign currency losses, a $778 million charge related to the TFTC fine (Note 7) and $37 million in restructuring and restructuring-related charges related to theCompany’s Strategic Realignment Plan (Note 10).Other income for fiscal 2016 included a gain of $380 million on the sale of wireless spectrum in the United Kingdom that was held by the QSI (QualcommStrategic Initiatives) segment in the first quarter of fiscal 2016 for $232 million in cash and $275 million in deferred payments due in 2020 to 2023 , which wererecorded at their present values in other assets. Other income for fiscal 2016 also included $202 million in restructuring and restructuring-related charges, whichwere partially offset by a $48 million gain on the sale of the Company’s business that provided augmented reality applications, all of which related to theCompany’s Strategic Realignment Plan.On February 9, 2015, the Company announced that it had reached a resolution with the China National Development and Reform Commission (NDRC)regarding its investigation of the Company relating to China’s Anti-Monopoly Law (AML) and the Company’s licensing business and certain interactions betweenthe Company’s licensing business and its semiconductor business. The NDRC issued an Administrative Sanction Decision finding that the Company had violatedthe AML, and the Company agreed to implement a rectification plan that modified certain of its business practices in China. In addition, the NDRC imposed a fineon the Company of 6.088 billion Chinese renminbi (approximately $975 million ), which the Company paid. The Company recorded the amount of the fine in thesecond quarter of fiscal 2015 in other expenses. Other expenses in fiscal 2015 also included $255 million and $11 million in impairment charges on goodwill andintangible assets, respectively, related to the Company’s content and push-to-talk services and display businesses and $190 million in restructuring andrestructuring-related charges related to the Company’s Strategic Realignment Plan, partially offset by $138 million in gains on sales of certain property, plant andequipment.F-18QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSInvestment and Other Income, Net (in millions) 2017 2016 2015Interest and dividend income$619 $611 $527Net realized gains on marketable securities456 239 451Net realized gains on other investments74 49 49Impairment losses on marketable securities(131) (112) (163)Impairment losses on other investments(46) (60) (37)Net gains (losses) on derivative instruments32 (8) 17Equity in net losses of investees(74) (84) (32)Net losses on foreign currency transactions(30) — —Net gains on deconsolidation of subsidiaries— — 3 $900 $635 $815There were no net impairment losses on marketable securities related to the noncredit portion of losses on debt securities recognized in other comprehensiveincome in fiscal 2017 , and such losses were $ 37 million and $ 23 million in fiscal 2016 and 2015 , respectively. The ending balance of the credit loss portion ofother-than-temporary impairments on debt securities held by the Company was negligible and $55 million at September 24, 2017 and September 25, 2016 ,respectively.Note 3. Income TaxesThe components of the income tax provision were as follows (in millions): 2017 2016 2015Current provision (benefit): Federal$72 $4 $(67)State3 4 4Foreign1,256 1,411 1,307 1,331 1,419 1,244Deferred (benefit) provision: Federal(586) (184) (9)State4 6 1Foreign(194) (110) (17) (776) (288) (25) $555 $1,131 $1,219The foreign component of the income tax provision consisted primarily of foreign withholding taxes on royalty fees included in United States earnings.The components of income before income taxes by United States and foreign jurisdictions were as follows (in millions): 2017 2016 2015United States$(762) $3,032 $2,993Foreign3,782 3,801 3,494 $3,020 $6,833 $6,487F-19QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe foreign component of income before income taxes in foreign jurisdictions consists primarily of income earned in Singapore.The following is a reconciliation of the expected statutory federal income tax provision to the Company’s actual income tax provision (in millions): 2017 2016 2015Expected income tax provision at federal statutory tax rate$1,057 $2,392 $2,270State income tax provision, net of federal benefit8 19 18Foreign income taxed at other than U.S. rates(963) (1,068) (937)Research and development tax credits(81) (143) (148)Worthless stock deduction of domestic subsidiary— (101) —Nondeductible charges related to the KFTC and TFTC investigations363 — —Impact of changes in tax reserves and audit settlements for prior year tax positions111 — (61)Other60 32 77 $555 $1,131 $1,219During fiscal 2017 , the Company recorded charges of $927 million and $778 million related to the fines imposed by the KFTC and the TFTC, respectively(Note 7), which are not deductible for tax purposes and are attributable to both the United States and a foreign jurisdiction.During fiscal 2016 , the Company recorded a tax benefit of $101 million from a worthless stock deduction on a domestic subsidiary of one of the Company’sformer display businesses. Also, during fiscal 2016 , the United States government permanently reinstated the federal research and development tax creditretroactively to January 1, 2015. As a result of the reinstatement, the Company recorded a tax benefit of $79 million in fiscal 2016 related to fiscal 2015. Duringfiscal 2015, the NDRC imposed a fine of $975 million (Note 2), which was not deductible for tax purposes and was substantially attributable to a foreignjurisdiction. Additionally, during fiscal 2015, the Company recorded a tax benefit of $101 million related to fiscal 2014 resulting from the United Statesgovernment reinstating the federal research and development tax credit retroactively to January 1, 2014 through December 31, 2014. The effective tax rate forfiscal 2015 also reflected the United States federal research and development tax credit generated through December 31, 2014, the date on which the credit expired,and a $61 million tax benefit as a result of a favorable tax audit settlement with the Internal Revenue Service (IRS) related to Qualcomm Atheros, Inc.’s pre-acquisition 2010 and 2011 tax returns.The Company’s QCT segment’s non-United States headquarters is located in Singapore. The Company has obtained tax incentives in Singapore thatcommenced in March 2012, which are effective through March 2027, that result in a tax exemption for the first five years provided that the Company meetsspecified employment and investment criteria. As a result of the expiration of certain of these incentives, the Company’s Singapore tax rate increased in fiscal 2017and will increase again in fiscal 2027 upon the expiration of the remaining incentives. Had the Company established QCT’s non-United States headquarters inSingapore without these tax incentives, the Company’s income tax expense would have been higher and impacted earnings per share attributable to Qualcomm asfollows (in millions, except per share amounts): 2017 2016 2015Additional income tax expense$493 $487 $656Reduction to diluted earnings per share$0.33 $0.32 $0.40The Company considers the operating earnings of certain non-United States subsidiaries to be indefinitely reinvested outside the United States based on theCompany’s plans for use and/or investment outside the United States and the Company’s belief that its sources of cash and liquidity in the United States will besufficient to meet future domestic cash needs. The Company has not recorded a deferred tax liability of approximately $13.7 billion related to the United Statesfederal and state income taxes and foreign withholding taxes on approximately $39.0 billion of undistributed earnings of certain non-United States subsidiariesindefinitely reinvested outside the United States. Should the Company decide to no longer indefinitely reinvest such earnings outside the United States, theCompany would have to adjust the income tax provision in the period management makes such determination.F-20QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe Company had deferred tax assets and deferred tax liabilities as follows (in millions): September 24, 2017 September 25, 2016Unused tax credits$1,798 $1,256Accrued liabilities and reserves888 409Unearned revenues886 920Share-based compensation241 277Unused net operating losses208 218Unrealized losses on other investments and marketable securities151 254Other21 55Total gross deferred tax assets4,193 3,389Valuation allowance(863) (754)Total net deferred tax assets3,330 2,635Intangible assets(535) (502)Unrealized gains on other investments and marketable securities(33) (194)Other(95) (78)Total deferred tax liabilities(663) (774)Net deferred tax assets$2,667 $1,861Reported as: Non-current deferred tax assets2,900 2,030Non-current deferred tax liabilities (1)(233) (169) $2,667 $1,861(1)Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.At September 24, 2017 , the Company had unused federal net operating loss carryforwards of $245 million expiring from 2021 through 2035 , unused state netoperating loss carryforwards of $858 million expiring from 2018 through 2037 and unused foreign net operating loss carryforwards of $215 million , of whichsubstantially all may be carried forward indefinitely. At September 24, 2017 , the Company had unused state tax credits of $763 million , of which substantially allmay be carried forward indefinitely, unused federal tax credits of $1.0 billion expiring from 2025 through 2037 and unused tax credits of $28 million in foreignjurisdictions expiring from 2033 through 2037 . The Company does not expect its federal net operating loss carryforwards to expire unused.At September 24, 2017 , the Company has provided a valuation allowance on certain state tax credits, foreign deferred tax assets and state net operating lossesof $752 million , $69 million and $42 million , respectively. The valuation allowances reflect the uncertainties surrounding the Company’s ability to generatesufficient future taxable income in certain foreign and state tax jurisdictions to utilize its net operating losses and the Company’s ability to generate sufficientcapital gains to utilize all capital losses. The Company believes, more likely than not, that it will have sufficient taxable income after deductions related to share-based awards to utilize its remaining deferred tax assets.F-21QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSA summary of the changes in the amount of unrecognized tax benefits for fiscal 2017 , 2016 and 2015 follows (in millions): 2017 2016 2015Beginning balance of unrecognized tax benefits$271 $40 $87Additions based on prior year tax positions92 20 31Reductions for prior year tax positions and lapse in statute of limitations(11) (6) (70)Additions for current year tax positions23 218 5Settlements with taxing authorities(3) (1) (13)Ending balance of unrecognized tax benefits$372 $271 $40The Company believes that it is reasonably possible that certain unrecognized tax benefits recorded at September 24, 2017 may result in a significant cashpayment in fiscal 2018 . Unrecognized tax benefits at September 24, 2017 included $289 million for tax positions that, if recognized, would impact the effectivetax rate. The unrecognized tax benefits differ from the amount that would affect the Company’s effective tax rate primarily because the unrecognized tax benefitswere included on a gross basis and did not reflect secondary impacts such as the federal deduction for state taxes, adjustments to deferred tax assets and thevaluation allowance that might be required if the Company’s tax positions are sustained. The increase in unrecognized tax benefits in fiscal 2017 was primarily dueto tax positions related to transfer pricing. The increase in unrecognized tax benefits in fiscal 2016 was primarily due to tax positions related to classification ofincome. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits at September 24, 2017 may increase or decrease infiscal 2018 .The Company files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company is currently aparticipant in the IRS Compliance Assurance Process, whereby the IRS and the Company endeavor to agree on the treatment of all tax issues prior to the tax returnbeing filed. The IRS completed its examination of the Company’s tax return for fiscal 2015 and issued a no change letter in February 2017, resulting in no changeto the income tax provision. The Company is no longer subject to United States federal income tax examinations for years prior to fiscal 2014. The Company issubject to examination by the California Franchise Tax Board for fiscal years after 2011. The Company is also subject to examination in other taxing jurisdictionsin the United States and numerous foreign jurisdictions, most notably in countries where the Company earns a routine return and tax authorities believe substantialvalue-add activities are performed. These examinations are at various stages with respect to assessments, claims, deficiencies and refunds, many of which are openfor periods after fiscal 2000. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, incometaxes payable and deferred taxes in the period in which the facts give rise to a revision become known. As of September 24, 2017, the Company believes thatadequate amounts have been reserved for based on facts known. However, the final determination of tax audits and any related legal proceedings could materiallydiffer from amounts reflected in the Company’s income tax provision and the related accruals.Cash amounts paid for income taxes, net of refunds received, were $1.0 billion , $1.3 billion and $1.2 billion for fiscal 2017 , 2016 and 2015 , respectively.Note 4. Capital StockStock Repurchase Program. On March 9, 2015 , the Company announced a stock repurchase program authorizing it to repurchase up to $15 billion of theCompany’s common stock. The stock repurchase program has no expiration date. During fiscal 2015, the Company entered into two accelerated share repurchaseagreements (ASR Agreements) with two financial institutions under which the Company paid an aggregate of $5.0 billion to the financial institutions and receivedfrom them a total of 78,276,000 shares of the Company’s common stock based on the average daily volume weighted-average stock price of the Company’scommon stock during the respective terms of the ASR Agreements, less a discount. The shares were retired and recorded as a reduction to stockholders’ equity.During fiscal 2017 , 2016 and 2015 , the Company repurchased and retired an additional 22,792,000 , 73,782,000 and 94,159,000 shares of common stock,respectively, for $1.3 billion , $3.9 billion and $6.2 billion , respectively, before commissions. To reflect share repurchases in the consolidated balance sheet, theCompany (i) reduces common stock for the par value of the shares, (ii) reduces paid-in capital for the amount in excess of par to zero during the quarter in whichthe shares are repurchased and (iii) records the residual amount to retained earnings . At September 24, 2017 , $1.6 billion remained authorized for repurchaseunder the Company’s stock repurchase program.F-22QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDividends. On October 10, 2017 , the Company announced a cash dividend of $0.57 per share on the Company’s common stock, payable on December 15,2017 to stockholders of record as of the close of business on November 29, 2017 . Dividends charged to retained earnings in fiscal 2017 , 2016 and 2015 were asfollows (in millions, except per share data): 2017 2016 2015 Per Share Total Per Share Total Per Share TotalFirst quarter$0.53 $801 $0.48 $730 $0.42 $710Second quarter0.53 798 0.48 726 0.42 702Third quarter0.57 858 0.53 794 0.48 771Fourth quarter0.57 857 0.53 796 0.48 749 $2.20 $3,314 $2.02 $3,046 $1.80 $2,932Note 5. Employee Benefit PlansEmployee Savings and Retirement Plan. The Company has a 401(k) plan that allows eligible employees to contribute up to 85% of their eligiblecompensation, subject to annual limits. The Company matches a portion of the employee contributions and may, at its discretion, make additional contributionsbased upon earnings. The Company’s contribution expense was $76 million , $74 million and $81 million in fiscal 2017 , 2016 and 2015 , respectively.Equity Compensation Plans. On March 8, 2016, the Company’s stockholders approved the Qualcomm Incorporated 2016 Long-Term Incentive Plan (the2016 Plan), which replaced the Qualcomm Incorporated 2006 Long-Term Incentive Plan (the Prior Plan). Effective on and after that date, no new awards will begranted under the Prior Plan, although all outstanding awards under the Prior Plan will remain outstanding according to their terms and the terms of the Prior Plan.The 2016 Plan provides for the grant of incentive and nonstatutory stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stockunits, performance units, performance shares, deferred compensation awards and other stock-based awards. The share reserve under the 2016 Plan is equal to90,000,000 shares, plus approximately 20,120,000 shares that were available for future grant under the Prior Plan on March 8, 2016, for a total of approximately110,120,000 shares available for grant under the 2016 Plan on that date. This share reserve is automatically increased as provided in the 2016 Plan by the numberof shares subject to stock options granted under the Prior Plan and outstanding as of March 8, 2016, which after that date expire or for any reason are forfeited,canceled or terminated, and by two times the number of shares subject to any awards other than stock options granted under the Prior Plan and outstanding as ofMarch 8, 2016, which after that date expire, are forfeited, canceled or terminated, fail to vest, are not earned due to any performance goal that is not met, areotherwise reacquired without having become vested, or are paid in cash, exchanged by a participant or withheld by the Company to satisfy any tax withholding ortax payment obligations related to such award. The Board of Directors of the Company may amend or terminate the 2016 Plan at any time. Certain amendments,including an increase in the share reserve, require stockholder approval. As of September 24, 2017 , approximately 95,485,000 shares were available for futuregrant under the 2016 Plan.RSUs are share awards that entitle the holder to receive shares of the Company’s common stock upon vesting. The RSUs generally include dividend-equivalent rights and vest over periods of three years from the date of grant. A summary of RSU transactions for all equity compensation plans follows: Number of Shares Weighted-AverageGrant Date FairValue Aggregate IntrinsicValue (In thousands) (In billions)RSUs outstanding at September 25, 201626,078 $61.42 RSUs granted12,525 66.54 RSUs canceled/forfeited(1,793) 63.17 RSUs vested(12,106) 64.34 RSUs outstanding at September 24, 201724,704 $62.46 $1.3At September 24, 2017 , total unrecognized compensation expense related to non-vested RSUs granted prior to that date was $911 million , which is expectedto be recognized over a weighted-average period of 1.6 years . The total vest-date fairF-23QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSvalue of RSUs that vested during fiscal 2017 , 2016 and 2015 was $820 million , $685 million and $1.0 billion , respectively. The total shares withheld to satisfystatutory tax withholding requirements related to all share-based awards were approximately 4,247,000 , 4,300,000 and 5,043,000 in fiscal 2017 , 2016 and 2015 ,respectively, and were based on the value of the awards on their vesting dates as determined by the Company’s closing stock price. Total payments for theemployees’ tax obligations to the taxing authorities were $268 million , $224 million and $351 million in fiscal 2017 , 2016 and 2015 , respectively, and wereincluded as a reduction to net cash provided by operating activities in the consolidated statements of cash flows.The Board of Directors may grant stock options to employees, directors and consultants to the Company to purchase shares of the Company’s common stockat an exercise price not less than the fair market value of the stock at the date of grant. Stock options vest over periods not exceeding five years and are exercisablefor up to ten years from the grant date. A summary of stock option transactions for all equity compensation plans follows: Number of Shares Weighted- AverageExercisePrice Average RemainingContractual Term Aggregate IntrinsicValue (In thousands) (Years) (In millions)Stock options outstanding at September 25, 201617,979 $40.96 Stock options canceled/forfeited/expired(52) 27.33 Stock options exercised(5,542) 41.02 Stock options outstanding at September 24, 201712,385 $40.99 1.3 $139Exercisable at September 24, 201712,382 $41.00 1.3 $139The total intrinsic value of stock options exercised during fiscal 2017 , 2016 and 2015 was $118 million , $147 million and $371 million , respectively, and theamount of cash received from the exercise of stock options was $236 million , $436 million and $519 million , respectively. Upon option exercise, the Companyissues new shares of stock.The total tax benefits realized, including the excess tax benefits, related to share-based awards during fiscal 2017 , 2016 and 2015 was $301 million , $253million and $437 million , respectively.Employee Stock Purchase Plan. The Company has an employee stock purchase plan for eligible employees to purchase shares of common stock at 85% ofthe lower of the fair market value on the first or the last day of each offering period, which is generally six months. Employees may authorize the Company towithhold up to 15% of their compensation during any offering period, subject to certain limitations. The employee stock purchase plan includes a non-423(b) plan.The shares authorized under the employee stock purchase plan were approximately 71,709,000 at September 24, 2017 . The shares reserved for future issuancewere approximately 14,648,000 at September 24, 2017 . During fiscal 2017 , 2016 and 2015 , approximately 5,746,000 , 5,966,000 and 4,977,000 shares,respectively, were issued under the plan at an average price of $45.29 , $38.89 and $53.92 per share, respectively. At September 24, 2017 , total unrecognizedcompensation expense related to non-vested purchase rights granted prior to that date was $26 million . The Company recorded cash received from the exercise ofpurchase rights of $260 million , $232 million and $268 million during fiscal 2017 , 2016 and 2015 , respectively.Note 6. DebtRevolving Credit Facility. In November 2016, the Company amended and restated its existing Revolving Credit Facility that provides for unsecured revolvingfacility loans, swing line loans and letters of credit (Amended and Restated Revolving Credit Facility) to increase the aggregate amount available to $5.0 billion ,of which $530 million and $4.47 billion will expire in February 2020 and November 2021 , respectively. The Company had not previously borrowed any fundsunder the existing Revolving Credit Facility. Proceeds from the Amended and Restated Revolving Credit Facility are expected to be used for general corporatepurposes. Loans under the Amended and Restated Revolving Credit Facility will bear interest, at the option of the Company, at either the reserve-adjustedEurocurrency Rate (determined in accordance with the Amended and Restated Revolving Credit Facility) or the Base Rate (determined in accordance with theAmended and Restated Revolving Credit Facility), in each case plus an applicable margin based on the Company’s long-term unsecured senior, non-creditenhanced debt ratings. The initial margins over the reserve-adjusted Eurocurrency Rate and the Base Rate will be 0.70% and 0.00% per annum, respectively . TheAmended and Restated Revolving Credit Facility has a facility fee, which initially accrues at a rate of 0.05% per annum. At September 24, 2017 , the Company hadnot borrowed any funds under the Amended and Restated Revolving Credit Facility .F-24QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCommercial Paper Program. The Company has an unsecured commercial paper program, which provides for the issuance of up to $5.0 billion of commercialpaper. Net proceeds from this program are used for general corporate purposes. Maturities of commercial paper can range from 1 day to up to 397 days . AtSeptember 24, 2017 and September 25, 2016 , the Company had $999 million and $1.7 billion , respectively, of outstanding commercial paper recorded as short-term debt with a weighted-average interest rate of 1.19% and 0.52% , respectively, which included fees paid to the commercial paper dealers, and weighted-average remaining days to maturity of 45 days and 36 days , respectively. The carrying value of the outstanding commercial paper approximated its estimated fairvalue at September 24, 2017 and September 25, 2016 .Bridge Loan Facility. In October 2016, the Company entered into commitment letters pursuant to which the Company received commitments for seniorunsecured bridge facility loans in an aggregate principal amount up to $13.6 billion (Bridge Loan Facility). Proceeds from the Bridge Loan Facility, if drawn, wereintended to be used to finance, in part, the proposed acquisition of NXP Semiconductors N.V. (NXP) by Qualcomm River Holdings B.V., a wholly ownedsubsidiary of the Company (Qualcomm River Holdings) (Note 9). Subsequently, the commitments available under the Bridge Loan Facility were reduced to $7.1billion upon the Company entering into a $4.0 billion Term Loan Facility, described below, and the sale of certain assets by NXP for estimated net cash proceedsof $2.5 billion in February 2017. In May 2017, in connection with the Company’s issuance of an aggregate principal amount of $11.0 billion of unsecured floating-rate and fixed-rate notes, described below, the commitments available under the Bridge Loan Facility were reduced such that there were no remainingcommitments available, and the Bridge Loan Facility was terminated. The Company had not previously borrowed any funds under the Bridge Loan Facility. TheBridge Loan Facility had a ticking fee, which accrued at a rate of 0.05% per annum commencing on December 26, 2016.Term Loan Facility. In November 2016, the Company entered into a Credit Agreement that provides for senior unsecured delayed-draw term facility loans inan aggregate amount of $4.0 billion (Term Loan Facility). Proceeds from the Term Loan Facility, if drawn, will be used to finance the proposed acquisition ofNXP. Commitments under the Term Loan Facility will expire on the first to occur of (i) the consummation of the proposed acquisition of NXP without using loansunder the Term Loan Facility, (ii) the termination of Qualcomm River Holdings’s obligation to consummate the proposed acquisition of NXP and (iii) January 25,2018 (which reflects the automatic extension of the original expiration date of October 27, 2017 in accordance with the NXP purchase agreement, and as such datemay be further extended in accordance with the NXP purchase agreement). Loans under the Term Loan Facility will mature on the third anniversary of the date onwhich they are funded and will bear interest at either the reserve-adjusted Eurocurrency Rate (determined in accordance with the Term Loan Facility) or the BaseRate (determined in accordance with the Term Loan Facility), in each case plus an applicable margin based on the Company’s long-term unsecured senior, non-credit enhanced debt ratings. The initial margins over the reserve-adjusted Eurocurrency Rate and the Base Rate will be 0.875% and 0.00% per annum,respectively. The Term Loan Facility has a ticking fee, which initially accrues at a rate of 0.05% per annum commencing on December 26, 2016. At September 24,2017 , the Company had not borrowed any funds under the Term Loan Facility.Long-term Debt. In May 2015 , the Company issued an aggregate principal amount of $10.0 billion of unsecured floating- and fixed-rate notes (May 2015Notes) with varying maturities. The proceeds from the May 2015 Notes of $9.9 billion , net of underwriting discounts and offering expenses, were used to fund theASR Agreements (Note 4) and also for other general corporate purposes. In May 2017 , the Company issued an aggregate principal amount of $11.0 billion ofunsecured floating- and fixed-rate notes (May 2017 Notes) with varying maturities. The proceeds from the May 2017 Notes of $10.95 billion , net of underwritingdiscounts and offering expenses, are intended to be used to finance, in part, the Company’s proposed acquisition of NXP and other related transactions and forgeneral corporate purposes. The followingF-25QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTStable provides a summary of the Company’s long-term debt (in millions except percentages): September 24, 2017 September 25, 2016 Amount Effective Rate Amount EffectiveRateMay 2015 Notes Floating-rate three-month LIBOR plus 0.27% notes due May 18, 2018$250 1.65% $250 1.14% Floating-rate three-month LIBOR plus 0.55% notes due May 20, 2020250 1.92% 250 1.42% Fixed-rate 1.40% notes due May 18, 20181,250 1.93% 1,250 0.93% Fixed-rate 2.25% notes due May 20, 20201,750 2.20% 1,750 1.69% Fixed-rate 3.00% notes due May 20, 20222,000 2.65% 2,000 2.04% Fixed-rate 3.45% notes due May 20, 20252,000 3.46% 2,000 3.46% Fixed-rate 4.65% notes due May 20, 20351,000 4.74% 1,000 4.74% Fixed-rate 4.80% notes due May 20, 20451,500 4.71% 1,500 4.71%May 2017 Notes Floating-rate three-month LIBOR plus 0.36% notes due May 20, 2019750 1.80% — Floating-rate three-month LIBOR plus 0.45% notes due May 20, 2020500 1.86% — Floating-rate three-month LIBOR plus 0.73% notes due January 30, 2023500 2.11% — Fixed-rate 1.85% notes due May 20, 20191,250 2.00% — Fixed-rate 2.10% notes due May 20, 20201,500 2.19% — Fixed-rate 2.60% notes due January 30, 20231,500 2.70% — Fixed-rate 2.90% notes due May 20, 20241,500 3.01% — Fixed-rate 3.25% notes due May 20, 20272,000 3.46% — Fixed-rate 4.30% notes due May 20, 20471,500 4.47% — Total principal21,000 10,000 Unamortized discount, including debt issuance costs(106) (57) Hedge accounting fair value adjustments— 65 Total long-term debt$20,894 $10,008 Reported as: Short-term debt$1,496 $— Long-term debt19,398 10,008 Total$20,894 $10,008 At September 24, 2017 , future principal payments were $1.5 billion in fiscal 2018, $2.0 billion in fiscal 2019, $4.0 billion in fiscal 2020, $2.0 billion in fiscal2022 and $11.5 billion after fiscal 2022; no principal payments are due in fiscal 2021.The Company’s 2019 floating-rate notes, 2020 floating-rate notes, 2019 fixed-rate notes and 2020 fixed-rate notes issued in May 2017 for an aggregateprincipal amount of $4.0 billion are subject to a special mandatory redemption at a price equal to 101% of the aggregate principal amount, plus accrued and unpaidinterest to, but excluding, the date of such mandatory redemption. The redemption is required on the first to occur of (i) the termination of the NXP purchaseagreement or (ii) January 25, 2018 (which reflects the automatic extension of the original expiration date of October 27, 2017 in accordance with the NXPpurchase agreement, and as such date may be further extended in accordance with the NXP purchase agreement to a date on or prior to June 1, 2018).The Company may redeem the fixed-rate notes at any time in whole, or from time to time in part, at specified make-whole premiums as defined in theapplicable form of note. The Company may not redeem the floating-rate notes prior to maturity. The obligations under the notes rank equally in right of paymentwith all of the Company’s other senior unsecured indebtedness and will effectively rank junior to all liabilities of the Company’s subsidiaries. At September 24,2017 and September 25, 2016 , the aggregate fair value of the notes, based on Level 2 inputs, was approximately $21.5 billion and $ 10.6 billion , respectively.F-26QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIn connection with issuance of the May 2015 Notes, the Company entered into interest rate swaps with an aggregate notional amount of $3.0 billion , whicheffectively converted all of the fixed-rate notes due in 2018 and approximately 43% and 50% of the fixed-rate notes due in 2020 and 2022, respectively, intofloating-rate notes. The net gains and losses on the interest rate swaps, as well as the offsetting gains or losses on the related fixed-rate notes attributable to thehedged risks, are recognized in earnings in interest expense in the current period. The Company did not enter into similar interest rate swaps in connection withissuance of the May 2017 Notes.The effective interest rates for the notes include the interest on the notes, amortization of the discount, which includes debt issuance costs, and if applicable,adjustments related to hedging. Interest is payable in arrears quarterly for the floating-rate notes and semi-annually for the fixed-rate notes. Cash interest paidrelated to the Company’s commercial paper program and long-term debt, net of cash received from the related interest rate swaps, was $313 million , $282 millionand negligible during fiscal 2017 , 2016 and 2015 , respectively.Debt Covenants. The Amended and Restated Revolving Credit Facility and the Term Loan Facility require, and the Bridge Loan Facility and prior RevolvingCredit Facility required, that the Company comply with certain covenants, including one financial covenant to maintain a ratio of consolidated earnings beforeinterest, taxes, depreciation and amortization to consolidated interest expense, as defined in each of the respective agreements, of not less than three to one at theend of each fiscal quarter . The Company is not subject to any financial covenants under the notes nor any covenants that would prohibit the Company fromincurring additional indebtedness ranking equal to the notes, paying dividends, issuing securities or repurchasing securities issued by it or its subsidiaries. AtSeptember 24, 2017 and September 25, 2016 , the Company was in compliance with the applicable covenants under each facility outstanding at such time.Note 7. Commitments and ContingenciesLegal and Regulatory Proceedings.ParkerVision, Inc. v. QUALCOMM Incorporated : On May 1, 2014, ParkerVision filed a complaint against the Company in the United States District Courtfor the Middle District of Florida alleging that certain of the Company’s products infringe certain ParkerVision patents. On August 21, 2014, ParkerVisionamended the complaint, now captioned ParkerVision, Inc. v. QUALCOMM Incorporated, Qualcomm Atheros, Inc., HTC Corporation, HTC America, Inc.,Samsung Electronics Co., LTD., Samsung Electronics America, Inc. and Samsung Telecommunications America, LLC, broadening the allegations. ParkerVisionalleged that the Company infringes 11 ParkerVision patents and seeks damages and injunctive and other relief. On December 3, 2015, ParkerVision dismissed sixpatents from the lawsuit and granted the Company and all other defendants a covenant not to assert those patents against any existing products. On February 2,2016, after agreement among the parties, the District Court stayed the remainder of the case pending the resolution of the complaint filed by ParkerVision againstthe Company and other parties with the United States International Trade Commission (ITC) described below. Subsequently, ParkerVision announced that it hadreached a settlement with Samsung which dismissed the Samsung entities from the District Court case. The Company had previously filed Inter-Partes Reviewpetitions with the United States Patent and Trademark Office (USPTO) to invalidate all asserted claims of several of the remaining patents. On March 7, 2017, theUSPTO decided in the Company’s favor with respect to all asserted claims of one such patent. After the ITC action described below was closed, and uponagreement among the parties, on May 24, 2017, the District Court further stayed the District Court case pending ParkerVision’s appeals of the USPTO’sinvalidation decisions.On December 14, 2015, ParkerVision filed another complaint against the Company in the United States District Court for the Middle District of Floridaalleging patent infringement. Apple Inc., Samsung Electronics Co., LTD., Samsung Electronics America, Inc., Samsung Telecommunications America, LLC,Samsung Semiconductor, Inc., LG Electronics, Inc., LG Electronics U.S.A., Inc. and LG Electronics MobileComm U.S.A., Inc. are also named defendants. Thecomplaint asserts that certain of the Company’s products infringe four additional ParkerVision patents and seeks damages and other relief. On December 15, 2015,ParkerVision filed a complaint with the ITC pursuant to Section 337 of the Tariff Act of 1930 against the same parties asserting the same four patents. Thecomplaint seeks an exclusion order barring the importation of products that use either of two Company transceivers or one Samsung transceiver and a cease anddesist order preventing the Company and the other defendants from carrying out commercial activities within the United States related to such products. OnJanuary 13, 2016, the Company served its answer to the District Court complaint. On January 15, 2016, the ITC instituted an investigation. On February 12, 2016,the District Court case was stayed pending completion of the ITC investigation. Subsequently, ParkerVision announced that it had reached a settlement withSamsung which dismissed the Samsung entities from the ITC investigation and related District Court case. On February 2, 2017, the ITC granted ParkerVision’smotion to drop all but one patent and one accused product from the ITC investigation. On March 12, 2017, one day before the ITC hearing was scheduled to begin,ParkerVision moved to withdraw its ITC complaint in its entirety. The Company and theF-27QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSother defendants did not oppose the withdrawal of the complaint. On April 28, 2017, the ITC formally closed the investigation. On May 4, 2017, ParkerVision fileda motion to reopen the related District Court Case, and on May 26, 2017, the District Court granted the motion. On July 19, 2017, the District Court set anapproximate date of mid-January 2018 for a claim construction hearing. A trial date has not been set.Apple Inc. (Apple) v. QUALCOMM Incorporated: On January 20, 2017, Apple filed a complaint against the Company in the United States District Court forthe Southern District of California seeking declarations with respect to several of the Company’s patents and alleging that the Company breached certainagreements and violated federal antitrust and California state unfair competition laws. In its initial complaint, Apple sought declaratory judgments of non-infringement by Apple of nine of the Company’s patents, or in the alternative, a declaration of royalties Apple must pay for the patents. Apple further sought adeclaration that the Company’s sale of baseband chipsets exhausts the Company’s patent rights for patents embodied in those chipsets. Separately, Apple sought toenjoin the Company from seeking excessive royalties from Apple and to disgorge royalties paid by Apple’s contract manufacturers that the court finds were notfair, reasonable and non-discriminatory (FRAND). Apple also claimed that the Company’s refusal to make certain payments to Apple under a BusinessCooperation and Patent Agreement (Cooperation Agreement) constitutes a breach of contract in violation of California law and sought damages in the amount ofthe unpaid payments, alleged to be approximately $1 billion. In addition, Apple claimed that the Company has refused to deal with competitors in contravention ofthe Company’s agreements with applicable standard setting organizations, has used its market position to impose contractual obligations on Apple that preventedApple from challenging the Company’s licensing practices, has tied the purchase of the Company’s CDMA-enabled and “premium” LTE-enabled chipsets tolicensing certain of the Company’s patents and has required Apple to purchase baseband chipsets exclusively from the Company as a condition of the Company’spayment to Apple of certain rebates, in violation of Section 2 of the Sherman Act and the California Unfair Competition Law. Apple sought injunctive relief withrespect to these claims and a judgment awarding its expenses, costs and attorneys’ fees.On April 10, 2017, the Company filed its Answer and Counterclaims (amended on May 24, 2017) in response to Apple’s complaint denying Apple’s claimsand asserting claims against Apple. The counterclaims against Apple include tortious interference with the Company’s long-standing Subscriber Unit LicenseAgreements (SULAs) with third-party contract manufacturers of Apple devices, causing those contract manufacturers to withhold certain royalty payments owed tothe Company and violate their audit obligations; breach of contract and the implied covenant of good faith and fair dealing relating to the parties’ CooperationAgreement; unjust enrichment and declaratory relief relating to the Cooperation Agreement; breach of contract based on Apple’s failure to pay amounts owed tothe Company under a Statement of Work relating to a high-speed feature of the Company’s chipsets; breach of the parties’ software agreement; and violation ofCalifornia Unfair Competition Law based on Apple’s threatening the Company to prevent it from promoting the superior performance of the Company’s ownchipsets. The Company also seeks declaratory judgments that the Company has satisfied its FRAND commitments with respect to Apple, and that the Company’sSULAs with the contract manufacturers do not violate either competition law or the Company’s FRAND commitments. On June 19, 2017, Apple filed a PartialMotion to Dismiss the Company’s counterclaim for violation of the California Unfair Competition Law. A hearing on that motion was held on October 13, 2017.The court has not yet ruled on the motion. On June 20, 2017, Apple filed an Answer and Affirmative Defenses to the rest of the Company’s counterclaims, and alsofiled an Amended Complaint reiterating all of the original claims and adding claims for declaratory judgments of invalidity of the nine patents that are subject todeclaratory judgment claims in the original complaint, adding new declaratory judgment claims for non-infringement, invalidity and a declaration of royalties fornine more patents. Apple also added claims for declaratory judgments that certain of the Company’s agreements are unenforceable. On July 21, 2017, theCompany filed an Answer to Apple’s Amended Complaint as well as a motion to dismiss the new declaratory judgment claims for non-infringement, invalidity anda declaration of royalties for the nine additional patents. A hearing on that motion was also held on October 13, 2017. The court has not yet ruled on the motion. OnJuly 18, 2017, Apple filed a motion to consolidate this action with QUALCOMM Incorporated v. Compal Electronics, Inc., et al. , discussed below, and onSeptember 13, 2017, the court granted that motion.On January 23, 2017, an Apple subsidiary in China filed two complaints against the Company in the Beijing Intellectual Property Court. On March 31, 2017,the court granted an application by Apple Inc. to join the actions as a plaintiff, and Apple amended the complaints. One of the complaints alleges a violation ofChina’s Anti-Monopoly Law (AML complaint); the other complaint requests a determination of the terms of a patent license between the Company and Apple(FRAND complaint). The AML complaint alleges that (i) the Company has abused its dominant position in communication standard-essential patents licensingmarkets and certain global baseband chipset markets by charging and offering royalty terms that were excessively high; (ii) the Company refused to license certainimplementers of standardized technologies, including Apple and baseband chipset manufacturers; (iii) the Company forced Apple to use only the Company’sproducts and services; and (iv) the Company bundled licenses to standard-essential patents with licenses to non-standard-essential patents andF-28QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSimposed other unreasonable or discriminatory trading terms on Apple in violation of the AML. The AML complaint seeks a decree that the Company cease thealleged abuse of dominance, as well as damages in the amount of 1 billion Chinese Renminbi (approximately $152 million based on the exchange rate onSeptember 24, 2017). The FRAND complaint makes allegations similar to the AML complaint and further alleges that the Company refused to offer licensingterms for the Company’s cellular standard-essential patents consistent with the Company’s FRAND licensing commitments and failed to provide to Apple certaininformation about the Company’s patents. The FRAND complaint seeks (i) a declaration that the license terms offered to Apple by the Company for its mobilecommunication standard essential patents are not compliant with FRAND; (ii) an order that the Company cease its actions that allegedly violate the Company’sFRAND obligations, including pricing on unfair, unreasonable and excessive terms, refusing to deal, imposing unreasonable trade conditions and failing to provideinformation on the Company’s patents; and (iii) a determination of FRAND-compliant license terms for the Company’s Chinese standard-essential patents. Applealso seeks its expenses in each of the cases. On August 3, 2017, the Company received three additional complaints filed by an Apple subsidiary and Apple Inc.against the Company in the Beijing Intellectual Property Court. The complaints seek declaratory judgments of non-infringement of three Qualcomm patents.On February 16, 2017, Apple and one of its Japanese subsidiaries filed four complaints against the Company in the Tokyo District Court. In three of thecomplaints, Apple seeks declaratory judgment of non-infringement by Apple of three of the Company’s patents. Apple further seeks a declaration that theCompany’s patent rights with respect to those three patents are exhausted by the Company’s SULAs with the contract manufacturers of Apple’s devices as well asthe Company’s sale of baseband chipsets. Apple also seeks an award of fees. On May 15, 2017, the Company learned of the fourth complaint. In that complaint,Apple and one of its Japanese subsidiaries seek damages of 100 million Japanese Yen (approximately $1 million based on the exchange rate on September 24,2017) from the Company based on allegations that the Company violated the Japanese Antimonopoly Act and the Japanese Civil Code. In particular, the fourthcomplaint alleges that (i) the Company holds a monopoly position in the market for baseband processor chipsets that implement certain cellular standards; (ii) theCompany collects double royalties through its license agreements and the sale of chipsets; (iii) the Company refused to grant Apple a license on FRAND terms andforced Apple to execute a rebate agreement under unreasonable conditions; (iv) the Company refused to grant Apple a direct license; and (v) the Companydemanded a license fee based on the market value of the total device. The Company has filed answers to all four of the complaints.On March 2, 2017, the Company learned that Apple and certain of its European subsidiaries issued a Claim Form against the Company in the UK High Courtof Justice, Chancery Division, Patents Court on January 23, 2017. Apple subsequently filed an Amended Claim Form and Particulars of Claim. Both the AmendedClaim Form and the Particulars of Claim allege several European competition law claims, including refusal to license competing chipmakers, failure to offer Applea direct license to the Company’s standard-essential patents on FRAND terms, demanding excessive royalties for the Company’s standard-essential patents, anddemanding excessive license fees for the use of the Company’s standard-essential patents in connection with chipsets purchased from the Company. Apple alsoseeks declarations that the Company is obliged to offer a direct patent license to Apple in respect of standard-essential patents actually practiced on fair, reasonableand non-discriminatory terms and that using the Company’s chipsets does not infringe any of the Company’s patents because the Company exhausted its patentrights. Finally, Apple seeks declarations that five of the Company’s European (UK) patents are invalid and not essential, and an order that each of those patents berevoked.On April 20, 2017, the Company was informed that on April 18, 2017, Apple and one of its Taiwanese subsidiaries filed a complaint against the Company inthe Taiwan Intellectual Property Court alleging that the Company has abused a dominant market position in licensing wireless standard-essential patents andselling baseband chipsets, including improper pricing, refusal to deal, exclusive dealing, tying, imposing unreasonable trade terms and discriminatory treatment.The complaint seeks rulings that the Company not use the sales price of the terminal device as the royalty base for standard-essential patents; not leverage itscellular standard-essential patents to obtain licenses of its non-standard-essential patents or demand cross-licenses without proper compensation; not refuse, reduce,delay or take any other action to limit the supply of its baseband chipsets to non-licensees; that the Company must license its standard-essential patents on FRANDterms; and that the Company shall not, based on standard-essential patents, seek injunctions. The complaint also seeks damages of 10 million Taiwan Dollars (lessthan $1 million based on the exchange rate on September 24, 2017), among other relief.On July 14, 2017, the Company filed a motion for anti-suit injunction in the United States District Court for the Southern District of California, asking thecourt to enjoin Apple from pursuing its foreign actions in the UK, China, Japan and Taiwan and from initiating other duplicative foreign actions, while the actionin the Southern District of California is pending. On September 7, 2017, the court denied this motion.The Company believes Apple’s claims in the above matters are without merit.F-29QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSQUALCOMM Incorporated v. Compal Electronics, Inc. et al .: On May 17, 2017, the Company filed a complaint in the United States District Court for theSouthern District of California against Compal Electronics, Inc. (Compal), FIH Mobile, Ltd., Hon Hai Precision Industry Co., Ltd. (together with FIH Mobile, Ltd.,Foxconn), Pegatron Corporation (Pegatron) and Wistron Corporation (Wistron) asserting claims for injunctive relief, specific performance, declaratory relief anddamages stemming from the defendants’ breach of contracts by ceasing the payment of royalties for iPhones and other devices which they manufacture for Apple.On May 24, 2017, the Company filed a Motion for Preliminary Injunction seeking to enjoin each of the defendants from violating their license agreements duringthe pendency of the litigation. On July 17, 2017, Compal, Foxconn, Pegatron and Wistron each filed third-party complaints for contractual indemnity against Appleseeking to join Apple as a party to the action. On July 18, 2017, Apple filed an answer to these third party complaints acknowledging its indemnity agreements andconsenting to be joined. On that same date, the defendants and Apple filed papers opposing the motion for preliminary injunction. On August 18, 2017, a hearingon the preliminary injunction motion was held, and on September 7, 2017, the court denied the motion. Also on July 18, 2017, the defendants filed an Answer andCounterclaims to the complaint, asserting defenses and counterclaims similar to allegations previously made by Apple in the Apple Inc. v. QUALCOMMIncorporated case in the Southern District of California discussed above. In addition, the defendants asserted certain new claims, including claims under Section 1of the Sherman Act and California’s Cartwright Act. The defendants seek damages, declaratory relief, injunctive relief, restitution of certain royalties and otherrelief. On July 18, 2017, Apple filed a motion to consolidate this action with the Apple Inc. v. QUALCOMM Incorporated case in the Southern District ofCalifornia. On September 13, 2017, the court granted Apple’s consolidation motion.The Company believes Compal’s, Foxconn’s, Pegatron’s and Wistron’s claims in the above matter are without merit.QUALCOMM Incorporated v. Apple Inc. : On July 6, 2017, the Company filed a complaint against Apple in the United States District Court for the SouthernDistrict of California asserting claims for damages and injunctive relief for infringement of six of the Company’s patents directed to a variety of features found iniPhone models. On July 7, 2017, the Company filed a complaint against Apple in the United States International Trade Commission (ITC) requesting that the ITCinstitute an investigation pursuant to Section 337 of the Tariff Act of 1930 based on Apple’s infringement of the same six patents. The Company is seeking alimited exclusion order and cease and desist order against importation of iPhone models that do not contain a Qualcomm brand baseband processor. The patentshave not been declared as essential to any standards organization and are not subject to commitments to license on FRAND terms. Apple filed an Answer andCounterclaims in the District Court case on September 26, 2017, but no schedule has been set in that case. On August 8, 2017, the ITC issued a notice of institutionof an investigation. On August 25, 2017, the Company withdrew allegations as to one patent in both the ITC investigation and the District Court case. A claimconstruction hearing is scheduled in the ITC investigation for January 22-23, 2018. The ITC investigation is scheduled for evidentiary hearing by theAdministrative Law Judge (ALJ) from June 18-26, 2018. The ALJ’s Initial Determination on the merits is due on September 14, 2018, and the target date for finaldetermination by the ITC is set for January 14, 2019.On July 17, 2017, the Company filed complaints against Apple and certain of its subsidiaries in the Federal Republic of Germany, asserting infringement ofone patent in the Mannheim District Court and infringement of another patent in the Munich District Court. On October 2, 2017, the Company filed claimextensions in these actions against Apple and certain of its subsidiaries, asserting infringement of two additional patents in the Mannheim District Court andinfringement of five additional patents in the Munich District Court. The complaints seek remedies including, among other relief, declaratory relief confirmingliability on the merits for damages and injunctive relief. The patents have not been declared as essential to any standards organization and are not subject tocommitments to license on FRAND terms.On September 29, 2017, the Company filed three complaints against Apple and certain of its subsidiaries in the Beijing (China) Intellectual Property Court,asserting infringement of three patents. The complaints seek remedies including injunctive relief and costs. The patents have not been declared as essential to anystandards organization and are not subject to commitments to license on FRAND terms.On November 1, 2017, the Company filed a complaint against Apple in San Diego Superior Court for breach of the Master Software Agreement between thecompanies. The complaint recounts instances when Apple failed to protect the Company’s software as required by the agreement and failed to provide sufficientinformation to which the Company is entitled under the agreement in order to understand whether other breaches have occurred. The complaint seeks specificperformance of Apple’s obligations to cooperate with an audit of its handling of the Company’s software, damages and injunctive relief. No case schedule has yetbeen set.3226701 Canada, Inc. v. QUALCOMM Incorporated et al: On November 30, 2015, plaintiffs filed a securities class action complaint against the Company andcertain of its current and former officers in the United States District Court for theF-30QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSouthern District of California. On April 29, 2016, plaintiffs filed an amended complaint. On January 27, 2017, the court dismissed the amended complaint in itsentirety, granting leave to amend. On March 17, 2017, plaintiffs filed a second amended complaint, alleging that the Company and certain of its current and formerofficers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by making false and misleading statements regarding theCompany’s business outlook and product development between November 19, 2014 and July 22, 2015. The second amended complaint seeks unspecifieddamages, interest, attorneys’ fees and other costs. On May 8, 2017, the Company filed a motion to dismiss the second amended complaint, and on October 20,2017, the court entered an order granting in part and denying in part the Company’s motion to dismiss. The court dismissed all claims as to all defendants otherthan the Company and Steve Mollenkopf with prejudice. The court also limited the case to two statements which it found, at least for pleading purposes, had stateda claim that could be explored in the discovery process. The Company believes the plaintiffs’ claims are without merit.Consolidated Securities Class Action Lawsuit: On January 23, 2017 and January 26, 2017, respectively, two securities class action complaints were filed bypurported stockholders of the Company in the United States District Court for the Southern District of California against the Company and certain of its currentand former officers and directors. The complaints alleged, among other things, that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Actof 1934, and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact in connection with certain allegations that theCompany is or was engaged in anticompetitive conduct. The complaints sought unspecified damages, interest, fees and costs. On May 4, 2017, the courtconsolidated the two actions and appointed lead plaintiffs. On July 3, 2017, the lead plaintiffs filed a consolidated amended complaint asserting the same basictheories of liability and requesting the same basic relief. On September 1, 2017, the defendants filed a motion to dismiss the consolidated amended complaint. Thehearing on that motion is scheduled for December 4, 2017. The Company believes the plaintiffs’ claims are without merit.Consumer Class Action Lawsuit: Since January 18, 2017, a number of consumer class action complaints have been filed against the Company in the UnitedStates District Courts for the Southern and Northern Districts of California, each on behalf of a putative class of purchasers of cellular phones and other cellulardevices. Twenty-four such cases remain outstanding. In April 2017, the Judicial Panel on Multidistrict Litigation transferred the cases that had been filed in theSouthern District of California to the Northern District of California. On May 15, 2017, the court entered an order appointing the plaintiffs’ co-lead counsel, and onMay 25, 2017, set a trial date of April 29, 2019. On July 11, 2017, plaintiffs filed a consolidated amended complaint alleging that the Company violated Californiaand federal antitrust and unfair competition laws by, among other things, refusing to license standard-essential patents to its competitors, conditioning the supply ofcertain of its baseband chipsets on the purchaser first agreeing to license the Company’s entire patent portfolio, entering into exclusive deals with companiesincluding Apple Inc., and charging unreasonably high royalties that do not comply with the Company’s commitments to standard setting organizations. Thecomplaint seeks unspecified damages and disgorgement and/or restitution, as well as an order that the Company be enjoined from further unlawful conduct. OnAugust 11, 2017, the Company filed a motion to dismiss the consolidated amended complaint. The Company believes the plaintiffs’ claims are without merit. Japan Fair Trade Commission (JFTC) Complaint : The JFTC received unspecified complaints alleging that the Company’s business practices are, in someway, a violation of Japanese law. On September 29, 2009, the JFTC issued a cease and desist order concluding that the Company’s Japanese licensees were forcedto cross-license patents to the Company on a royalty-free basis and were forced to accept a provision under which they agreed not to assert their essential patentsagainst the Company’s other licensees who made a similar commitment in their license agreements with the Company. The cease and desist order seeks to requirethe Company to modify its existing license agreements with Japanese companies to eliminate these provisions while preserving the license of the Company’spatents to those companies. The Company disagrees with the conclusions that it forced its Japanese licensees to agree to any provision in the parties’ agreementsand that those provisions violate the Japanese Antimonopoly Act. The Company has invoked its right under Japanese law to an administrative hearing before theJFTC. In February 2010, the Tokyo High Court granted the Company’s motion and issued a stay of the cease and desist order pending the administrative hearingbefore the JFTC. The JFTC has held hearings on 37 different dates. No further hearings are currently scheduled.Korea Fair Trade Commission (KFTC) Complaint : On January 4, 2010, the KFTC issued a written decision finding that the Company had violated Koreanlaw by offering certain discounts and rebates for purchases of its CDMA chipsets and for including in certain agreements language requiring the continuedpayment of royalties after all licensed patents have expired. The KFTC levied a fine, which the Company paid and recorded as an expense in fiscal 2010. TheCompany appealed to the Seoul High Court, and on June 19, 2013, the Seoul High Court affirmed the KFTC’s decision. On July 4, 2013, the CompanyF-31QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSfiled an appeal with the Korea Supreme Court. There have been no material developments since then with respect to this matter.Korea Fair Trade Commission (KFTC) Investigation : On March 17, 2015, the KFTC notified the Company that it was conducting an investigation of theCompany relating to the Korean Monopoly Regulation and Fair Trade Act (MRFTA). On December 27, 2016, the KFTC announced that it had reached a decisionin the investigation, finding that the Company has violated provisions of the MRFTA. On January 22, 2017, the Company received the KFTC’s formal writtendecision, which finds that the following conducts violate the MRFTA: (i) refusing to license, or imposing restrictions on licenses for, cellular communicationsstandard-essential patents with competing modem chipset makers; (ii) conditioning the supply of modem chipsets to handset suppliers on their execution andperformance of license agreements with the Company; and (iii) coercing agreement terms including portfolio license terms, royalty terms and free cross-grantterms in executing patent license agreements with handset makers. The KFTC’s decision orders the Company to: (i) upon request by modem chipset companies,engage in good-faith negotiations for patent license agreements, without offering unjustifiable conditions, and if necessary submit to a determination of terms by anindependent third party; (ii) not demand that handset companies execute and perform under patent license agreements as a precondition for purchasing modemchips; (iii) not demand unjustifiable conditions in the Company’s license agreements with handset companies, and upon request renegotiate existing patent licenseagreements; and (iv) notify modem chipset companies and handset companies of the decision and order imposed on the Company and report to the KFTC new oramended agreements. According to the KFTC’s decision, the foregoing will apply to transactions between the Company and the following enterprises: (i) handsetmanufacturers headquartered in Korea and their affiliate companies; (ii) enterprises that sell handsets in or to Korea and their affiliate companies; (iii) enterprisesthat supply handsets to companies referred in (ii) above and the affiliate companies of such enterprises; (iv) modem chipset manufacturers headquartered in Koreaand their affiliate companies; and (v) enterprises that supply modem chipsets to companies referred in (i), (ii) or (iii) above and the affiliate companies of suchenterprises. The KFTC’s decision also imposed a fine of approximately 1.03 trillion Korean Won (approximately $927 million ), which was paid on March 30,2017. The Company believes that its business practices do not violate the MRFTA, and on February 21, 2017 filed an action in the Seoul High Court to cancel theKFTC’s decision. The Seoul High Court has not ruled on the Company’s action to cancel the KFTC’s decision. On the same day, the Company filed an applicationwith the Seoul High Court to stay the decision’s remedial order pending the Seoul High Court’s final judgment on the Company’s action to cancel the KFTC’sdecision. The Seoul High Court held hearings on the Company’s application to stay the decision’s remedial order on July 10, 2017 and July 14, 2017. OnSeptember 4, 2017, the Seoul High Court denied the Company’s application to stay the remedial order. The Company has appealed the Seoul High Court’sdecision to the Korea Supreme Court. The Supreme Court has not ruled on the Company’s appeal of the stay decision.Icera Complaint to the European Commission (Commission) : On June 7, 2010, the Commission notified and provided the Company with a redacted copy of acomplaint filed with the Commission by Icera, Inc. (subsequently acquired by Nvidia Corporation) alleging that the Company has engaged in anticompetitiveactivity. The Company was asked by the Commission to submit a preliminary response to the portions of the complaint disclosed to it, and the Company submittedits response in July 2010. Subsequently, the Company provided additional documents and information as requested by the Commission. On July 16, 2015, theCommission announced that it had initiated formal proceedings in this matter. On December 8, 2015, the Commission announced that it had issued a Statement ofObjections expressing its preliminary view that between 2009 and 2011, the Company engaged in predatory pricing by selling certain baseband chipsets to twocustomers at prices below cost, with the intention of hindering competition. A Statement of Objections informs the subject of the investigation of the allegationsagainst it and provides an opportunity to respond to such allegations. It is not a determination of the final outcome of the investigation. On August 15, 2016, theCompany submitted its response to the Statement of Objections. If a violation is found, a broad range of remedies is potentially available to the Commission,including imposing a fine and/or injunctive relief prohibiting or restricting certain business practices. It is difficult to predict the outcome of this matter or whatremedies, if any, may be imposed by the Commission. The Company believes that its business practices do not violate the EU competition rules.European Commission (Commission) Investigation : On October 15, 2014, the Commission notified the Company that it is conducting an investigation of theCompany relating to Articles 101 and/or 102 of the Treaty on the Functioning of the European Union (TFEU). On July 16, 2015, the Commission announced that ithad initiated formal proceedings in this matter. On December 8, 2015, the Commission announced that it had issued a Statement of Objections expressing itspreliminary view that since 2011 the Company has paid significant amounts to a customer on condition that it exclusively use the Company’s baseband chipsets inits smartphones and tablets. This conduct has allegedly reduced the customer’s incentives to source chipsets from the Company’s competitors and harmedcompetition and innovation for certain baseband chipsets. A Statement of Objections informs the subject of the investigation of the allegations against it andprovides anF-32QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSopportunity to respond to such allegations. It is not a determination of the final outcome of the investigation. On June 27, 2016, the Company submitted itsresponse to the Statement of Objections. If a violation is found, a broad range of remedies is potentially available to the Commission, including imposing a fineand/or injunctive relief prohibiting or restricting certain business practices. It is difficult to predict the outcome of this matter or what remedies, if any, may beimposed by the Commission. The Company believes that its business practices do not violate the EU competition rules.United States Federal Trade Commission (FTC) v. QUALCOMM Incorporated : On September 17, 2014, the FTC notified the Company that it is conductingan investigation of the Company relating to Section 5 of the Federal Trade Commission Act (FTCA). On January 17, 2017, the FTC filed a complaint against theCompany in the United States District Court for the Northern District of California alleging that the Company engaged in anticompetitive conduct and unfairmethods of competition in violation of Section 5 of the FTCA by conditioning the supply of baseband processors on the purchaser first agreeing to a license to theCompany’s standard-essential patents, paying incentives to purchasers of baseband processors to induce them to accept certain license terms, refusing to license itsstandard-essential patents to the Company’s competitors and entering into alleged exclusive dealing arrangements with Apple Inc. The complaint seeks apermanent injunction against the Company’s alleged violations of the FTCA and other unspecified ancillary equitable relief. The Company filed a motion todismiss the FTC’s complaint on April 3, 2017, which the court denied on June 26, 2017. On April 19, 2017, the court set a trial date for January 4, 2019. TheCompany believes the FTC’s claims are without merit.Taiwan Fair Trade Commission (TFTC) Investigation : On December 4, 2015, the TFTC notified the Company that it was conducting an investigation intowhether the Company’s patent licensing practices violate the Taiwan Fair Trade Act (TFTA). On April 27, 2016, the TFTC specified that the allegations underinvestigation include whether: (i) the Company jointly licensed its patents rather than separately licensing standard-essential patents and non-standard-essentialpatents; (ii) the Company’s royalty charges are unreasonable; (iii) the Company unreasonably required licensees to grant it cross-licenses; (iv) the Company failedto provide lists of licensed patents to licensees; (v) the Company violated a FRAND licensing commitment by declining to grant licenses to chipset makers; (vi) theCompany declined to sell chipsets to unlicensed potential customers; and (vii) the Company provided royalty rebates to certain companies in exchange for theirexclusive use of the Company’s chipsets. On October 11, 2017, the TFTC announced that it had reached a decision in the investigation, finding that the Companyhas violated the TFTA. On October 23, 2017, the Company received TFTC’s formal written decision, which finds that the following conducts violate the TFTA: (i)refusing to license and demanding restrictive covenants from chip competitors; (ii) refusing to supply baseband processors to companies that do not have anexecuted license; and (iii) providing a royalty discount to Apple in exchange for its exclusive use of the Company’s chipsets. The TFTC’s decision orders theCompany to: (1) cease the following conduct within 60 days of the day after receipt of the decision: (a) applying the clauses in an agreement entered into with acompeting chip supplier requesting it to provide sensitive sales information such as chip prices, customers, sales volumes, product types and serial numbers; (b)applying clauses in component supply agreements entered into with handset manufacturers relating to the refusal to sell chips to unlicensed manufacturers; and (c)applying discount clauses in the exclusive agreement entered into with a relevant enterprise; (2) notify competing chip companies and handset manufacturers inwriting within 30 days after receipt of the decision that those companies may request to amend or enter into patent license agreements and other relevantagreements within 60 days of the day following the day such notices are received, and upon receipt of such requests, the Company shall commence negotiation ingood faith; (3) submit status reports to the TFTC on any such negotiations every six months beginning from the day after receipt of the decision, as well as tosubmit a report to the TFTC within 30 days after amendments to any license agreements or newly signed license agreements are executed. The TFTC’s decisionalso imposed a fine of 23.4 billion Taiwan Dollars (approximately $778 million based on the exchange rate at September 24, 2017), which is due on or beforeNovember 7, 2017. The Company believes that its business practices do not violate the TFTA and intends to seek a stay of, and to file an action to revoke, theTFTC’s decision.Contingent losses: The Company will continue to vigorously defend itself in the foregoing matters. However, litigation and investigations are inherentlyuncertain. Accordingly, the Company cannot predict the outcome of these matters. Other than with respect to the TFTC fine, the Company has not recorded anyaccrual at September 24, 2017 for contingent losses associated with these matters based on its belief that losses, while possible, are not probable. Further, anypossible range of loss cannot be reasonably estimated at this time. The unfavorable resolution of one or more of these matters could have a material adverse effecton the Company’s business, results of operations, financial condition or cash flows. The Company is engaged in numerous other legal actions not described abovearising in the ordinary course of its business and, while there can be no assurance, believes that the ultimate outcome of these other legal actions will not have amaterial adverse effect on its business, results of operations, financial condition or cash flows.F-33QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSIndemnifications . The Company generally does not indemnify its customers and licensees for losses sustained from infringement of third-party intellectualproperty rights. However, the Company is contingently liable under certain product sales, services, license and other agreements to indemnify certain customers,chipset foundries and semiconductor assembly and test service providers against certain types of liability and/or damages arising from qualifying claims of patent,copyright, trademark or trade secret infringement by products or services sold or provided by the Company, or by intellectual property provided by the Company tochipset foundries and semiconductor assembly and test service providers. The Company’s obligations under these agreements may be limited in terms of timeand/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by the Company.Through September 24, 2017 , the Company has received a number of claims from its direct and indirect customers and other third parties for indemnificationunder such agreements with respect to alleged infringement of third-party intellectual property rights by its products. Reimbursements under indemnificationarrangements have not been material to the Company’s consolidated financial statements. The Company has not recorded any accrual for contingent liabilities atSeptember 24, 2017 associated with these indemnification arrangements based on the Company’s belief that additional liabilities, while possible, are not probable.Further, any possible range of loss cannot be reasonably estimated at this time.Purchase Obligations . The Company has agreements with suppliers and other parties to purchase inventory, other goods and services and long-lived assets.Obligations under these agreements at September 24, 2017 for each of the subsequent five years from fiscal 2018 through 2022 were $4.3 billion , $1.0 billion ,$376 million , $120 million and $27 million , respectively, and there were no obligations thereafter. Of these amounts, for each of the subsequent five years fromfiscal 2018 through 2022, commitments to purchase integrated circuit product inventories comprised $3.5 billion , $846 million , $286 million , $72 million and$27 million , respectively, and there were no purchase commitments thereafter. Integrated circuit product inventory obligations represent purchase commitmentsfor raw materials, semiconductor die, finished goods and manufacturing services, such as wafer bump, probe, assembly and final test. Under the Company’smanufacturing relationships with its foundry suppliers and assembly and test service providers, cancelation of outstanding purchase commitments is generallyallowed but requires payment of costs incurred through the date of cancelation, and in some cases, incremental fees related to capacity underutilization.Operating Leases . The Company leases certain of its land, facilities and equipment under noncancelable operating leases, with terms ranging from less thanone year to 21 years and with provisions in certain leases for cost-of-living increases. Rental expense for fiscal 2017 , 2016 and 2015 was $129 million , $116million and $99 million , respectively. Future minimum lease payments at September 24, 2017 for each of the subsequent five years from fiscal 2018 through 2022were $98 million , $102 million , $82 million , $66 million and $42 million , respectively, and $55 million thereafter.Other Commitments . At September 24, 2017 , the Company was committed to fund certain strategic investments up to $514 million , of which $69 million isexpected to be funded in both fiscal 2018 and fiscal 2021. The remaining commitments do not have fixed funding dates and are subject to certain conditions.Commitments represent the maximum amounts to be funded under these arrangements; actual funding may be in lesser amounts or not at all.Note 8. Segment InformationThe Company is organized on the basis of products and services and has three reportable segments. The Company conducts business primarily through itsQCT (Qualcomm CDMA Technologies) semiconductor business and its QTL (Qualcomm Technology Licensing) licensing business. QCT develops and suppliesintegrated circuits and system software based on CDMA, OFDMA and other technologies for use in mobile devices, wireless networks, devices used in the Internetof Things (IoT), broadband gateway equipment, consumer electronic devices and automotive telematics and infotainment systems. QTL grants licenses to useportions of its intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products.The Company’s QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments and includes revenues and related costs associated withdevelopment contracts with an equity method investee. The Company also has nonreportable segments, including its mobile health, data center, small cell andother wireless technology and service initiatives.The Company evaluates the performance of its segments based on earnings (loss) before income taxes (EBT). Segment EBT includes the allocation of certaincorporate expenses to the segments, including depreciation and amortization expense related to unallocated corporate assets. Certain income and charges are notallocated to segments in the Company’s management reports because they are not considered in evaluating the segments’ operating performance. Unallocatedincome and charges include certain interest expense; certain net investment income; certain share-based compensation; and certain research and developmentexpenses, selling, general and administrative expenses and other expenses or income that were deemed to be not directly related to the businesses of the segments.Additionally, unallocated charges include recognition ofF-34QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSthe step-up of inventories to fair value, amortization of certain intangible assets and certain other acquisition-related charges, third-party acquisition and integrationservices costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset impairment charges andlitigation settlements and/or damages. Additionally, starting with acquisitions in the second quarter of fiscal 2017, unallocated charges include recognition of thedepreciation related to the step-up of property, plant and equipment to fair value. Such charges related to acquisitions that were completed prior to the secondquarter of fiscal 2017 continue to be allocated to the respective segment, and such amounts are not material. All of the costs related to the initial research of 5G(fifth generation) technology are included in unallocated corporate research and development expenses, whereas initial costs related to the research of 3G (thirdgeneration) and 4G (fourth generation) technology were recorded in both the QCT segment and unallocated corporate research and development expenses based onthe nature of the activity. Fiscal 2016 and 2015 results have not been revised as such costs were incurred prior to fiscal 2014.The table below presents revenues, EBT and total assets for reportable segments (in millions): 2017 2016 2015Revenues QCT$16,479 $15,409 $17,154QTL6,445 7,664 7,947QSI113 47 4Reconciling Items(746) 434 176Total$22,291 $23,554 $25,281EBT QCT$2,747 $1,812 $2,465QTL5,175 6,528 6,882QSI65 386 (74)Reconciling Items(4,967) (1,893) (2,786)Total$3,020 $6,833 $6,487Assets QCT$3,830 $2,995 $2,923QTL1,735 644 438QSI1,037 910 812Reconciling Items58,884 47,810 46,623Total$65,486 $52,359 $50,796The Company reports revenues from external customers by country based on the location to which its products or services are delivered, which for QCT isgenerally the country in which its customers manufacture their products, or for licensing revenues, the invoiced addresses of its licensees. As a result, the revenuesby country presented herein are not necessarily indicative of either the country in which the devices containing the Company’s products and/or intellectual propertyare ultimately sold to consumers or the country in which the companies that sell the devices are headquartered. For example, China revenues could includerevenues related to shipments of integrated circuits to a company that is headquartered in South Korea but that manufactures devices in China, which devices arethen sold to consumers in Europe and/or the United States. Revenues by country were as follows (in millions): 2017 2016 2015China (including Hong Kong)$14,579 $13,503 $13,337South Korea3,538 3,918 4,107United States513 386 246Other foreign3,661 5,747 7,591 $22,291 $23,554 $25,281F-35QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSegment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI. QSI segment assets include certain non-marketable equity instruments and other investments and a receivable from the sale of wireless spectrum in fiscal 2016 (Note 2). QSI assets at September 24, 2017, September 25, 2016 and September 27, 2015 included $254 million , $162 million and $163 million , respectively, related to investments in equity methodinvestees. The increase in QCT segment assets resulted primarily from the Company’s recently formed RF360 Holdings joint venture in the second quarter of fiscal2017 (Note 9). The increase in QTL segment assets was due to an increase in accounts receivable (Note 2). Total segment assets differ from total assets on aconsolidated basis as a result of unallocated corporate assets primarily comprised of certain cash, cash equivalents, marketable securities, property, plant andequipment, deferred tax assets, intangible assets and assets of nonreportable segments. The net book values of long-lived tangible assets located outside of theUnited States were $1.4 billion , $404 million and $414 million at September 24, 2017 , September 25, 2016 and September 27, 2015 , respectively. The increasein fiscal 2017 was primarily from the RF360 Holdings joint venture, which has substantially all of its operations outside the United States. The net book values oflong-lived tangible assets located in the United States were $1.8 billion , $1.9 billion and $2.1 billion at September 24, 2017 , September 25, 2016 andSeptember 27, 2015 , respectively.Reconciling items in the previous table were as follows (in millions): 2017 2016 2015Revenues Nonreportable segments$311 $438 $181BlackBerry arbitration(962) — —Unallocated other revenues(95) — —Intersegment eliminations— (4) (5) $(746) $434$176EBT BlackBerry arbitration$(962) $— $—Unallocated other revenues(95) — —Unallocated cost of revenues(517) (495) (314)Unallocated research and development expenses(1,056) (799) (809)Unallocated selling, general and administrative expenses(647) (478) (497)Unallocated other expense, net(1,742) (154) (1,289)Unallocated interest expense(488) (292) (101)Unallocated investment and other income, net913 667 855Nonreportable segments(373) (342) (630)Intersegment eliminations— — (1) $(4,967) $(1,893) $(2,786)In May 2017, in connection with the arbitration decision, BlackBerry Limited (BlackBerry) and the Company entered into a Joint Stipulation Regarding FinalAward Agreement agreeing that the Company would pay BlackBerry $940 million to cover the award amount, pre-judgment interest and attorneys’ fees. Thisamount, which was paid in the third quarter of fiscal 2017, also reflected $22 million that was owed to the Company by BlackBerry, which was recorded asrevenues in the QTL segment. The remaining amount was recorded as an adjustment to revenues related to the arbitration decision, which was not allocated toQTL in the Company’s management reports because it will not be considered in evaluating segment results. Unallocated other revenues is comprised of a reductionto revenues related to the portion of a business arrangement under negotiation that resolves a legal dispute. Unallocated other expense, net in fiscal 2017 wascomprised of charges related to the fines imposed by the KFTC and the TFTC (Note 7), as well as restructuring and restructuring-related charges related to theCompany’s Strategic Realignment Plan, which was substantially implemented in fiscal 2016 (Note 10). Unallocated other expense, net for fiscal 2016 wascomprised of net restructuring and restructuring-related charges related to the Company’s Strategic Realignment Plan (Note 10). Unallocated other expense, net forfiscal 2015 was comprised of a charge related to the resolution reached with the NDRC, goodwill and intangible asset impairment charges related to three of theCompany’s nonreportable segments and restructuring and restructuring-related charges related to the Company’s Strategic Realignment Plan, partially offset by again on the sale of certain property, plant and equipment (Note 2).Unallocated acquisition-related expenses were comprised as follows (in millions):F-36QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2017 2016 2015Cost of revenues$437 $434 $272Research and development expenses20 10 14Selling, general and administrative expenses272 99 72Note 9. AcquisitionsCompleted. On February 3, 2017 (the Closing Date), the Company and TDK Corporation (TDK) completed the formation of a joint venture, under the nameRF360 Holdings, to enable delivery of radio frequency front-end (RFFE) modules and radio frequency (RF) filters into fully integrated products for mobile devicesand Internet of Things (IoT) applications, among others. The joint venture is owned 51% by Qualcomm Global Trading Pte. Ltd. (Qualcomm Global Trading), aSingapore corporation and wholly-owned subsidiary of the Company, and 49% by EPCOS AG (EPCOS), a German wholly-owned subsidiary of TDK. RF360Holdings is a Singapore corporation with research and development and manufacturing and/or sales locations in the United States, Europe and Asia and itsheadquarters in Munich, Germany. Certain intellectual property, patents and filter and module design and manufacturing assets were carved out of existing TDKbusinesses and are owned by the joint venture, and certain assets were acquired directly by affiliates of the Company. Qualcomm Global Trading has the option toacquire (and EPCOS has an option to sell) EPCOS’s interest in the joint venture for $1.15 billion (Settlement Amount) 30 months after the Closing Date (the Putand Call Option).EPCOS is entitled to up to a total of $200 million in payments based on sales of RF filter functions over the three-year period after the Closing Date, which isa substitute for and in lieu of the right of EPCOS to receive any profit sharing, distributions, dividends or other payments of any kind or nature. Such contingentconsideration was recorded as a liability at fair value at close based on significant inputs that were not observable, with future changes in fair value recorded inearnings. Such fair value adjustments recorded in fiscal 2017 were negligible.RF360 Holdings is a variable interest entity, and its results of operations and statement of financial position are included in the Company’s consolidatedfinancial statements (on a one-month reporting lag) as the governance structure of RF360 Holdings provides the Company with the power to direct the activities ofthe joint venture that most significantly impact its economic performance, such as operating decisions related to research and development, manufacturing andsales and marketing of its products. Since the Put and Call Option is considered a financing of the Company’s purchase of EPCOS’s interest in RF360 Holdings,noncontrolling interest is not recorded in the Company’s consolidated financial statements. Therefore, the Put and Call Option was recorded as a liability at fairvalue at close and included in other noncurrent liabilities. The liability is being accreted to the Settlement Amount, with the offset recorded as interest expense. Thecarrying value of the Put and Call Option approximated its estimated fair value at September 24, 2017 .The total purchase price consisted of the following (in millions):Cash paid to TDK at close$1,463Fair value of Put and Call Option1,112Fair value of contingent consideration and other deferred payments496Total purchase price$3,071The Company has not finalized the accounting for this business acquisition related to certain tax matters, and therefore, such amounts are subject to changeduring the remainder of the one year measurement period. The allocation of the purchase price to the assets acquired and liabilities assumed based on their fairvalues was as follows (in millions):F-37QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSCash and cash equivalents$306Accounts receivable303Inventories261Intangible assets subject to amortization: Technology-based intangible assets738Customer-related intangible assets87Marketing-related intangible assets8In-process research and development (IPR&D)75Property, plant and equipment821Goodwill829Other assets42Total assets3,470Liabilities(399) $3,071The Company recognized $829 million in goodwill related to this transaction, of which $386 million is expected to be deductible for tax purposes. Thegoodwill recognized was allocated to the QCT segment for annual impairment testing purposes. The goodwill is primarily attributable to the assembled workforceand synergies expected to arise after the acquisition. Each category of intangible assets acquired will be amortized on a straight-line basis over the weighted-average useful lives of seven years for technology-based intangible assets, nine years for customer-related intangible assets and one year for marketing-relatedintangible assets. At September 24, 2017 , the remaining IPR&D of $61 million consisted of two projects, which are expected to be completed over the next year.Upon completion, the IPR&D projects will be amortized over their useful lives, which are estimated to be six years . The estimated fair values of the intangibleassets and the property, plant and equipment acquired were primarily determined using the income approach and cost approach, respectively, both of which werebased on significant inputs that were not observable.The Company’s results of operations for fiscal 2017 included the operating results of RF360 Holdings on a one-month reporting lag since the date ofacquisition, the amounts of which were not material. The following table presents the unaudited pro forma results for fiscal 2017 and fiscal 2016 . The unauditedpro forma financial information combines the results of operations of Qualcomm and RF360 Holdings as though the companies had been combined as of thebeginning of fiscal 2016 . The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would havebeen achieved if the acquisition had taken place at such time. The unaudited pro forma results presented below include adjustments for the step-up of inventories tofair value, amortization and depreciation of identified intangible assets and property, plant and equipment, adjustments for certain acquisition-related charges,interest expense related to the Put and Call Option and related tax effects (in millions): (Unaudited) 2017 2016Pro forma revenues$22,806 $24,731Pro forma net income attributable to Qualcomm2,614 5,791During fiscal 2017, the Company acquired three other businesses for total cash consideration of $35 million , net of cash acquired, and up to a total of $94million in certain contingent payments, which were recorded as a liability at fair value. The Company recognized $47 million in goodwill related to thesetransactions, of which $12 million is expected to be deductible for tax purposes. Goodwill of $23 million , $12 million and $11 million was assigned to theCompany’s QTL, QCT and nonreportable segments, respectively.During fiscal 2016, the Company acquired four businesses for total cash consideration of $392 million , net of cash acquired. Technology-based intangibleassets of $257 million were recognized with a weighted-average useful life of four years . The Company recognized $172 million in goodwill related to thesetransactions, all of which was assigned to the Company’s QCT segment and of which $24 million is expected to be deductible for tax purposes.On August 13, 2015 , the Company acquired CSR plc, which was renamed CSR Limited (CSR), for total cash consideration of $2.3 billion (net of $176million of cash acquired). CSR is an innovator in the development of multifunctionF-38QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSsemiconductor platforms and technologies for the automotive, consumer and voice and music categories. The acquisition complemented the Company’s currentofferings by adding products, channels and customers in the growth categories of the IoT and automotive infotainment. CSR was integrated into the QCT segment.The $2.4 billion total purchase price was allocated as follows: $1.0 billion to amortizable intangible assets, $969 million to goodwill, $182 million to IPR&Dand $280 million to other net assets.Goodwill recognized in this transaction is not deductible for tax purposes and was allocated to the QCT segment for annual impairment testing purposes.Goodwill is primarily attributable to synergies expected to arise after the acquisition. Each category of intangible assets acquired are being amortized on a straight-line basis over their weighted-average useful lives of five years for technology-based intangible assets and four years for customer-related and marketing-relatedintangible assets.The Company’s results of operations for fiscal 2015 included the operating results of CSR since the date of acquisition, the amounts of which were notmaterial. Unaudited pro forma revenues and net income attributable to Qualcomm for fiscal 2015, presenting the results of operations of Qualcomm and CSR asthough the companies had been combined as of the beginning of fiscal 2014, were $25.9 billion and $5.2 billion , respectively. This unaudited pro formainformation is provided for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had takenplace as of the beginning of fiscal 2014.During fiscal 2015, the Company acquired four other businesses for total cash consideration of $405 million , net of cash acquired. Technology-basedintangible assets of $84 million were recognized with a weighted-average useful life of eight years . The Company recognized $289 million in goodwill related tothese transactions, of which $35 million is expected to be deductible for tax purposes. Goodwill of $29 million , $6 million and $254 million was assigned to theCompany’s QCT, QTL and nonreportable segments, respectively.Proposed. On October 27, 2016 , the Company announced a definitive agreement under which Qualcomm River Holdings, B.V. (Qualcomm River Holdings),an indirect, wholly owned subsidiary of QUALCOMM Incorporated, will acquire NXP Semiconductors N.V. (NXP). Pursuant to the definitive agreement,Qualcomm River Holdings has commenced a tender offer to acquire all of the issued and outstanding common shares of NXP for $110 per share in cash, forestimated total cash consideration to be paid to NXP’s shareholders of $38 billion . NXP is a leader in high-performance, mixed-signal semiconductor electronicsin automotive, broad-based microcontrollers, secure identification, network processing and RF power products.The transaction is subject to receipt of regulatory approvals in various jurisdictions and other closing conditions, including the tender of at least 80% of theissued and outstanding common shares of NXP in the offer (provided that the minimum tender threshold may be reduced to a percentage not less than 70% withthe prior written consent of NXP). At an Extraordinary General Meeting of NXP’s shareholders held on January 27, 2017, NXP’s shareholders approved certainmatters relating to the transaction, including the appointment of designees of Qualcomm River Holdings to NXP’s board of directors (effective upon the closing ofthe transaction) and certain transactions that are intended to be consummated after the completion of the tender offer.In May 2017, the Company issued an aggregate principal amount of $11.0 billion of unsecured floating- and fixed-rate notes with varying maturities, of whicha portion will be used to fund the purchase price and other related transactions. In addition, the Company has secured $4.0 billion in committed financing through aTerm Loan Facility, which is expected to be drawn on at the close of the NXP transaction (Note 6). The remaining amount will be funded with cash held by foreignentities.Qualcomm River Holdings and NXP may terminate the definitive agreement under certain circumstances. If the definitive agreement is terminated by NXP incertain circumstances, NXP will be required to pay Qualcomm River Holdings a termination fee of $1.25 billion . If the definitive agreement is terminated byQualcomm River Holdings under certain circumstances involving the failure to obtain the required regulatory approvals or the failure of NXP to complete certainpre-closing reorganization steps in all material respects, Qualcomm River Holdings will be required to pay NXP a termination fee of $2.0 billion . In November2016, as required by the definitive agreement, Qualcomm River Holdings entered into four letters of credit for an aggregate amount of $2.0 billion related to thepotential termination fee payable to NXP. Pursuant to the terms of each letter of credit, NXP will have the right to draw amounts to fund certain terminationcompensation owed by Qualcomm River Holdings to NXP if the definitive agreement is terminated under certain circumstances. The letters of credit expire onJune 30, 2018 or if drawn on by NXP or surrendered by Qualcomm River Holdings. Each letter of credit is required to be fully cash collateralized in an amountequal to 100% of its face value through deposits with the issuers of the letters of credit. Qualcomm River Holdings is restricted from using the funds deposited ascollateral while the letters of credit areF-39QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSoutstanding. At September 24, 2017 , the letters of credit were fully collateralized through bank time deposits and money market funds, which were recorded asother noncurrent assets.Note 10. Strategic Realignment PlanOn July 22, 2015 , the Company announced a Strategic Realignment Plan designed to improve execution, enhance financial performance and drive profitablegrowth as the Company works to create sustainable long-term value for stockholders. As part of this, among other actions, the Company implemented a costreduction plan, which included a series of targeted reductions across the Company’s businesses, particularly in QCT, and a reduction to its annual share-basedcompensation grants. Restructuring activities were initiated in the fourth quarter of fiscal 2015, the cost reduction initiatives were achieved by the end of fiscal2016 and other activities under the plan were completed by the end of fiscal 2017 . During fiscal 2017, 2016 and 2015, the Company recorded restructuring andrestructuring-related charges of $37 million , $202 million (which was partially offset by a $48 million gain on the sale of the Company’s business that providedaugmented reality applications) and $190 million , respectively.Note 11. Fair Value MeasurementsThe following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 24, 2017 (inmillions): Level 1 Level 2 Level 3 TotalAssets Cash equivalents$21,016 $12,933 $— $33,949Marketable securities U.S. Treasury securities and government-related securities969 13 — 982Corporate bonds and notes— 2,285 — 2,285Mortgage- and asset-backed and auction rate securities— 93 40 133Equity and preferred securities and equity funds36 — — 36Debt funds— 109 — 109Total marketable securities1,005 2,500 40 3,545Derivative instruments— 14 — 14Other investments369 — 125 494Total assets measured at fair value$22,390 $15,447 $165 $38,002Liabilities Derivative instruments$— $27 $— $27Other liabilities369 — 196 565Total liabilities measured at fair value$369 $27 $196 $592Activity between Levels of the Fair Value Hierarchy. There were no significant transfers between Level 1 and Level 2 during fiscal 2017 and 2016 .The following table includes the activity for marketable securities, other investments and other liabilities classified within Level 3 of the valuation hierarchy(in millions):F-40QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2017 2016 MarketableSecurities Other Investments OtherLiabilities MarketableSecurities Other InvestmentsBeginning balance of Level 3$43 $37 $— $224 $13Total realized and unrealized gains or losses: Included in selling, general and administrative expenses— — (7) — —Included in investment and other income, net— 3 — (4) (23)Included in other comprehensive income (loss)— 8 — (1) 15Issuances— — 203 — —Purchases— 111 — 2 40Sales— — — (106) —Settlements(3) (34) — (45) (8)Transfers into Level 3— — — — —Transfers out of Level 3— — — (27) —Ending balance of Level 3$40 $125 $196 $43 $37The Company recognizes transfers into and out of levels within the fair value hierarchy at the end of the fiscal month in which the actual event or change incircumstances that caused the transfer occurs. Transfers out of Level 3 during fiscal 2016 for marketable securities primarily consisted of debt securities withsignificant upgrades in credit ratings or for which there were observable inputs.Nonrecurring Fair Value Measurements. The Company measures certain assets and liabilities at fair value on a nonrecurring basis. These assets andliabilities include cost and equity method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in anacquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale ordetermined to be impaired. During fiscal 2015, the Company updated the business plans and related internal forecasts related to certain of the Company’sbusinesses, resulting in impairment charges to write down certain property, plant and equipment, intangible assets and goodwill (Note 2). The Companydetermined the fair values using cost, income and market approaches. The estimation of fair value and cash flows used in the fair value measurements required theuse of significant unobservable inputs, and as a result, the fair value measurements were classified as Level 3. During fiscal 2017, 2016 and 2015, the Company didnot have any other significant assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.Note 12. Marketable SecuritiesMarketable securities were comprised as follows (in millions): Current Noncurrent September 24, 2017 September 25, 2016 September 24, 2017 September 25, 2016Available-for-sale: U.S. Treasury securities and government-related securities$23 $1,116 $959 $1,099Corporate bonds and notes2,014 10,159 271 8,584Mortgage- and asset-backed and auction rate securities93 1,363 40 534Equity and preferred securities and equity funds36 64 — 1,682Debt funds109 — — 1,803Total available-for-sale2,275 12,702 1,270 13,702Time deposits4 — — —Total marketable securities$2,279 $12,702 $1,270 $13,702During fiscal 2016, the Company exited an investment in a debt fund for which the Company elected the fair value option. The investment would haveotherwise been recorded using the equity method. Changes in fair value associated with this investment were recognized in investment and other income, net.During fiscal 2016 and 2015 , the net decrease in fairF-41QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSvalue associated with this investment was negligible and $10 million , respectively. At September 24, 2017 , marketable securities also included $4 million oftime deposits with original maturities that range from 94 to 285 days.At September 24, 2017 , the contractual maturities of available-for-sale debt securities were as follows (in millions): September 24, 2017Years to Maturity: Less than one year$2,189One to five years1,079Five to ten years—Greater than ten years—No single maturity date241Total$3,509Debt securities with no single maturity date included debt funds, mortgage- and asset-backed securities and auction rate securities.The Company recorded realized gains and losses on sales of available-for-sale securities as follows (in millions): Gross Realized Gains Gross RealizedLosses Net Realized Gains2017$553 $(127) $4262016277 (37) 2402015540 (52) 488Available-for-sale securities were comprised as follows (in millions): Cost Unrealized Gains Unrealized Losses Fair ValueSeptember 24, 2017 Equity securities$8 $28 $— $36Debt securities (including debt funds)3,497 13 (1) 3,509 $3,505 $41 $(1) $3,545September 25, 2016 Equity securities$1,554 $204 $(12) $1,746Debt securities (including debt funds)24,363 388 (93) 24,658 $25,917 $592 $(105) $26,404The following table shows the gross unrealized losses and fair values of the Company’s investments in individual securities that are classified as available-for-sale and have been in a continuous unrealized loss position deemed to be temporary for less than 12 months and for more than 12 months, aggregated byinvestment category (in millions): September 24, 2017 Less than 12 months More than 12 months Fair Value Unrealized Losses Fair Value Unrealized LossesCorporate bonds and notes$330 $(1) $21 $—F-42QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 25, 2016 Less than 12 months More than 12 months Fair Value Unrealized Losses Fair Value Unrealized LossesU.S. Treasury securities and government-related securities$444 $(5) $16 $—Corporate bonds and notes2,775 (12) 1,033 (65)Mortgage- and asset-backed and auction rate securities337 (3) 211 (2)Equity and preferred securities and equity funds312 (4) 130 (8)Debt funds— — 309 (6) $3,868 $(24) $1,699 $(81)In connection with the proposed NXP transaction (Note 9), the Company divested a substantial portion of its marketable securities portfolio in order tofinance, in part, that transaction. Marketable securities that were expected to be used to finance the NXP transaction were classified as noncurrent at September 24,2017 as they are not considered available for current operations. Given the change in the Company’s intention to sell certain marketable securities, the Companyrecognized other-than-temporary impairment losses in fiscal 2017 for such marketable securities (Note 2) and may recognize additional losses prior to the sale ofsuch marketable securities. For the available-for-sale securities that are not expected to be sold to finance the NXP transaction, the Company concluded that theunrealized losses were temporary at September 24, 2017 . Further, for debt securities with unrealized losses, as of September 24, 2017 , the Company did not havethe intent to sell, nor was it more likely than not that the Company would be required to sell, such securities before recovery or maturity.F-43QUALCOMM IncorporatedNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 13. Summarized Quarterly Data (Unaudited)The following financial information reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of theresults of the interim periods.The table below presents quarterly data for fiscal 2017 and 2016 (in millions, except per share data): 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter2017 (1) Revenues$5,999 $5,016 $5,371 $5,905Operating income (2)778 729 773 333Net income (2)681 749 865 168Net income attributable to Qualcomm682 749 866 168 Basic earnings per share attributable to Qualcomm (3):$0.46 $0.51 $0.59 $0.11Diluted earnings per share attributable to Qualcomm (3):0.46 0.50 0.58 0.11 2016 (1) Revenues$5,775 $5,551 $6,044 $6,184Operating income1,685 1,415 1,592 1,804Net income1,496 1,164 1,443 1,599Net income attributable to Qualcomm1,498 1,164 1,444 1,599 Basic earnings per share attributable to Qualcomm (3):$1.00 $0.78 $0.98 $1.08Diluted earnings per share attributable to Qualcomm (3):0.99 0.78 0.97 1.07(1)Amounts, other than per share amounts, are rounded to millions each quarter. Therefore, the sum of the quarterly amounts may not equal the annual amounts reported.(2)Operating income and net income in the fourth quarter of fiscal 2017 were negatively impacted by a $778 million charge related to the TFTC fine.(3)Earnings per share attributable to Qualcomm are computed independently for each quarter and the full year based upon respective average shares outstanding. Therefore,the sum of the quarterly earnings per share amounts may not equal the annual amounts reported.F-44SCHEDULE IIQUALCOMM INCORPORATEDVALUATION AND QUALIFYING ACCOUNTS(In millions) Balance atBeginning ofPeriod Charged(Credited) toCosts andExpenses Deductions Other Balance atEnd ofPeriodYear ended September 24, 2017 Allowances: — trade receivables$1 $10 $— $— $11Valuation allowance on deferred tax assets754 109 — — 863 $755 $119 $— $— $874Year ended September 25, 2016 Allowances: — trade receivables$6 $(5) $— $— $1Valuation allowance on deferred tax assets635 118 — 1(a)754 $641 $113 $— $1 $755Year ended September 27, 2015 Allowances: — trade receivables$5 $1 $— $— $6— notes receivable4 — (3) (1)(b)—Valuation allowance on deferred tax assets414 130 — 91(a)635 $423 $131 $(3) $90 $641(a)This amount was recorded to goodwill in connection with a business acquisition.(b)This amount relates to notes receivable on strategic investments that were converted to cost method equity investments.S-1EXHIBIT 10.38QUALCOMM INCORPORATED2018 DIRECTOR COMPENSATION PLANARTICLE 1ADOPTION1.1 Adoption . The Compensation Committee (the “Compensation Committee”) of the Board of Directors of Qualcomm Incorporated (the“Company”) adopted and approved this 2018 Director Compensation Plan (the “Plan”) by resolutions adopted on September 21, 2017. The Plan was adopted toestablish the compensation to be paid to the Company’s nonemployee directors (“Directors”), based on the Compensation Committee’s annual review ofnonemployee director compensation, including an analysis prepared by independent compensation analyst Frederic W. Cook & Co., Inc., of reported nonemployeedirector compensation practices at the same peer companies used in the Compensation Committee’s evaluation of compensation for the Company’s namedexecutive officers. This Plan is effective on January 1, 2018.1.2 Issuance of Deferred Stock Units . The Plan constitutes a sub-plan under Section 3.5(j) of the 2016 Long-Term Incentive Plan, as amended (the"2016 LTIP"), with respect to the grant of Deferred Stock Units as set forth herein. By approval of this Plan, the Compensation Committee has authorized andapproved the grant, issuance and settlement of the Deferred Stock Units pursuant to the 2016 LTIP as provided herein and subject to the terms and conditions ofthe forms of award agreements for such Deferred Stock Units which have been authorized and approved by the Compensation Committee as provided in the 2016LTIP.ARTICLE 2DIRECTOR COMPENSATION2.1 Annual Retainer . Directors who are U.S. residents receive an Annual Retainer of $100,000 per calendar year. In consideration of the increasedtravel time, Directors who are non-U.S. residents receive an Annual Retainer of $120,000 per calendar year. The Annual Retainer is earned and paid quarterly inarrears, in equal one-fourth installments as soon as practicable after the end of each calendar quarter.2.2 Board Committee Chair Retainers . The chairs of the following Board Committees receive annual Board Committee Chair Retainers as follows:(a) Audit Committee Chair Retainer : $25,000 per calendar year;(b) Compensation Chair Retainer : $25,000 per calendar year; and(c) Governance Chair Retainer : $15,000 per calendar year.The Board may appoint special committees from time-to-time and the Board Committee Chair Retainer, if any, for the chairs of such committees are determined bythe Compensation Committee in its discretion. Board Committee Chair Retainers are earned and paid quarterly in arrears, in equal one-fourth installments as soonas practicable after the end of each calendar quarter.2.3 Presiding Director Retainer . The Presiding Director will receive an annual Presiding Director Retainer of $35,000, which is earned and paidquarterly in arrears, in equal one-fourth installments as soon as practicable after the end of each calendar quarter.2.4 Meeting Fees . Each Director will receive $1,500 for each standing committee meeting attended in person or by telephone. No fees are paid forattending Board meetings. Directors Emeriti receive $2,000 for each Board meeting attended in person and $1,000 for each telephonic Board meeting attended.The Board may appoint special committees from time-to-time and the Meeting Fees, if any, for such special committees are determined by the CompensationCommittee in its discretion. Meeting Fees will be paid on a quarterly basis as soon as practicable after the end of each calendar quarter.2.5 Annual Deferred Stock Units . On the date of the annual meeting of stockholders of the Company, each Director will receive an automatic grantof a number of Annual Deferred Stock Units (“Annual DSUs”) determined by dividing (1) $200,000, by (2) the fair value of each such unit on such date, asdetermined by Aon (or another third-party designated by the Company) in accordance with FASB ASC Topic 718, with the result rounded up to the next wholeunit. Annual DSUs are fully vested on the grant date and paid on the third anniversary of the grant date (subject to an election made pursuant to Section 3.1(b) ofthis Plan), or earlier upon death, Disability or a Change in Control, as set forth in the Annual DSU agreements approved by the Compensation Committee.2.6 Proration of Retainers and Annual Deferred Stock Units . An individual who becomes or ceases to be a Director other than on the first day ofany calendar quarter will receive prorated Retainers for that quarter based on the number of days in such calendar quarter in which he or she served as a Director.An individual commencing service as a Director between annual meetings of the stockholders, will receive an automatic grant on the date services commence of anumber of Annual DSUs equal to the product (rounded up to the nearest whole number) of (1) the number of Annual DSUs granted to each Director pursuant toSection 2.5 at the most recent annual meeting of stockholders of the Company, multiplied by (2) a fraction, (a) the numerator of which shall be the number ofcomplete or partial calendar months from and including the month he or she commences service as a Director through the end of the calendar month immediatelypreceding the month in which the next annual meeting is scheduled to be held (or, if the next annual meeting has not been scheduled as of the grant date, it will beassumed to be scheduled for the next-following March for this purpose), and (b) the denominator of which shall be 12.ARTICLE 3ELECTIONS TO DEFER PAYMENT OF COMPENSATION3.1 Allowable Deferrals(a) Elective Deferred Stock Units . Directors may elect to convert all or a portion (in 25% increments) of their Retainers into Elective Deferred StockUnits (“Elective DSUs”), which are fully vested on the grant date and payable upon the earliest of (1) a date elected by the Director that is at least three yearsfollowing the grant date, (2) separation from service, (3) death, (4) Disability, or (5) a Change in Control, as set forth in the Elective DSU agreements approved bythe Compensation Committee. A Director who has made such an election shall, on the last day of the calendar quarter for which the Retainer would be paid but forsuch election, automatically receive a grant pursuant to this Plan of a number of Elective DSUs equal to (i) the amount of the Retainer to which such electionapplies, divided by (ii) the Fair Market Value (as defined in the 2016 LTIP) of a share of the Company’s Common Stock on the last date of that quarter (or the nexttrading date following the close of the quarter with respect to any quarter that does not end on a trading date), with the result rounded up to the next whole unit.(b) Deferral of Payment Date for Annual Deferred Stock Units . A Director may elect to defer the payment of the Annual DSUs to a date that is laterthan three years from the grant date.(c) Deferrals into the Nonqualified Deferred Compensation Plan . Directors may elect to defer all or a portion (in whole percentages) of their Retainersand/or Meeting Fees into the Company’s Nonqualified Deferred2Compensation Plan (“NQDCP”), which gives Directors several investment options and allows them to select the timing and form of distributions.3.2 Timing and Manner of Elections(a) Annual Elections . Generally, any election referenced in Section 3.1 must be made by a Director in writing on the form provided by the Companybefore the beginning of the calendar year in which the Retainer or Meeting Fees are earned or the Annual DSU is granted.(b) First Year Elections for New Directors . Directors who join the Board between annual meetings may make an election referenced in Section 3.1 (a)or (c) no later than thirty (30) days following the date he or she joins the Board, although that election will apply only to Retainers or Meeting Fees earned after theend of the calendar quarter in which such election is made.(c) Effect of Elections . Elections are intended to comply with Section 409A of the Internal Revenue Code and are irrevocable and continue from yearto year unless changed or terminated effective as of the beginning of a subsequent calendar year.ARTICLE 4AMENDMENT AND TERMINATION4.1 Amendment and Termination . The Committee may at any time amend, suspend, discontinue or terminate this Plan; provided, however, that nosuch amendment, suspension, discontinuance or termination shall materially and adversely affect the rights of any Director with respect to amounts earned orDeferred Stock Units granted prior to the amendment, suspension, discontinuance or termination.3EXHIBIT 10.39QUALCOMM INCORPORATED2016 LONG-TERM INCENTIVE PLANEXECUTIVE RESTRICTED STOCK UNIT GRANT NOTICEQualcomm Incorporated (the “ Company ”), pursuant to its 2016 Long-Term Incentive Plan (the “ Plan ”) hereby grants to you, the Participant named below, thenumber of Restricted Stock Units set forth below, each of which represents the right to receive one (1) share of the Company’s common stock, subject to all of theterms and conditions as set forth in this Executive Restricted Stock Unit Grant Notice (the “ Grant Notice ”) and the Executive Restricted Stock Unit Agreement(attached hereto) and the Plan which are incorporated herein in their entirety. Capitalized terms not otherwise defined in this Grant Notice or the ExecutiveRestricted Stock Unit Agreement shall have the meaning set forth in the Plan. A copy of the Plan can be obtained from the Stock Administration website, locatedon the Company’s internal webpage, or you may request a hard copy from the Stock Administration Department.Participant : «Employee» Grant No. : «Number»Emp # : «ID»Number of Restricted Stock Units : «Shares_Granted»Date of Grant : «Grant_Date»Performance Period : September 25, 2017 – March 25, 2018Performance Measure : Adjusted GAAP Operating Income defined as the Company’s operating income, determined in accordance with generally acceptedaccounting principles in the United States (GAAP), but determined excluding(1)the Qualcomm Strategic Initiative segment as defined in the Company’s fiscal 2016 Form 10-K;(2)all share-based compensation other than amounts settleable in cash;(3)acquisition-related items, which consist of:(a)acquired in-process research and development,(b)recognition of the step-up of inventories to fair value,(c)purchase accounting effects on property, plant and equipment for acquisitions completed in or after the second quarter of fiscal 2017,(d)amortization of intangible assets for acquisitions completed in or after the third quarter of fiscal 2011,(e)expenses related to the termination of contracts that limit the use of the acquired intellectual property, and(f)third-party acquisition and integration services costs.The above adjustments shall apply only with respect to applicable items acquired in transactions that qualify as business combinations pursuant to GAAP;(4)the following items for which each event individually equals or exceeds $25 million on a pre-tax basis:(a)restructuring and restructuring-related costs (in the aggregate by restructuring event), which consist of the following costs:i.severance and benefits (including COBRA and outplacement expenses);ii.consulting costs;iii.increased security costs;iv.acceleration of depreciation and/or amortization expense;v.facilities and lease termination or abandonment charges;vi.asset impairment charges and/or contract terminations;vii.third-party business separation costs; andviii.relocation costs as a result of an office or facility closure.(b)goodwill and indefinite- and long-lived asset impairments;(c)gain/losses on divestitures or non-revenue generating asset sales; and(d)impact of litigation settlement, arbitration and/or judgment.(5)the impact of unresolved contract disputes on revenues recorded during the Performance Period (including but not limited to disputes resulting inlitigation or arbitration) to the extent a licensee withholds or fails to make royalty payments or disputes the royalty payment paid, provided that, to theextent that the licensee fails to report information sufficient to determine the actual impact on revenues of the withholding or failure to make royaltypayments or dispute of paid amounts, the average royalty revenues over the four fiscal quarters preceding the dispute (or such shorter period for whichinformation is available) shall be used to determine the impact on royalty revenues due to the contract dispute for purposes of this award, and suchamount shall be prorated as appropriate to reflect the period during the Performance Period in which such withholding, dispute or failure to pay impactsrevenues.Performance Target : «$_Amount» in Adjusted GAAP Operating Income for the Performance PeriodVesting Dates :Restricted Stock Units Vested Vesting Date«1/3 Shares» «1st Vesting Date»«1/3 Shares» «2nd Vesting Date»«1/3 Shares» «3rd Vesting Date»Additional Terms/Acknowledgments : You must acknowledge, in the form determined by the Company, receipt of, and represent that you have read, understand,accept and agree to the terms and conditions of, this Grant Notice, the Agreement including the Exclusive Consulting Agreement attached to the Agreement andthe Plan (including, but not limited to, the binding arbitration provision in Section 3.7 of the Plan).Qualcomm Incorporated:By: /s/ Steven M. MollenkopfSteven M. MollenkopfChief Executive OfficerDated: «Grant_Date»Attachment: Executive Restricted Stock Unit Agreement (RSU-EX-A12)QUALCOMM INCORPORATED 2016 LONG-TERM INCENTIVE PLAN EXECUTIVE RESTRICTED STOCK UNIT AGREEMENTQualcomm Incorporated (the “ Company ”) has granted a number of Restricted Stock Units (this “ Award ”) with respect to the number of shares of theCompany’s common stock (“ Stock ”) specified in the Executive Restricted Stock Unit Grant Notice (the “ Grant Notice ”) to you, the Participant named in theGrant Notice pursuant to the terms and conditions set forth in the Grant Notice, this Executive Restricted Stock Unit Agreement and the attachments hereto(together with the Grant Notice, the “ Agreement ”) and the 2016 Long-Term Incentive Plan (the “ Plan ”). Capitalized terms that are not explicitly defined in theGrant Notice or this Agreement but are defined in the Plan shall have the same definitions as in the Plan.The terms and conditions of this Award are as follows:1. VESTING.1.1 VESTING CONTINGENT ON ACHIEVING PERFORMANCE TARGET . Your Restricted Stock Units will become vested asprovided in Sections 1.2 through 1.6 and be paid as provided in Section 2 only if the Performance Measure equals or exceeds the Performance Target for thePerformance Period (as each capitalized term is defined in the Grant Notice). Any determination that the Performance Measure equals or exceeds the PerformanceTarget for the Performance Period shall be made by written certification of the Committee no later than the November 30 th that next follows the end of thePerformance Period. If the Performance Measure does not equal or exceed the Performance Target, this Award shall terminate and no Restricted Stock Units willvest or be paid.1.2 SERVICE VESTING. Except to the extent that your Restricted Stock Units may vest earlier as provided in Sections 1.3 through 1.6,below, your Restricted Stock Units will vest to the extent you are in Service on the applicable Vesting Date(s) specified in the Grant Notice.1.3 ATTAINMENT OF NORMAL RETIREMENT AGE. Your Restricted Stock Units will be fully vested on the later of (a) the datewhich is six (6) months after the Grant Date or (b) the date on which you have attained age fifty-five (55) and completed at least ten (10) years of consecutiveService.1.4 DEATH. If your Service terminates because of your death, the vesting of your Restricted Stock Units shall be accelerated in full effectiveupon your death.1.5 DISABILITY. If your Service terminates because of your Disability, the vesting of your Restricted Stock Units shall be accelerated infull effective as of the date on which your Service terminates due to your Disability.1.6 TERMINATION AFTER CHANGE IN CONTROL. If your Service terminates as a result of Termination After Change in Control (asdefined below), then the vesting of your Restricted Stock Units shall be accelerated in full effective as of the date on which your Service terminates. For thispurpose, “ Termination After Change in Control ” shall mean either of the following events occurring within twenty-four (24) months after a Change in Control(as defined in the Plan):(a) termination by the Participating Company Group of your Service with the Participating Company Group for any reason other thanfor Cause (as defined below); or(b) your resignation for Good Reason (as defined below) from all capacities in which you are then rendering Service to theParticipating Company Group within a reasonable period of time following the event constituting Good Reason.Notwithstanding any provision herein to the contrary, Termination After Change in Control shall not include any termination of your Service with the ParticipatingCompany Group which (A) is for Cause; (B) is a result of your1death or Disability; (C) is a result of your voluntary termination of Service other than for Good Reason; or (D) occurs prior to the effectiveness of a Change inControl.For purposes of this Section 1:“ Cause ” shall mean any of the following: (i) your theft, dishonesty, or falsification of any Participating Company documentsor records; (ii) your improper use or disclosure of a Participating Company’s confidential or proprietary information; (iii) any action by you which has adetrimental effect on a Participating Company’s reputation or business; (iv) your failure or inability to perform any reasonable assigned duties after written noticefrom a Participating Company of, and a reasonable opportunity to cure, such failure or inability; (v) any material breach by you of any employment or serviceagreement between you and a Participating Company, which breach is not cured pursuant to the terms of such agreement; (vi) your conviction (including any pleaof guilty or nolo contendere ) of any criminal act which impairs your ability to perform your duties with a Participating Company; or (vii) violation of a materialCompany or Participating Company policy.“ Good Reason ” shall mean any one or more of the following:(i) without your express written consent, the assignment to you of any duties, or any limitation of yourresponsibilities, substantially inconsistent with your positions, duties, responsibilities and status with the Participating Company Group immediately prior to thedate of a Change in Control;(ii) without your express written consent, the relocation of the principal place of your employment or service to alocation that is more than fifty (50) miles from your principal place of employment or service immediately prior to the date of a Change in Control, or theimposition of travel requirements substantially more demanding of you than such travel requirements existing immediately prior to the date of the Change inControl;(iii) any failure by the Participating Company Group to pay, or any material reduction by the Participating CompanyGroup of, (A) your base salary in effect immediately prior to the date of the Change in Control (unless reductions comparable in amount and duration areconcurrently made for all other employees of the Participating Company Group with responsibilities, organizational level and title comparable to yours), or (B)your bonus compensation, if any, in effect immediately prior to the date of a Change in Control (subject to applicable performance requirements with respect to theactual amount of bonus compensation earned by you);(iv) any failure by the Participating Company Group to (A) continue to provide you with the opportunity toparticipate, on terms no less favorable than those in effect for the benefit of any employee or service provider group which customarily includes a person holdingthe employment or service provider position or a comparable position with the Participating Company Group then held by you, in any benefit or compensationplans and programs, including, but not limited to, the Participating Company Group’s life, disability, health, dental, medical, savings, profit sharing, stock purchaseand retirement plans, if any, in which you were participating immediately prior to the date of the Change in Control, or their equivalent, or (B) provide you with allother fringe benefits (or their equivalent) from time to time in effect for the benefit of any employee group which customarily includes a person holding theemployment or service provider position or a comparable position with the Participating Company Group then held by you;(v) any breach by the Participating Company Group of any material agreement between you and a ParticipatingCompany concerning your employment; or(vi) any failure by the Company to obtain the assumption of any material agreement between you and the Companyconcerning your employment by a successor or assign of the Company.22. PAYMENT OF YOUR RESTRICTED STOCK UNITS.2.1 TIMING OF PAYMENT.(a) Subject to the other terms of the Plan and this Agreement, any Restricted Stock Units that vest in accordance with Section 1.2 willbe paid to you as follows: (i) the first installment shall be paid to you no later than 30 days after the later of (1) the earliest Vesting Date specified in the GrantNotice or (2) the date on which the Committee certifies in writing that the Performance Measure equals or exceeds the Performance Target for the PerformancePeriod; and (ii) any subsequent installments shall be paid to you no later than 30 days after the applicable Vesting Date specified in the Grant Notice.(b) Subject to the other terms of the Plan and this Agreement, any Restricted Stock Units that vest and become nonforfeitable inaccordance with Section 1.3 will be paid to you as follows: (i) the first installment shall be paid to you no later than 30 days after the later of (1) the earliestVesting Date specified in the Grant Notice or (2) the date on which the Committee certifies in writing that the Performance Measure equals or exceeds thePerformance Target for the Performance Period; and (ii) any subsequent installments shall be paid to you no later than 30 days after the applicable Vesting Datespecified in the Grant Notice; provided, however, that payments shall be made pursuant to this Section 2.1(b) following termination of your employment with theParticipating Company only if such termination was not for Cause and you (A) execute a general release of claims in a form satisfactory to the Company and thatgeneral release becomes irrevocable before the 60th day following your termination of employment, and (B) comply with the requirements contained in theExclusive Consulting Agreement attached hereto as Attachment 1 (the “ Consulting Agreement ”). Notwithstanding the foregoing, in the event you violate any ofthe provisions contained in the Consulting Agreement, any Restricted Stock Units that became vested pursuant to Section 1.3 shall be immediately forfeitedwithout consideration. In the event that your employment is terminated for Cause, you shall immediately forfeit your right to payment of any Restricted StockUnits following the date of such termination under this Section 2.1(b).(c) Subject to the other terms of the Plan and this Agreement, any Restricted Stock Units that vest and become nonforfeitable inaccordance with Sections 1.4, 1.5 or 1.6 will be paid to you no later than 30 days after the later of the date your Service terminates or the date on which theCommittee certifies in writing that the Performance Measure equals or exceeds the Performance Target.2.2 FORM OF PAYMENT. Your vested Restricted Stock Units shall be paid in whole shares of Stock except as otherwise provided inSection 10.3 of the Plan regarding fractional shares attributable to Dividend Equivalents.2.3 TAX WITHHOLDING. You acknowledge that the Company and/or the Participating Company that employs you (the “ Employer ”)may be subject to withholding tax obligations arising by reason of the vesting and/or payment of this Award. You authorize your Employer to satisfy thewithholding tax obligations by one or a combination of the following methods, as selected by the Company in its sole discretion: (a) withholding from your payand any other amounts payable to you; (b) withholding of Stock and/or cash from the payment of this Award; (c) arranging for the sale of shares of Stock payablein connection with this Award (on your behalf and at your direction which you authorize by accepting this Award); or (d) any other method allowed by the Plan orapplicable law. Notwithstanding the foregoing, you may elect in the manner specified by the Company to make a cash payment to the Company or your Employerto satisfy the withholding tax obligations with respect to this Award, provided such election is made during an open trading window under the Qualcomm InsiderTrading Policy and you are not in possession of any material nonpublic information at the time of such election. If your Employer satisfies the withholdingobligations by withholding a number of whole shares of Stock as described in subsection (b) herein, you will be deemed to have been issued the full number ofshares of Stock subject to this Award, notwithstanding that a number of shares is held back in order to satisfy the withholding obligations. The “ Fair MarketValue ” of any Stock withheld pursuant to this Section 2.3 shall be equal to the closing price of a share of Stock as quoted on any national or regional securitiesexchange or market system constituting the primary market for the Stock on the date of determination (or, if there is no closing price on that day, the last tradingday prior to that day) or, if the Stock is not listed on a national or regional securities exchange or market system, the value of a share of Stock as determined by theCommittee in good faith without regard to any restriction other than a restriction3which, by its terms, will never lapse. The Company shall not be required to issue any shares of Stock pursuant to this Agreement unless and until the withholdingobligations are satisfied.3. TAX ADVICE. You represent, warrant and acknowledge that the Company and, if different, your Employer, has made no warranties orrepresentations to you with respect to the income tax consequences of the transactions contemplated by this Award, and you are in no manner relying on theCompany, your Employer or their representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS ANDREGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE TAX TREATMENT OF THISOR ANY OTHER AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OFAVOIDING TAXPAYER PENALTIES.4. DIVIDEND EQUIVALENTS. If the Board declares a cash dividend on the Company’s Stock, you will be entitled to Dividend Equivalents in theform, payable on the terms and at such times as provided in Section 10.3 of the Plan.5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, no shares of Stock will be issued to you uponvesting or payment of this Award unless the Stock is then registered under the Securities Act or, if such Stock is not then so registered, the Company hasdetermined that such vesting and issuance would be exempt from the registration requirements of the Securities Act. By accepting this Award, you agree not to sellany of the shares of Stock received under this Award at a time when applicable laws or Company policies prohibit a sale.6. TRANSFERABILITY. Prior to the issuance of shares of Stock in payment of all Restricted Stock Units, your Restricted Stock Units shall not besubject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by your creditors or by yourbeneficiary, except (a) transfer by will or by the laws of descent and distribution or (b) transfer by written designation of a beneficiary, in a form acceptable to theCompany, with such designation taking effect upon your death. All rights with respect to your Restricted Stock Units shall be exercisable during your lifetime onlyby you or your guardian or legal representative. Prior to actual payment of any Restricted Stock Units, such Restricted Stock Units will represent an unsecuredobligation of the Company, payable (if at all) only from the general assets of the Company.7. AWARD NOT A SERVICE CONTRACT. This Award is not an employment or service contract and nothing in this Agreement, the Grant Noticeor the Plan shall be deemed to create in any way whatsoever any obligation on your part to continue in the Service of a Participating Company, or of a ParticipatingCompany to continue your Service with the Participating Company. In addition, nothing in this Award shall obligate the Company, its stockholders, Board,Officers or Employees to continue any relationship which you might have as a Director or Consultant for the Company.8. RESTRICTIVE LEGEND. Stock issued pursuant to the vesting and payment this Award may be subject to such restrictions upon the sale, pledgeor other transfer of the Stock as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.9. REPRESENTATIONS, WARRANTIES, COVENANTS, AND ACKNOWLEDGMENTS. You hereby agree that in the event the Company andthe Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the shares of Stock issued pursuant to thisAward may be conditioned upon you making certain representations, warranties, and acknowledgments relating to compliance with applicable securities laws.10. VOTING AND OTHER RIGHTS. Subject to the terms of this Agreement, you shall not have any voting rights or any other rights and privilegesof a shareholder of the Company unless and until shares of Stock are issued upon payment of this Award.11. CODE SECTION 409A. It is the intent that the terms relating to the vesting and payment of the Award as set forth in this Agreement shall qualifyfor exemption from or comply with the requirements of Section 409A of the Code, and any ambiguities herein will be interpreted to so qualify or comply.Notwithstanding the4foregoing or anything herein to the contrary, if it is determined that this Award fails to satisfy the requirements of the “short-term deferral” exemption and isotherwise deferred compensation subject to Section 409A of the Code, and if you are a “specified employee” (as defined under Section 409A(a)(2)(B)(i) of theCode) as of the date of your “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)), then the issuance of any shares of Stock thatwould otherwise be made upon the date of the separation from service or within the first six (6) months thereafter will not be made on the originally scheduled dateand will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the separation from service, but only if such delay in theissuance of the shares is necessary to avoid the imposition of additional taxation on you in respect of the shares under Section 409A of the Code. The Companyreserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify this Agreement as may benecessary to ensure that all payments provided for under this Agreement are made in a manner that qualifies for exemption from or complies with Section 409A ofthe Code; provided, however, that the Company makes no representation that the vesting or payments pursuant to this Award provided for under this Agreementwill be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to the vesting orpayments pursuant to this Award or require that any vesting or payments pursuant to this Award comply with the require Section of 409A of the Code. TheCompany will have no liability to you or any other party if the Award, the delivery of shares of Stock upon payment of the Award or other payment hereunder thatis intended to be exempt from, or compliant with, Code Section 409A, is not so exempt or compliant or for any action taken by the Company with respect thereto.12. NOTICES. Any notices provided for in this Agreement, the Grant Notice or the Plan shall be given in writing and shall be deemed effectivelygiven upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed toyou at the last address you provided to the Company.13. NATURE OF GRANT. In accepting the Award, you acknowledge and agree that:(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminatedby the Company at any time, (subject to any limitations set forth in the Plan);(b) the Award is voluntary and occasional and does not create any contractual or other right to receive future awards, or benefits in lieu ofawards, even if other awards have been awarded repeatedly in the past;(c) all decisions with respect to future Awards, if any, will be at the sole discretion of the Company;(d) your participation in the Plan is voluntary;(e) the Award and the shares of Stock subject to the Award are not intended to replace any pension rights or compensation;(f) the Award and the shares of Stock subject to the Award are not part of normal or expected compensation or salary for any purposes,including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards,pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services forthe Company, the Employer or any Participating Company;(g) the future value of the underlying shares of Stock is unknown and cannot be predicted with any certainty;(h) no claim or entitlement to compensation or damages shall arise from forfeiture of your Award resulting from termination of youremployment or Service or your breach of any terms hereof (for any reason whatsoever and whether or not in breach of local labor laws or later found invalid), andin consideration of the grant of the Award to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the5Company, waive your ability, if any, to bring any such claim, and release the Company from any such claim; if, notwithstanding the foregoing, any such claim isallowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agreeto execute any and all documents necessary to request dismissal or withdrawal of such claim;(i) the Award and the benefits evidenced by this Agreement do not create any entitlement, not otherwise specifically provided for in the Plan orprovided by the Company in its discretion, to have the Award or any such benefits transferred to, or assumed by, another company, nor to be exchanged, cashedout or substituted for, in connection with any corporate transaction affecting the Company’s Stock;(j) the Award is subject to vesting based on satisfaction of Performance Goals as provided in Section 10.2 of the Plan, as provided herein. TheAward shall be interpreted and administered to satisfy the requirements of Section 162(m)(4)(C) of the Code and the regulations thereunder; and(k) the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding yourparticipation in the Plan, or your acquisition or sale of the underlying shares of Stock; you are hereby advised to consult with your own personal tax, legal andfinancial advisors regarding your participation in the Plan before taking any action related to the Plan.14. APPLICABLE LAW. This Agreement shall be governed by the laws of the State of California as if the Agreement were between Californiaresidents and as if it were entered into and to be performed entirely within the State of California.15. ARBITRATION. Any dispute or claim concerning any Restricted Stock Units granted (or not granted) pursuant to the Plan and any other disputesor claims relating to or arising out of this Agreement or the Plan shall be fully, finally and exclusively resolved by binding arbitration conducted by the AmericanArbitration Association pursuant to the commercial arbitration rules in San Diego, California. By accepting this Award, you and the Company waive yourrespective rights to have any such disputes or claims tried by a judge or jury.16. AMENDMENT. Your Award may be amended as provided in the Plan at any time, provided no such amendment may adversely affect this Awardwithout your consent unless such amendment is necessary to comply with any applicable law or government regulation, or is contemplated in Section 11 hereof.No amendment or addition to this Agreement shall be effective unless in writing or in such electronic form as may be designated by the Company.17. GOVERNING PLAN DOCUMENT. This Award is subject to this Agreement, the Grant Notice and all the provisions of the Plan, the provisionsof which are hereby made a part of this Agreement, and is further subject to all interpretations, amendments, rules and regulations which may from time to time bepromulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Agreement, the Grant Notice and those of the Plan, theprovisions of the Plan shall control.18. SEVERABILITY. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, ifpossible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid andenforceable to the full extent possible.19. DESCRIPTION OF ELECTRONIC DELIVERY . The Plan documents, which may include but do not necessarily include: the Plan, the GrantNotice, this Agreement, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to you electronically. In addition, ifpermitted by the Company, you may electronically accept and acknowledge the Grant Notice and/or this Agreement and/or deliver such documents to theCompany or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronic acknowledgement,acceptance and/or delivery may include but do not necessarily include use of a link to a Company intranet or the internet site of a third party involved inadministering the Plan, the delivery of the document via electronic mail (“e-mail”) or such other means specified by the Company. You hereby consent to receivethe above-listed documents by electronic delivery and, if permitted by the Company, agree to participate in the Plan through an on-line or electronic systemestablished and maintained by the Company or a third party designated by the Company, as set forth herein.620. WAIVER. The waiver by the Company with respect to your (or any other Participant’s) compliance of any provision of this Agreement shall notoperate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach of such party of a provision of this Agreement.21. REPAYMENT/FORFEITURE. Any benefits you may receive hereunder shall be subject to repayment or forfeiture as may be required tocomply with (a) any applicable listing standards of a national securities exchange adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reformand Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities andExchange Commission adopted thereunder, (b) similar rules under the laws of any other jurisdiction and (c) any policies adopted by the Company to implementsuch requirements, all to the extent determined by the Company in its discretion to be applicable to you.7Attachment 1QUALCOMM INCORPORATED EXCLUSIVE CONSULTING AGREEMENT1. Consulting Services Following Normal Retirement Age . In the event you terminate your employment with the Participating Companies and receive or areentitled to receive additional vesting, payments or other rights or benefits under the Award to which this Exclusive Consulting Agreement is attached as a result ofhaving previously attained Normal Retirement Age, you will provide the Company consulting services related to the subject matter of that employment as providedin this Exclusive Consulting Agreement. Such consulting services will not exceed five (5) hours per month, and there will be no separate compensation for suchservices beyond that provided in the Award. Should the Company request services in excess of five (5) hours per month, you and Company will negotiateappropriate compensation for such additional services before they are undertaken. You represent, warrant and covenant that you will perform any services underthis Exclusive Consulting Agreement in a timely, professional and workmanlike manner and that all services, materials, information and deliverables provided byyou hereunder will comply with (i) the requirements communicated by Company, (ii) the Company’s policies and procedures; and (iii) any other agreementsbetween you and the Company, including but not limited to any severance, confidentiality or proprietary agreements. All capitalized terms in this ExclusiveConsulting Agreement not otherwise defined herein shall have the meaning prescribed by the Qualcomm Incorporated 2016 Long-Term Incentive Plan (the “ Plan”) or the Award thereunder to which this Exclusive Consulting Agreement is attached.2. The Award . You are a former high-level executive with at least 10 years’ service with the Company and as such you are entitled to additional vesting,payments or other rights or benefits under the Award as a result of having reached Normal Retirement Age. Your agreement to the terms and conditions of thisExclusive Consulting Agreement is an express condition of the Award and the additional provisions of the Award applicable to you following attainment ofNormal Retirement Age.3. Independent Contractor Relationship . Your relationship with Company under this Exclusive Consulting Agreement is that of an independent contractor, andnothing herein is intended to, or shall be construed to, create a partnership, agency, joint venture, employment, or similar relationship. You will not be entitled toany of the benefits that Company may make available to its employees, including, but not limited to, group health or life insurance, profit‑sharing benefits, orretirement benefits, or awards under the Plan unless expressly provided in writing otherwise. You agree that providing services under this Exclusive ConsultingAgreement shall not be treated as Service for purposes of the Plan or the Award. You are not authorized to make any representation, contract, or commitment onbehalf of Company unless specifically requested or authorized in writing to do so by a Company officer. You are solely responsible for, and will file, on a timelybasis, all tax returns and payments required to be filed with, or made to, any federal, state, or local tax authority. You will indemnify and hold harmless Companyfrom and against any and all tax liability related to this Exclusive Consulting Agreement as well as any claims, actions, or charges arising out of or caused by yourclassification as an independent contractor.4. Exclusivity .4.1 The consultancy arrangement contemplated by this Exclusive Consulting Agreement shall be on an exclusive basis. You shall not, during the Term,without the prior written consent of the Compensation Committee, engage in any work, services, or other activities for any person or entity which directly orindirectly competes with Company in any way. This includes, but is not limited to acting as an employee, officer, director, contractor, owner, consultant, or agentof any such person or entity. The determination of whether a person or entity is competitive with Company shall be subject to the sole and exclusive discretion ofthe Compensation Committee. You shall act in the best interest of Company while providing the Exclusive Consulting Services to Company.5. Term and Termination .5.1 Term . This Exclusive Consulting Agreement is effective as of the date of your termination of employment with Company followingNormal Retirement Age and will terminate on the two year anniversary thereof unless terminated earlier as set forth below (the “ Term ”).A-15.2 Termination by Company . Company may terminate this Exclusive Consulting Agreement before the end of the Term for any breach ofSection 4 hereof by you or any material breach by you of any other provision hereof. Should Company believe that you breached this Exclusive ConsultingAgreement in a manner that allows a termination pursuant to this Section 5.2, Company will notify you in writing and allow you to cure any breach (if such breachis curable) within ten (10) days after the date of Company’s written notice of breach. You understand that if Company terminates this Exclusive ConsultingAgreement pursuant to this Section 5.2, you will forfeit all additional vesting, payments or other rights or benefits under the Award as a result of having attainedNormal Retirement Age and you will be subject to the Equity Clawback provisions of Section 6, below.5.3 Termination by You . You may not terminate this Exclusive Consulting Agreement during the Term except or unless Company materiallybreaches this Consulting Agreement. Should you believe that Company materially breached this Exclusive Consulting Agreement, you will notify the Company inwriting and allow Company to cure any breach (if such breach is curable) within ten (10) days after the date of your written notice of breach.6. Equity Clawback . In the event of any breach by you of Section 4 hereof or any material breach by you of any other provision hereof, then any additionalvesting, payments or other rights or benefits you may have as a result of having attained Normal Retirement Age shall automatically and immediately terminateand be forfeited. In addition, you shall, within 30 days following notice from Company, pay to the Company an amount equal to the aggregate benefit, value orgain you realized or obtained as a result of any additional vesting, payments or other rights or benefits you received under the Award as a result of having attainedNormal Retirement Age.A-2EXHIBIT 10.40QUALCOMM INCORPORATED2016 LONG-TERM INCENTIVE PLANEXECUTIVE PERFORMANCE STOCK UNIT AWARDGRANT NOTICEQualcomm Incorporated (the “ Company ”), pursuant to its 2016 Long-Term Incentive Plan (the “ Plan ”), hereby grants to you, the Participant named below, aPerformance Stock Unit Award (the “ Award ”) subject to all of the terms and conditions as set forth in this Executive Performance Stock Unit Award GrantNotice (“ Grant Notice ”), the Executive Performance Stock Unit Award Agreement (the “ Agreement ”), which is attached hereto, and the Plan, which areincorporated herein in their entirety. A copy of the Plan can be obtained from the Stock Administration website, located on the Company’s internal webpage, oryou may request a hard copy from the Stock Administration Department.Participant : «First_Name» «Last_Name» Grant No .: «Number »Emp # : «ID»Date of Grant : «Grant_Date»Target Relative Total Shareholder Return (“RTSR”) Shares : «Target RTSR Shares»Target Return on Invested Capital (“ROIC”) Shares : «Target ROIC Shares»Performance Period : September 25, 2017 – September 27, 2020, or such shorter period provided in the AgreementVesting Date : «Date»Additional Terms/Acknowledgments: You must acknowledge, in the form determined by the Company, receipt of, and represent that you have read, understand,accept and agree to the terms and conditions of, this Grant Notice, the Agreement including the Exclusive Consulting Agreement attached to the Agreement andthe Plan (including, but not limited to, the binding arbitration provision in Section 3.7 of the Plan).Qualcomm Incorporated:By: /s/ Steven M. MollenkopfSteven M. MollenkopfChief Executive OfficerDated: «Grant_Date»Attachment: Executive Performance Stock Unit Award Agreement (U.S. PSU-EX-A11)QUALCOMM INCORPORATED 2016 LONG-TERM INCENTIVE PLAN EXECUTIVE PERFORMANCE STOCK UNIT AWARDAGREEMENTQualcomm Incorporated (the “ Company ”) has granted this Performance Stock Unit Award (this “ Award ”) to you, the Participant named in theExecutive Performance Stock Unit Award Grant Notice (the “ Grant Notice ”) pursuant to the terms and conditions set forth in the Grant Notice, this ExecutivePerformance Stock Unit Award Agreement and the attachments hereto (together with the Grant Notice, the “ Agreement ”) and the 2016 Long-Term Incentive Plan(the “ Plan ”). Capitalized terms that are not explicitly defined in the Grant Notice or this Agreement but are defined in the Plan shall have the same definitions asin the Plan.The details of this Award are as follows:1. VESTING.1.1 SERVICE VESTING. Except to the extent provided in Section 1.2 and Section 6, you will be fully vested in this Award on the VestingDate specified in the Grant Notice if and to the extent that you continue in Service through that Vesting Date. If your Service terminates before the Vesting Datefor any reason other than as specified in Section 1.2, this Award shall be forfeited.1.2 VESTING UPON TERMINATION OF SERVICE DUE TO DEATH, DISABILITY OR TERMINATION AFTER CHANGE INCONTROL, OR UPON ATTAINMENT OF NORMAL RETIREMENT AGE. You will be vested in this Award if your Service terminates before the VestingDate specified in the Grant Notice due to death, Disability or Termination After Change in Control (as defined below) or upon the date you have attained NormalRetirement Age (as defined below), if and to the extent that you continue in Service through the date of such termination of Service or the date you have attainedNormal Retirement Age. If your Service terminates for any reason other than due to death, Disability or Termination After Change in Control (as defined below),or prior to the date on which you have attained Normal Retirement Age, this Award shall be forfeited.(a) Certain Definitions.(i) “ Cause ” shall mean any of the following: (1) your theft of, dishonesty with respect to, or falsification of any ParticipatingCompany documents or records; (2) your improper use or disclosure of a Participating Company’s confidential or proprietary information; (3)any action by you which has a detrimental effect on a Participating Company’s reputation or business; (4) your failure or inability to perform anyreasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability;(5) any material breach by you of any employment or service agreement between you and a Participating Company, which breach is not curedpursuant to the terms of such agreement; (6) your conviction (including any plea of guilty or nolo contendere ) of any criminal act which impairsyour ability to perform your duties with a Participating Company; or (7) violation of a material Company or Participating Company policy.(ii) “ Good Reason ” shall mean any one or more of the following:a) without your express written consent, the assignment to you of any duties, or any limitation of your responsibilities,substantially inconsistent with your positions, duties, responsibilities and status with the Participating Company Group immediatelyprior to the date of a Change in Control;b) without your express written consent, the relocation of the principal place of your employment or service to a locationthat is more than fifty (50) miles from your principal place of employment or service immediately prior to the date of a Change1in Control, or the imposition of travel requirements substantially more demanding of you than such travel requirements existingimmediately prior to the date of the Change in Control;c) any failure by the Participating Company Group to pay, or any material reduction by the Participating Company Group of,(A) your base salary in effect immediately prior to the date of a Change in Control (unless reductions comparable in amount andduration are concurrently made for all other employees of the Participating Company Group with responsibilities, organizational leveland title comparable to yours), or (B) your bonus compensation, if any, in effect immediately prior to the date of a Change in Control(subject to applicable performance requirements with respect to the actual amount of bonus compensation earned by you);d) any failure by the Participating Company Group to (A) continue to provide you with the opportunity to participate, onterms no less favorable than those in effect for the benefit of any employee or service provider group which customarily includes aperson holding the employment or service provider position or a comparable position with the Participating Company Group then heldby you, in any benefit or compensation plans and programs, including, but not limited to, the Participating Company Group’s life,disability, health, dental, medical, savings, profit sharing, stock purchase and retirement plans, if any, in which you were participatingimmediately prior to the date of the Change in Control, or their equivalent, or (B) provide you with all other fringe benefits (or theirequivalent) from time to time in effect for the benefit of any employee group which customarily includes a person holding theemployment or service provider position or a comparable position with the Participating Company Group then held by you;e) any breach by the Participating Company Group of any material agreement between you and a Participating Companyconcerning your employment; orf) any failure by the Company to obtain the assumption of any material agreement between you and the Companyconcerning your employment by a successor or assignee of the Company.(iii) “ Normal Retirement Age ” shall be the later of (1) the date which is six (6) months after the Grant Date or (2) the date on whichyou have attained age fifty-five (55) and completed at least ten (10) years of consecutive Service.(iv) “ Termination After Change in Control ” shall mean either of the following events occurring within twenty-four (24) monthsafter a Change in Control:a) termination by the Participating Company Group of your Service with the Participating Company Group for any reasonother than for Cause; orb) your resignation for Good Reason from all capacities in which you are then rendering Service to the ParticipatingCompany Group within a reasonable period of time following the event constituting Good Reason.Notwithstanding any provision herein to the contrary, Termination After Change in Control shall not include any termination of your Service with theParticipating Company Group which (1) is for Cause; (2) is a result of your death or Disability; (3) is a result of your voluntary termination of Serviceother than for Good Reason; or (4) occurs prior to the effectiveness of a Change in Control.1.3 SUSPENSION OF VESTING. Notwithstanding any other provision of the Plan or this Agreement, the Company reserves the right, in itssole discretion, to suspend vesting of this Award in the event of any leave of absence or part-time Service.22. SETTLEMENT OF THE AWARD.2.1 AMOUNT, FORM AND TIMING OF PAYMENT OF AWARD THAT VESTS ON VESTING DATE SPECIFIED IN THEGRANT NOTICE. If your Award vests on the Vesting Date specified in the Grant Notice, you shall be paid in a number of shares of Stock equal to the totalnumber of Shares Earned (if any) determined pursuant to Attachment 1 , which is attached hereto and made a part hereof. Such shares of Stock shall be paid withinthe 30 days after the later of (a) the Vesting Date specified in the Grant Notice or (b) the date on which the Compensation Committee (the “ Committee ”)determines and certifies in writing the number of shares (if any) that are payable, which determination and certification shall be made by the Committee no laterthan the November 30 th that next follows the end of the Performance Period.2.2 AMOUNT, FORM AND TIMING OF PAYMENT OF AWARD THAT VESTS UPON ATTAINMENT OF NORMALRETIREMENT AGE. If your Award vests upon your attainment of Normal Retirement Age, you shall be paid in a number of shares of Stock equal to the totalnumber of Shares Earned (if any) determined pursuant to Attachment 1 , which is attached hereto and made a part hereof. Such shares of Stock shall be paid withinthe 30 days after the later of (a) the Vesting Date specified in the Grant Notice or (b) the date on which the Committee determines and certifies in writing thenumber of shares (if any) that are payable, which determination and certification shall be made by the Committee no later than the November 30 th that next followsthe end of the Performance Period; provided , however , that payment shall be made pursuant to this Section 2.2 following your termination of employment withthe Participating Company only if such termination was not for Cause and you (A) execute a general release of claims in a form satisfactory to the Company andthat general release become irrevocable before the 60th day following your termination of employment, and (B) comply with the requirements of the ExclusiveConsulting Agreement attached hereto as Attachment 2 (the “ Consulting Agreement ”). Notwithstanding the foregoing, in the event you violate any of theprovisions contained in the Consulting Agreement, all rights to payment under this Section 2.2. shall be immediately forfeited without consideration. In the eventyour employment is terminated for Cause, you will immediately forfeit your right to payment under this Section 2.2.2.3 AMOUNT, FORM AND TIMING OF PAYMENT OF AWARD THAT VESTS UPON TERMINATION OF SERVICE BEFORETHE VESTING DATE SPECIFIED IN THE GRANT NOTICE DUE TO DEATH, DISABILITY OR TERMINATION AFTER CHANGE INCONTROL. If your Service terminates before the Vesting Date specified in the Grant Notice due to death, Disability or Termination After a Change in Control,you (or in the event of death, your estate, personal representative, or beneficiary to whom this Award may be transferred by will or by the laws of descent anddistribution), will be paid a number of shares of Stock equal to the product of (1) the sum of (a) the RTSR Shares Earned and (b) the ROIC Shares Earneddetermined pursuant to this Attachment 1 except that the Performance Period for this determination will be the period beginning on the date specified in the GrantNotice, and ending on the last day of the Company’s fiscal year in which your Service terminates, multiplied by (2) a fraction the numerator of which is the numberof whole and partial months (rounded up to the next whole month) from the beginning of the Performance Period until the date your Service terminates, and thedenominator of which is 36. Shares of Stock payable pursuant to this Section 2.3 shall be paid within the 30 days after the date on which the Committee determinesand certifies in writing the number of shares of Stock (if any) that are payable pursuant to this Section 2.3, which determination and certification shall be made bythe Committee no later than the November 30 th that next follows the end of the Company’s fiscal year in which such termination of Service occurred.2.4 AMOUNT, FORM AND TIMING OF PAYMENT UPON DEATH DURING THE PERFORMANCE PERIOD FOLLOWINGTERMINATION OF SERVICE DUE TO DISABILITY. If your Service with the Employer terminates because of your Disability and you are entitled toreceive or have received a payment of Stock pursuant to Section 2.3, and you later die during the Performance Period specified in the Grant Agreement, yourestate, personal representative, or beneficiary to whom this Award may be transferred by will or by the laws of descent and distribution will be paid an additionalnumber of shares of Stock equal to the difference (if any) between (1) the shares of Stock you would have received under Section 2.3 had you remained in Serviceuntil the date of your death, reduced by (2) any shares of Stock you are entitled to receive or have received pursuant to Section 2.3 as a result of termination of yourService due to your Disability. Shares of Stock payable pursuant to this Section 2.4 shall be paid within the 30 days after the date on which the Committeedetermines and certifies in writing the number of shares of Stock (if any) that are payable pursuant to this Section 2.4, which determination and3certification shall be made by the Committee no later than the November 30 th that next follows the end of the Company’s fiscal year in which such termination ofService occurred.2.5 TAX WITHHOLDING. You acknowledge that the Company and/or the Participating Company that employs you (the “ Employer ”)may be subject to withholding tax obligations arising by reason of the vesting and/or payment of this Award. You authorize your Employer to satisfy thewithholding tax obligations by one or a combination of the following methods, as selected by the Company in its sole discretion: (a) withholding from your payand any other amounts payable to you; (b) withholding of Stock and/or cash from the payment of this Award; (c) arranging for the sale of shares of Stock payablein connection with this Award (on your behalf and at your direction which you authorize by accepting this Award); or (d) any other method allowed by the Plan orapplicable law. Notwithstanding the foregoing, you may elect in the manner specified by the Company to make a cash payment to the Company or your Employerto satisfy the withholding tax obligations with respect to this Award, provided such election is made during an open trading window under the Qualcomm InsiderTrading Policy and you are not in possession of any material nonpublic information at the time of such election. If your Employer satisfies the withholdingobligations by withholding a number of whole shares of Stock as described in subsection (b) herein, you will be deemed to have been issued the full number ofshares of Stock subject to this Award, notwithstanding that a number of shares is held back in order to satisfy the withholding obligations. The “ Fair MarketValue ” of any Stock withheld pursuant to this Section 2.5 shall be equal to the closing price of a share of Stock as quoted on any national or regional securitiesexchange or market system constituting the primary market for the Stock on the date of determination (or, if there is no closing price on that day, the last tradingday prior to that day) or, if the Stock is not listed on a national or regional securities exchange or market system, the value of a share of Stock as determined by theCommittee in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse. The Company shall not be required to issueany shares of Stock pursuant to this Agreement unless and until the withholding obligations are satisfied.3. TAX ADVICE. You represent, warrant and acknowledge that the Company and, if different, your Employer, has made no warranties orrepresentations to you with respect to the income tax consequences of the transactions contemplated by this Award, and you are in no manner relying on theCompany, your Employer or their representatives for an assessment of such tax consequences. YOU UNDERSTAND THAT THE TAX LAWS ANDREGULATIONS ARE SUBJECT TO CHANGE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE TAX TREATMENT OF THISOR ANY OTHER AWARD. NOTHING STATED HEREIN IS INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OFAVOIDING TAXPAYER PENALTIES.4. DIVIDEND EQUIVALENTS. If the Board declares a cash dividend on the Company’s Stock, you will be entitled to Dividend Equivalentsin the form, payable on the terms and at such times as provided in Section 10.3 of the Plan.5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, no shares of Stock will be issued to youupon vesting of this Award unless the Stock is then registered under the Securities Act or, if such Stock is not then so registered, the Company has determined thatsuch vesting and issuance would be exempt from the registration requirements of the Securities Act. By accepting this Award, you agree not to sell any of theshares of Stock received under this Award at a time when applicable laws or Company policies prohibit a sale.6. CHANGE IN CONTROL. In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or otherbusiness entity or parent thereof, as the case may be (the “ Acquiring Corporation ”), may, without your consent, either assume the Company’s rights andobligations under this Award or substitute for this Award a substantially equivalent award for the Acquiring Corporation’s stock.6.1 Payout Pursuant to a Change in Control. In the event the Acquiring Corporation elects not to assume or substitute for this Award inconnection with a Change in Control, the vesting of this Award, so long as your Service has not terminated prior to the date of the Change in Control, shall beaccelerated, effective as of the date ten (10) days prior to the date of the Change in Control, and immediately prior to the closing of the Change in Control, you willbe paid a number of shares of Stock equal to the sum of (a) the RTSR Shares Earned determined4pursuant to Attachment 1 based on a Performance Period ending ten (10) days before the Change in Control, plus (b) the Target ROIC Shares specified in the GrantNotice.6.2 Vesting Contingent Upon Consummation. The vesting of this Award and payment of any shares of Stock by reason of this Section 6shall be conditioned upon the consummation of the Change in Control.6.3 Applicability of Agreement. Notwithstanding the foregoing, shares of Stock acquired upon settlement of this Award prior to the Changein Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions ofthis Agreement except as otherwise provided in this Agreement.6.4 Continuation of Award. Notwithstanding the foregoing, if the corporation the stock of which is subject to this Award immediately priorto an Ownership Change Event constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event,less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation or by other corporations that are members of anaffiliated group within the meaning of Section 1504(a) of the Code, without regard to the provisions of Section 1504(b) of the Code, this Award shall not terminateunless the Committee otherwise provides in its discretion.7. TRANSFERABILITY. Prior to the issuance of shares of Stock in settlement of this Award, the Award shall not be subject in any manner toanticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by your creditors or by your beneficiary (if any), except (i)transfer by will or by the laws of descent and distribution or (ii) to the extent permitted by the Company, transfer by written designation of a beneficiary, in a formacceptable to the Company, with such designation taking effect upon your death. All rights with respect to the Performance Stock Units shall be exercisable duringyour lifetime only by you or your guardian or legal representative. Prior to actual payment of any shares of Stock pursuant to this Award, this Award will representan unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.8. AWARD NOT A SERVICE CONTRACT. This Award is not an employment or service contract and nothing in this Agreement, the GrantNotice or the Plan shall be deemed to create in any way whatsoever any obligation on your part to continue in the Service of a Participating Company, or of aParticipating Company to continue your Service with the Participating Company. In addition, nothing in your Award shall obligate the Company, its stockholders,Board, Officers or Employees to continue any relationship which you might have as a Director or Consultant for the Company.9. RESTRICTIVE LEGEND. Stock issued pursuant to the vesting and payment of this Award may be subject to such restrictions upon the sale,pledge or other transfer of the Stock as the Company and the Company’s counsel deem necessary under applicable law or pursuant to this Agreement.10. REPRESENTATIONS, WARRANTIES, COVENANTS, AND ACKNOWLEDGMENTS. You hereby agree that in the event theCompany and the Company’s counsel deem it necessary or advisable in the exercise of their discretion, the transfer or issuance of the shares of Stock issuedpursuant to the vesting and payment of this Award may be conditioned upon you making certain representations, warranties, and acknowledgments relating tocompliance with applicable securities laws.11. VOTING AND OTHER RIGHTS. Subject to the terms of this Agreement, you shall not have any voting rights or any other rights andprivileges of a shareholder of the Company unless and until shares of Stock are issued upon payment of this Award.12. CODE SECTION 409A. It is the intent that the terms relating to the vesting and the payment of the Award as set forth in this Agreementshall qualify for exemption from or comply with the requirements of Section 409A of the Code, and any ambiguities herein will be interpreted to so qualify orcomply. Notwithstanding the foregoing or anything herein to the contrary, if it is determined that this Award fails to satisfy the requirements of the “short-termdeferral” exemption and is otherwise deferred compensation subject to Section 409A of the Code, and if you are a “specified employee” (as defined under Section409A(a)(2)(B)(i) of the Code) as of the date of your “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)), then the issuance ofany5shares of Stock that would otherwise be made upon the date of the separation from service or within the first six (6) months thereafter will not be made on theoriginally scheduled date and will instead be issued in a lump sum on the date that is six (6) months and one day after the date of the separation from service, butonly if such delay in the issuance of the shares is necessary to avoid the imposition of additional taxation on you in respect of the shares under Section 409A of theCode. The Company reserves the right, to the extent the Company deems appropriate or advisable in its sole discretion, to unilaterally amend or modify thisAgreement as may be necessary to ensure that all vesting or payments provided for under this Agreement are made in a manner that qualifies for exemption fromor complies with the requirements of Section 409A of the Code; provided, however, that the Company makes no representation that the vesting or paymentspursuant to this Award will be exempt from or comply with the requirements of Section 409A of the Code and makes no undertaking to preclude Section 409A ofthe Code from applying to the vesting or payments of this Award or require that any vesting or payments pursuant to this Award comply with the requirements ofSection 409A of the Code. The Company will have no liability to you or any other party if the Award, the delivery of shares of Stock upon payment of the Awardor other payment hereunder that is intended to be exempt from, or compliant with, Section 409A of the Code, is not so exempt or compliant or for any action takenby the Company with respect thereto.13. NOTICES. Any notices provided for in this Agreement, the Grant Notice or the Plan shall be given in writing and shall be deemedeffectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,addressed to you at the last address you provided to the Company.14. NATURE OF GRANT. In accepting the Award, you acknowledge and agree that:(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminatedby the Company at any time, (subject to any limitations set forth in the Plan);(b) the Award is voluntary and occasional and does not create any contractual or other right to receive future awards or benefits in lieu ofawards, even if other awards have been awarded repeatedly in the past;(c) all decisions with respect to future awards, if any, will be at the sole discretion of the Company;(d) your participation in the Plan is voluntary;(e) the Award and the shares of Stock subject to the Award are extraordinary items that do not constitute compensation of any kind forServices of any kind rendered to the Company or the Employer, and which are outside the scope of your employment or service contract, if any;(f) the Award and the shares of Stock subject to the Award are not intended to replace any pension rights or compensation;(g) the Award and the shares of Stock subject to the Award are not part of normal or expected compensation or salary for any purposes,including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards,pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services forthe Company, the Employer or any Participating Company;(h) the future value of the underlying shares of Stock is unknown and cannot be predicted with any certainty;(i) no claim or entitlement to compensation or damages shall arise from forfeiture of your Award resulting from termination of youremployment or Service or your breach of any terms hereof (for any reason whatsoever and whether or not in breach of local labor laws or later found invalid), andin consideration of the grant of the Award to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company, waiveyour ability, if any, to bring any such claim, and release the Company from any such claim; if,6notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably tohave agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;(j) the Award and the benefits evidenced by this Agreement do not create any entitlement, not otherwise specifically provided for in the Plan orprovided by the Company in its discretion, to have the Award or any such benefits transferred to, or assumed by, another company, nor to be exchanged, cashedout or substituted for, in connection with any corporate transaction affecting the Company’s Stock;(k) the Award is a Performance Award granted pursuant to the Plan providing for a number of Performance Units equal to the Target RTSRShares and Target ROIC Shares specified in the Grant Agreement, which shall be payable in a number of shares of Stock (if any) based on the RTSR and ROIC forthe Performance Period, as provided herein. This Performance Award shall be interpreted and administered to satisfy the requirements of section 162(m)(4)(C) ofthe Code and the regulations thereunder; and(l) the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding yourparticipation in the Plan, or your acquisition or sale of the underlying shares of Stock; you are hereby advised to consult with your own personal tax, legal andfinancial advisors regarding your participation in the Plan before taking any action related to the Plan.15. APPLICABLE LAW. This Agreement shall be governed by the laws of the State of California as if the Agreement were between Californiaresidents and as if it were entered into and to be performed entirely within the State of California.16. ARBITRATION. Any dispute or claim concerning any Performance Stock Units granted (or not granted) pursuant to the Plan and any otherdisputes or claims relating to or arising out of this Agreement or the Plan shall be fully, finally and exclusively resolved by binding arbitration conducted by theAmerican Arbitration Association pursuant to the commercial arbitration rules in San Diego, California. By accepting this Award, you and the Company waiveyour respective rights to have any such disputes or claims tried by a judge or jury.17. AMENDMENT. Your Award may be amended as provided in the Plan at any time, provided no such amendment may adversely affect thisAward without your consent unless such amendment is necessary to comply with any applicable law or government regulation, or is contemplated in Section 12hereof. No amendment or addition to this Agreement shall be effective unless in writing or in such electronic form as may be designated by the Company.18. GOVERNING PLAN DOCUMENT. Your Award is subject to this Agreement, the Grant Notice and all the provisions of the Plan, theprovisions of which are hereby made a part of this Agreement, and is further subject to all interpretations, amendments, rules and regulations which may from timeto time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this Agreement, the Grant Notice and those of thePlan, the provisions of the Plan shall control.19. SEVERABILITY. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, ifpossible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid andenforceable to the full extent possible.20. DESCRIPTION OF ELECTRONIC DELIVERY . The Plan documents, which may include but do not necessarily include: the Plan, theGrant Notice, this Agreement, and any reports of the Company provided generally to the Company’s stockholders, may be delivered to you electronically. Inaddition, if permitted by the Company, you may electronically accept and acknowledge the Grant Notice and/or this Agreement and/or deliver such documents tothe Company or to such third party involved in administering the Plan as the Company may designate from time to time. Such means of electronicacknowledgement, acceptance and/or delivery may include but do not necessarily include use of a link to a Company intranet or the internet site of a third partyinvolved in administering the Plan, the delivery of the document via electronic mail (“e-mail”) or such other means specified by the Company. You hereby consentto receive the above-listed documents by electronic delivery and, if permitted by7the Company, agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by theCompany, as set forth herein.21. WAIVER. The waiver by the Company with respect to your (or any other Participant’s) compliance of any provision of this Agreement shallnot operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach of such party of a provision of this Agreement.22. REPAYMENT/FORFEITURE. Any benefits you may receive hereunder shall be subject to repayment or forfeiture as may be required tocomply with (a) any applicable listing standards of a national securities exchange adopted in accordance with Section 954 of the Dodd-Frank Wall Street Reformand Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities andExchange Commission adopted thereunder, (b) similar rules under the laws of any other jurisdiction and (c) any policies adopted by the Company, including butnot limited to any policies that may be adopted to implement the foregoing standards or rules, all to the extent determined by the Company in its discretion.8ATTACHMENT 1For purposes of Section 2.1 of this Agreement, “Shares Earned” means the sum of (1) the RTSR Shares Earned and (2) the ROIC Shares Earned, as determinedpursuant to this Attachment 1 .“ RTSR Shares Earned ” means the number of Shares determined by multiplying the Target RTSR Shares specified in the Grant Notice by the TSR PayoutPercentage, rounding up to the nearest whole share. For purposes of determining the RTSR Shares Earned:“ Beginning Period Average Price ” means the average official closing price per share of the issuer over the 20-consecutive-trading days ending with andincluding the first day of the Performance Period (if the applicable day is not a trading day, the immediately preceding trading day).“ Ending Period Average Price ” means the average official closing price per share of the issuer over the 20-consecutive-trading days ending with andincluding the last day of the Performance Period (if the applicable day is not a trading day, the immediately preceding trading day).“ Nasdaq-100 Companies ” means the companies that are included in the NASDAQ-100 Index (published by The NASDAQ Stock Market, or itssuccessor) continuously from the beginning through the end of the Performance Period. The Committee shall have the authority to make appropriateadjustments to the extent necessary to account for extraordinary, unusual and infrequently occurring events and transactions involving that company to theextent such adjustments a would not preclude the payment of TSR Shares Earned from satisfying the requirements of Section 162(m)(4)(C) of the InternalRevenue Code of 1986, as amended (the “ Code ”) and the regulations thereunder.“ Performance Period ” means the period specified in the Grant Notice.“ TSR ” means total shareholder return as determined by dividing (i) the sum of (A) the Ending Period Average Price minus the Beginning PeriodAverage Price plus (B) all dividends and other distributions paid on the issuer’s shares during the Performance Period by (ii) the Beginning PeriodAverage Price. In calculating TSR, all dividends are assumed to have been reinvested in shares when paid. The Committee shall have the authority tomake appropriate equitable adjustments to account for extraordinary items affecting a company’s TSR for the Performance Period to the extent suchadjustments would not preclude the payment of TSR Shares Earned from satisfying the requirements of Section 162(m)(4)(C) of the Code and theregulations thereunder.“ TSR Payout Percentage ” means the percentage that corresponds to the TSR Percentile Rank specified below:TSR Percentile RankPayout Percentage90 th percentile and above200%75 th percentile150%60 th percentile100% (Target)50 th percentile75%33 rd percentile33%Below 33 rd percentile0%Between the levels specified above, the Payout Percentage is interpolated linearly at a ratio of three-and-one-third (3-1/3) percentage points for eachpercentile that the TSR Percentile Rank is greater than the 60 th percentile, and two-and-one-half (2-1/2) percentage points for each percentile that the TSRPercentile Rank is less than the 60 th percentile, in each case rounded up to the nearest decimal point.A-1“ TSR Percentile Rank ” means the Company’s percentile ranking relative to the Nasdaq-100 Companies, based on TSR. TSR Percentile Rank isdetermined by ordering the Nasdaq-100 Companies (plus the Company if the Company is not one of the Nasdaq‑100 Companies) from highest to lowestbased on TSR for the Performance Period and counting down from the company with the highest TSR (ranked first) to the Company’s position on the list.If two companies are ranked equally, the ranking of the next company shall account for the tie, so that if one company is ranked first, and two companiesare tied for second, the next company is ranked fourth. After this ranking, the TSR Percentile Rank will be calculated using the following formula,rounded to the nearest whole percentile by application of regular rounding:TSR Percentile Rank =( N – R )* 100N“ N ” represents the number of Nasdaq-100 Companies for the Performance Period (plus the Company if the Company is not one of the Nasdaq-100Companies for the Performance Period).“ R ” represents the Company’s ranking among the Nasdaq-100 Companies (plus the Company if the Company is not one of the Nasdaq-100 Companiesfor the Performance Period).For example, if there are 100 Nasdaq-100 Companies (including the Company), and the Company ranked 40 th , the TSR Percentile Rank would be at the60 th percentile: 60 = (100 – 40)/100 * 100.LIMITATION ON AMOUNT OF PAYMENT. Notwithstanding anything in this Agreement to the contrary, if the Company’s TSR is negative for thePerformance Period, then the RTSR Shares Earned will be equal to the lesser of (a) the number of RTSR Shares (if any) determined without regard to thisLimitation on Amount of Payment, or (b) the Target RTSR Shares specified in the Grant Notice.A-2“ ROIC Shares Earned ” means the number of shares determined by multiplying the Target ROIC Shares specified in the Grant Notice by the ROIC PayoutPercentage, rounding up to the nearest whole share. For purposes of determining the ROIC Shares Earned:“ Average ” means the sum of the balance at the beginning of the Company’s fiscal year plus the balance at the end of that fiscal year divided by two (2).“ Adjusted Debt ” means debt issued or assumed by Qualcomm Incorporated or any of its consolidated subsidiaries, provided that in the event of anacquisition with a purchase price that is greater than $5 billion, the impact of debt incurred or assumed in connection with or related to such acquisitionshall be excluded for the fiscal year in which such acquisition closes and, if such debt is incurred in the fiscal year prior to the year in which suchacquisition closes, for such prior fiscal year and the year in which the acquisition closes (but for no other years).“ Adjusted GAAP Equity ” means the total stockholders’ equity attributable to Qualcomm as reported in the consolidated balance sheet prepared inaccordance with accounting principles generally accepted in the United States (“GAAP”) and shall be adjusted to exclude the following items:(1)Provided that in the event of an acquisition with a purchase price that is greater than $5 billion, solely for purposes of calculating AdjustedGAAP Equity for the fiscal year in which such acquisition closes (but for no other year), the impact of equity issued by QualcommIncorporated to fund such acquisition;(2)Provided that in the event of an acquisition with a purchase price that is greater than $5 billion, the after-tax impact of expense (e.g. interestexpense) or amortization of premiums or discounts related to debt issued or assumed by Qualcomm Incorporated or any of its subsidiaries inconnection with or related to such acquisition shall be excluded for the fiscal year in which the acquisition closes, and if such debt is incurred inthe fiscal year prior to the year in which such acquisitions closes, for such prior fiscal year and the year in which the acquisition closes (but forno other years);(3) The effect of adjustments to retained earnings for changes in U.S. GAAP (including the adoption of new accounting standards); and(4) Tax items, including the effects of changes to tax laws, individually exceeding $10 million that are unrelated to the fiscal year in which they arerecorded, but only with respect to tax items relating to one or more tax years ending before the beginning of the Performance Period.To the extent that adjustments are made to Adjusted GAAP Operating Income pursuant to items (3) and (4) as described below, correspondingadjustments shall be made to Adjusted GAAP Equity.“ Adjusted GAAP Operating Income ” is determined in accordance with GAAP and shall be adjusted to exclude the after tax impact of the followingitems:(1) The Qualcomm Strategic Initiative (“QSI”) segment as defined in the Company’s fiscal 2016 Form 10-K;(2) Acquisition-related items, which consist of:(a) Acquired in-process research and development,(b) Recognition of the step-up of inventories to fair value,(c) Purchase accounting effects on property, plant and equipment for acquisitions completed in or after the second quarter of fiscal 2017,A-3(d) Amortization of intangible assets for acquisitions completed in or after the third quarter of fiscal 2011,(e) Expenses related to the termination of contracts that limit the use of the acquired intellectual property, and(f) Third-party acquisition and integration services costs.The above adjustments shall apply only with respect to applicable items acquired in transactions that qualify as business combinations pursuant toGAAP;(3) The following items for which each event individually equals or exceeds $25 million on a pre-tax basis:(a) Restructuring and restructuring-related costs (in the aggregate by restructuring event), which consist of the following costs:•severance and benefits (including COBRA and outplacement expenses);•consulting costs;•increased security costs;•acceleration of depreciation and/or amortization expense;•facilities and lease termination or abandonment charges;•asset impairment charges and/or contract terminations;•third-party business separation costs; and•relocation costs as a result of an office or facility closure.GAAP operating income shall not be adjusted for any item that cannot specifically be tied to the restructuring event;(b) Goodwill and indefinite- and long-lived asset impairments, but only with respect to goodwill and assets acquired before the first day ofthe Performance Period;(c) Gain/losses on divestitures or non-revenue generating asset sales;(d) Impact of litigation settlement, arbitration and/or judgment, but only to the extent the profit or loss arising from the settlement orjudgment is clearly attributable to one or more fiscal years ending before the beginning of the Performance Period; and(e) The impact of unresolved contract disputes on revenues recorded during the Performance Period (including but not limited to disputesresulting in litigation or arbitration) to the extent a licensee withholds or fails to make royalty payments or disputes the royalty paymentpaid, provided that, to the extent that the licensee fails to report information sufficient to determine the actual impact on revenues of thewithholding or failure to make royalty payments or dispute of paid amounts, the average royalty revenues over the four fiscal quarterspreceding the dispute (or such shorter period for which information is available) shall be used to determine the impact on royalty revenuesdue to the contract dispute, and such amount shall be prorated as appropriate to reflect the period during the Performance Period in whichsuch withholding, dispute or failure to pay impacts revenue.(4) In the event of an acquisition with a purchase price that is greater than $5 billion, solely for purposes of calculating Adjusted GAAP OperatingIncome for the fiscal year in which such acquisition closes (but for no other year), operating results from such acquisition shall be excluded.“ Adjusted GAAP Tax Rate ” means the applicable tax rates determined in accordance with GAAP, adjusted for earnings and the related tax expenseassociated with the adjustments specified in the definition of Adjusted GAAP Operating Income.“ Performance Period ” means the period specified in the Grant Notice.A-4“ Return on Invested Capital ” or “ ROIC ” means the percentage determined by dividing(1) the sum of the following amounts calculated separately for each of the Company fiscal years in the Performance Period: the product of (A)the Adjusted GAAP Operating Income for the fiscal year multiplied by (B) the difference between one (1) and the Adjusted GAAP Tax Rate forsuch fiscal year; by(2) the sum of the following amounts calculated separately for each of the Company’s fiscal years in the Performance Period: the sum of (A)Average Adjusted GAAP Equity for the fiscal year and (B) Average Adjusted Debt for the fiscal year.“ ROIC Payout Percentage ” means the percentage that corresponds to the specified below:ROIC RatioROIC Payout Percentage120%200%100%100%80%33%Below 80%0% PayoutBetween the levels specified above, the ROIC Payout Percentage is interpolated linearly at a ratio of 3.35 percentage points for each one percentimprovement in the ROIC Ratio from 80% to 100% and five (5) percentage points for each one percent improvement in the ROIC Ratio from 100% up to120%, in each case rounded up to the nearest decimal point.“ ROIC Ratio” means the ROIC for the Performance Period divided by the ROIC Target.“ ROIC Target” means 12.0% percent.LIMITATION ON ADJUSTMENTS. No adjustments shall be made in the calculation of Adjusted Debt, Adjusted GAAP Equity, Adjusted GAAP OperatingIncome or Adjusted GAAP Tax Rate which would preclude the payment of ROIC Shares Earned from satisfying the requirements of Code Section 162(m)(4)(C)and the regulations thereunder.A-5ATTACHMENT 2QUALCOMM INCORPORATED EXCLUSIVE CONSULTING AGREEMENT1. Consulting Services Following Normal Retirement Age . In the event you terminate your employment with the Participating Companies and receive or areentitled to receive additional vesting, payments or other rights or benefits under the Award to which this Exclusive Consulting Agreement is attached as a result ofhaving previously attained Normal Retirement Age, you will provide the Company consulting services related to the subject matter of that employment as providedin this Exclusive Consulting Agreement. Such consulting services will not exceed five (5) hours per month, and there will be no separate compensation for suchservices beyond that provided in the Award. Should the Company request services in excess of five (5) hours per month, you and Company will negotiateappropriate compensation for such additional services before they are undertaken. You represent, warrant and covenant that you will perform any services underthis Exclusive Consulting Agreement in a timely, professional and workmanlike manner and that all services, materials, information and deliverables provided byyou hereunder will comply with (i) the requirements communicated by Company, (ii) the Company’s policies and procedures; and (iii) any other agreementsbetween you and the Company, including but not limited to any severance, confidentiality or proprietary agreements. All capitalized terms in this ExclusiveConsulting Agreement not otherwise defined herein shall have the meaning prescribed by the Qualcomm Incorporated 2016 Long-Term Incentive Plan (the “ Plan”) or the Award thereunder to which this Exclusive Consulting Agreement is attached.2. The Award . You are a former high-level executive with at least 10 years’ service with the Company and as such you are entitled to additional vesting,payments or other rights or benefits under the Award as a result of having reached Normal Retirement Age. Your agreement to the terms and conditions of thisExclusive Consulting Agreement is an express condition of the Award and the additional provisions of the Award applicable to you following attainment ofNormal Retirement Age.3. Independent Contractor Relationship . Your relationship with Company under this Exclusive Consulting Agreement is that of an independent contractor, andnothing herein is intended to, or shall be construed to, create a partnership, agency, joint venture, employment, or similar relationship. You will not be entitled toany of the benefits that Company may make available to its employees, including, but not limited to, group health or life insurance, profit‑sharing benefits, orretirement benefits, or awards under the Plan unless expressly provided in writing otherwise. You agree that providing services under this Exclusive ConsultingAgreement shall not be treated as Service for purposes of the Plan or the Award. You are not authorized to make any representation, contract, or commitment onbehalf of Company unless specifically requested or authorized in writing to do so by a Company officer. You are solely responsible for, and will file, on a timelybasis, all tax returns and payments required to be filed with, or made to, any federal, state, or local tax authority. You will indemnify and hold harmless Companyfrom and against any and all tax liability related to this Exclusive Consulting Agreement as well as any claims, actions, or charges arising out of or caused by yourclassification as an independent contractor.4. Exclusivity .4.1 The consultancy arrangement contemplated by this Exclusive Consulting Agreement shall be on an exclusive basis. You shall not, during the Term,without the prior written consent of the Committee, engage in any work, services, or other activities for any person or entity which directly or indirectly competeswith Company in any way. This includes, but is not limited to acting as an employee, officer, director, contractor, owner, consultant, or agent of any such person orentity. The determination of whether a person or entity is competitive with Company shall be subject to the sole and exclusive discretion of the Committee. Youshall act in the best interest of Company while providing the Exclusive Consulting Services to Company.B-15. Term and Termination .5.1 Term . This Exclusive Consulting Agreement is effective as of the date of your termination of employment with Company following NormalRetirement Age and will terminate on the two year anniversary thereof unless terminated earlier as set forth below (the “ Term ”).5.2 Termination by Company . Company may terminate this Exclusive Consulting Agreement before the end of the Term for any breach of Section 4hereof by you or any material breach by you of any other provision hereof. Should Company believe that you breached this Exclusive Consulting Agreement in amanner that allows a termination pursuant to this Section 5.2, Company will notify you in writing and allow you to cure any breach (if such breach is curable)within ten (10) days after the date of Company’s written notice of breach. You understand that if Company terminates this Exclusive Consulting Agreementpursuant to this Section 5.2, you will forfeit all additional vesting, payments or other rights or benefits under the Award as a result of having attained NormalRetirement Age and you will be subject to the Equity Clawback provisions of Section 6, below.5.3 Termination by You . You may not terminate this Exclusive Consulting Agreement during the Term except or unless Company materially breachesthis Consulting Agreement. Should you believe that Company materially breached this Exclusive Consulting Agreement, you will notify the Company in writingand allow Company to cure any breach (if such breach is curable) within ten (10) days after the date of your written notice of breach.6. Equity Clawback . In the event of any breach by you of Section 4 hereof or any material breach by you of any other provision hereof, then any additionalvesting, payments or other rights or benefits you may have as a result of having attained Normal Retirement Age shall automatically and immediately terminateand be forfeited. In addition, you shall, within 30 days following notice from Company, pay to the Company an amount equal to the aggregate benefit, value orgain you realized or obtained as a result of any additional vesting, payments or other rights or benefits you received under the Award as a result of having attainedNormal Retirement Age.B-2EXHIBIT 12.1QUALCOMM IncorporatedCOMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(In millions, except ratio data) Year Ended September 24, 2017 September 25, 2016 September 27, 2015 September 28, 2014 September 29,2013Earnings: Income from continuing operations before income taxes andincome (losses) from equity method investments$3,094 $6,917 $6,519 $8,788 $8,200Fixed charges (1)537 336 137 35 118Cash distributions from equity method investments— — 6 — 1Less: Capitalized interest— — — — (65)Total earnings$3,631 $7,253 $6,662 $8,823 $8,254 Fixed charges: (1) Interest$494 $297 $104 $5 $88Interest component of rental expense43 39 33 30 30Total fixed charges$537 $336 $137 $35 $118Ratio of earnings to fixed charges7 x 22 x 49 x 252 x 70 x(1)Fixed charges include interest expense (which includes amortization of debt issuance costs), whether expensed or capitalized, and the portion of operating rental expensethat management believes is representative of the interest component of rent expense, which is estimated to be one-third of rental expense.EXHIBIT 21SUBSIDIARIES OF REGISTRANTSubsidiaries of Qualcomm IncorporatedState or Other Jurisdiction of IncorporationQualcomm Technologies, Inc.DelawareQualcomm Global Trading Pte. Ltd.SingaporeQualcomm Asia Pacific Pte. Ltd.SingaporeQualcomm Technologies International, Ltd.United KingdomThe names of other subsidiaries are omitted. Such subsidiaries would not, if considered in the aggregate as a single subsidiary, constitute a significantsubsidiary within the meaning of Item 601(b)(21)(ii) of Regulation S-K.EXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-203935) and Form S-8 (No. 333-137692, No. 333-148177, No. 333-148556, No. 333-150423, No. 333-166246, No. 333-173184, No. 333-174649, No. 333-188104, No. 333-197445, No. 333-203575 and No. 333-210048) of QUALCOMM Incorporated of our report dated November 1, 2017 relating to the consolidated financial statements, the financial statement scheduleand the effectiveness of internal control over financial reporting, which appears in this Form 10-K./s/ PricewaterhouseCoopers LLPSan Diego, CaliforniaNovember 1, 2017EXHIBIT 31.1CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Steve Mollenkopf, certify that:1.I have reviewed this Annual Report on Form 10-K of QUALCOMM Incorporated;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Dated: November 1, 2017/s/ Steve Mollenkopf Steve Mollenkopf Chief Executive Officer EXHIBIT 31.2CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, George S. Davis, certify that:1.I have reviewed this Annual Report on Form 10-K of QUALCOMM Incorporated;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Dated: November 1, 2017/s/ George S. Davis George S. Davis Executive Vice President and Chief Financial Officer EXHIBIT 32.1CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002(18 U.S.C. SECTION 1350) In connection with the accompanying Annual Report of QUALCOMM Incorporated (the “Company”) on Form 10-K for the fiscal year ended September 24,2017 (the “Report”), I, Steve Mollenkopf, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of theSarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Dated: November 1, 2017/s/ Steve Mollenkopf Steve Mollenkopf Chief Executive Officer EXHIBIT 32.2CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002(18 U.S.C. SECTION 1350)In connection with the accompanying Annual Report of QUALCOMM Incorporated (the “Company”) on Form 10-K for the fiscal year ended September 24,2017 (the “Report”), I, George S. Davis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of theSarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Dated: November 1, 2017/s/ George S. Davis George S. Davis Executive Vice President and Chief Financial Officer

Continue reading text version or see original annual report in PDF format above