Qualcomm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(Mark one)

FORM 10-K 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended September 29, 2019 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from                      to                      .

Commission File Number 0-19528 

QUALCOMM Incorporated

(Exact name of registrant as specified in its charter)

Delaware

(State or Other Jurisdiction of Incorporation
or Organization)

5775 Morehouse Dr., San Diego, California

(Address of Principal Executive Offices) 

95-3685934

(I.R.S. Employer
Identification No.)

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
Common stock, $0.0001 par value

 Trading Symbol(s) 
 QCOM 

Name of Each Exchange on Which Registered
NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act:

None

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 

Yes 

  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes 

 No 

Indicate 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 during the 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 the past 90 days. Yes 

  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that 
the registrant was required to submit such files). Yes 

 No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller 
reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller 
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated
filer

Accelerated
filer

Non-accelerated filer

Smaller reporting
company

Emerging
growth company

If 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 or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes 

 No 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant at March 29, 
2019 (the last business day of the registrant’s most recently completed second fiscal quarter) was $69,171,646,680, based upon the 
closing price of the registrant’s common stock on that date as reported on the NASDAQ Global Select Market.

The number of shares outstanding of the registrant’s common stock was 1,141,844,863 at November 4, 2019.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Definitive Proxy Statement in connection with the registrant’s 2020 Annual Meeting of 

Stockholders, to be filed with the Commission subsequent to the date hereof pursuant to Regulation 14A, are incorporated by 
reference into Part III of this Report.

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QUALCOMM Incorporated
Form 10-K

For the Fiscal Year Ended September 29, 2019
Index

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal and Regulatory Proceedings
Mine Safety Disclosures

PART I

PART II

Item 5.

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

PART III

Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Item 15.
Item 16.

Exhibits and Financial Statement Schedules
Form 10-K Summary

PART IV

Page

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 TRADEMARKS

Qualcomm, Snapdragon, MSM, Hexagon, 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.

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In this document, the words “Qualcomm,” “we,” “our,” “ours” and “us” refer only to QUALCOMM Incorporated and its 

subsidiaries and not any other person or entity. This Annual Report (including, but not limited to, the section regarding 
Management’s Discussion and Analysis of Financial Condition and Results of Operations) 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 future matters such as the development of new products, enhancements 
or technologies, industry and market trends, sales levels, expense levels and other statements regarding matters that are not 
historical are forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this 
Annual Report.

Although forward-looking statements in this Annual Report reflect our good faith judgment, such statements can only be 

based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and 
uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by 
the forward-looking statements. Factors that could cause or contribute to such differences in results and 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 no obligation 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 and factors 
that may affect our business, financial condition, results of operations and prospects.

Item 1. Business

PART I

We 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 last Sunday 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 fiscal quarters 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 our 52-week 
fiscal years and our 13-week fiscal quarters. The fiscal years ended September 29, 2019 and September 24, 2017 included 52 
weeks. The fiscal year ended September 30, 2018 included 53 weeks.

Overview

We are a global leader in the development and commercialization of foundational technologies for the wireless industry. 

Our technologies and products are used in mobile devices and other wireless products, including network equipment, 
broadband gateway equipment, consumer electronic devices and other connected devices. Our inventions have 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 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 segments and applications 
beyond mobile, including automotive, computing, IoT (Internet of Things) and networking, allowing devices and objects to 
connect and communicate with each other in new ways. We derive revenues principally from sales of integrated circuit 
products and licensing our intellectual property, including patents and other rights.

The foundational technologies we invent help power the modern mobile experience, impacting how the world connects, 

computes and communicates. We share these inventions broadly through our licensing program, enabling wide ecosystem 
access to technologies at the core of mobile innovation, and through the sale of our wireless integrated circuit platforms (also 
known as chips or chipsets) and other products, which accelerates 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 enable a global environment to drive continued progress and growth. 

We have a long history of driving innovation. We have played and continue to play a leading role in developing system 

level inventions that serve as the foundation for 3G, 4G and 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 a public cellular 
wireless network.

 We own significant intellectual property, including patents, patent applications and trade secrets, applicable to products 

that implement any version of CDMA and OFDMA. Companies in the mobile industry generally recognize that any company 

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seeking to develop, manufacture and/or sell devices 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 mobile and other wireless devices that help 

drive end-user demand, and we own substantial intellectual property related to these technologies. Some of these inventions 
are contributed to and commercialized as industry standards, such as certain video and audio codecs, Wi-Fi, GPS (global 
positioning system) and Bluetooth. Other technologies that we have developed and that are widely used by wireless devices 
are not related to any industry standards, such as operating systems, user interfaces, graphics and camera processing 
functionality, RF (radio frequency), RF front-end (RFFE) and antenna designs and application processor architectures. Our 
patents cover a wide range of technologies across the entire wireless system (including wireless devices and network 
infrastructure equipment), not just the portion of such patented technologies incorporated into chipsets.

We are organized on the basis of products and services and have three reportable segments. We conduct business 

primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology 
Licensing) licensing business. QCT develops and supplies integrated circuits and system software based on CDMA, OFDMA 
and other technologies for use in mobile devices, wireless networks, broadband gateway equipment, consumer electronic 
devices, devices used in IoT and automotive telematics and infotainment systems. QTL grants licenses to use portions of our 
intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of 
certain wireless products. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also 
have nonreportable segments, including Qualcomm Government Technologies or QGOV (formerly Qualcomm Cyber 
Security Solutions), as well as other wireless technology and service initiatives.

Industry Trends

As the largest technology platform in the world, mobile has transformed the way we connect, compute and communicate. 

The scale and pace of innovation in the mobile industry, especially around connectivity and computing capabilities, is also 
impacting industries beyond wireless, empowering new services, new business models and new experiences. Our inventions 
and licensing program have been integral to, and provided foundational technologies for, the evolution of the mobile industry.

Advancing connectivity. 3G/4G multimode mobile broadband technology has been a key innovation of mobile, 
providing users with fast, reliable, always-on connectivity. As of September 30, 2019, there were approximately 6.0 billion 
3G/4G connections globally (CDMA-based, OFDMA-based and CDMA/OFDMA multimode) representing 76% of total 
mobile connections (GSMA Intelligence, November 2019). By 2023, global 3G/4G connections are projected to reach 7.0 
billion, with approximately 88% of these connections coming from emerging regions and China (GSMA Intelligence, 
November 2019).

3G/4G multimode mobile broadband continues to be an important platform for extending the reach and potential of the 

Internet. This is amplified in emerging regions and China, where, as of September 30, 2019, 3G/4G mobile broadband 
connections are estimated to be approximately seven times the number of fixed Internet household connections (GSMA 
Intelligence November 2019 and PT June 2019). In China, 3G/4G multimode services have experienced strong adoption 
since being launched in 2013, with more than 1.4 billion connections estimated as of September 30, 2019 (GSMA 
Intelligence, November 2019). In India, mobile operators continue to expand their 3G/4G multimode services, providing 
consumers with the benefits of advanced mobile broadband connectivity while creating new opportunities for device 
manufacturers and other members of the mobile ecosystem. 3G/4G mobile broadband may be the first and, in many cases, the 
only way that people in these regions access the Internet. The transition of wireless networks and devices to 3G/4G has not 
only been driven by the number of affordable handsets available in emerging regions and China, but also by the variety of 
flexible and affordable data plans being offered by mobile operators.

With the first 5G global specifications defined in 2018 by 3GPP (3rd Generation Partnership Project), an industry 
standards development organization, initial commercial 5G network deployments and device launches, which focus on 
enhanced mobile broadband services, began in 2019 and will continue into 2020 and beyond. 5G is designed to enhance 
mobile broadband services, including ultra-high definition (4K) video streaming, near-instant access to cloud services and 
augmented and virtual reality applications, with lower latency and multi-gigabit user data speeds, and bring more capacity 
and efficiency to networks, which may enable operators to offer new unlimited mobile data plans.

Looking ahead, we expect future releases of 5G to expand to new industries beyond traditional cellular communications 

and to create new business models and services, such as autonomous vehicles and artificial intelligence-based platforms 
designed to bring greater autonomy to manufacturing and other industrial applications (known as industrial IoT), through 
ultra-reliable, ultra-low latency communication links. We also expect 5G will enable connecting a significant number of 
“things” (also known as IoT, including the connected home, smart cities, wearables and voice and music devices), with 

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connectivity designed to meet diverse (low) power and cost requirements, as well as to address both low and high complexity 
applications. 

Most 5G devices are expected to include multimode support for 3G, 4G and Wi-Fi, enabling service continuity where 5G 

has yet to be deployed and simultaneous connectivity across 4G technology, while also allowing mobile operators to utilize 
current network deployments. At the same time, 4G is expected to continue to evolve in parallel with the further development 
of 5G and become fundamental to many of the key 5G technologies (through multi-connectivity) in areas such as support for 
unlicensed spectrum, gigabit LTE user data speeds and LTE IoT that meets low power and cost requirements. The first phase 
of 5G networks supports mobile broadband services for the smartphone form factor both in lower spectrum bands below 6 
GHz (sub-6), as well as higher bands above 6 GHz, including millimeter wave (mmWave). As with previous generations of 
mobile networks, it will take time to deploy new 5G networks. 

Consumer demand in smartphones. From October 2018 through September 2019, approximately 1.4 billion 
smartphones are estimated to have shipped globally, representing a year-over-year decrease of approximately 4% (IDC, 
Mobile Phone Tracker, 2019Q3). Smartphone shipments in calendar 2020 are expected to be approximately flat year-over-
year (IDC Quarterly Mobile Phone Tracker, 2019Q3). The slow-down in smartphone demand that began in the year ended 
September 2019, and that is expected to continue into calendar 2020, reflects further lengthening of replacement cycles, 
particularly in developed regions and China, where consumer demand is increasingly driven by new product launches and/or 
innovation cycles as the industry transitions to 5G. 

Consumer demand for new types of experiences, combined with the needs of mobile operators and device manufacturers 

to provide differentiated features and services, is driving continued innovation within the smartphone. As a result, the 
smartphone has become the go-to device for social networking, music and video streaming, gaming, email and web 
browsing, among others. It is expected that 5G connectivity will drive further innovations within the smartphone and offer 
enhanced connectivity, which in turn will enable new applications. Given its advanced capabilities and utility, the smartphone 
has replaced many traditional consumer electronic devices, including digital cameras, video cameras, standalone GPS units, 
gaming devices and music players. 

Transforming other industries. With their significant scale and highly integrated solutions, industries beyond mobile, 
including automotive, computing, IoT and networking, among others, are leveraging the same technology innovations found 
in today’s leading smartphones to enhance existing products and services as well as to create new products and services. Our 
inventions that contribute to the formation of advanced cellular technologies, such as 3G/4G and now 5G connectivity, are 
helping to drive, and in the case of 5G accelerate the pace of, this transformation. For example, in the automotive industry, 
approximately 72% of new vehicles produced are projected to have cellular connectivity by 2025, compared to 40% in 2018 
(Strategy Analytics, October 2019). In addition, the installed base of non-mobile devices with cellular connectivity, which 
includes IoT devices among others, is projected to grow more than 150% between 2019 and 2023 (ABI Research, February 
2019). 

Wireless Technologies Overview

The growth in the use of wireless devices worldwide and the demand for data services and applications requires 

continuous innovation to improve the user experience, support new services, increase network capacity, make use of different 
frequency bands and allow for dense network deployments. To meet these requirements, different wireless communications 
technologies continue to evolve. For nearly three decades, we have invested heavily in research and development and have 
developed foundational technologies that drive the continued evolution of the wireless industry, 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 wireless 
communications 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 same frequency channel by dividing the signal into different time slots. Most of these 
systems are classified as 2G (second generation) technology. The main examples of TDMA-based technologies are GSM 
(deployed worldwide), IS-136 (deployed in the Americas) and Personal Digital Cellular (PDC) (deployed in Japan).

The transition of wireless devices from 2G to 3G/4G and the emergence of 5G technologies continued around the world 

with estimated 3G/4G/5G connections up 11% year-over-year (GSMA Intelligence, November 2019). As of September 30, 
2019, there were approximately 1.9 billion GSM connections worldwide, representing approximately 24% of total cellular 
connections, down from 30% as of September 30, 2018 (GSMA Intelligence, November 2019).

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CDMA-based. CDMA-based technologies are characterized by their access method allowing several users to share the 
same frequency and time by allocating different 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 vastly improved capacity for voice and low-rate data 
services as compared to analog technologies and significant improvements over TDMA-based technologies such as GSM. To 
date, these technologies have seen many revisions. New specifications continue to be defined by 3GPP. 

CDMA technologies ushered in a significant increase in mobile broadband data services. As of September 30, 2019, there 

were approximately 2.1 billion CDMA-based connections worldwide, representing approximately 27% of total cellular 
connections, down from 28% as of September 29, 2018 as consumers migrate to OFDMA-based technologies (GSMA 
Intelligence, November 2019).

OFDMA-based. OFDMA-based technologies are characterized by their access method allowing several users to share the 
same frequency band and time by allocating different subcarriers to individual users. Most of the OFDMA-based technologies 
to be deployed or expected to be deployed through the end of 2019 are classified as 4G technology. 5G heavily leverages 
OFDMA-based technologies. 3GPP developed 4G specifications through the standardization of the radio component (LTE) 
and the core network component (Enhanced Packet Core or EPC). Similarly, 3GPP has developed 5G specifications through 
the specification of the radio component (New Radio or NR) and the core network component (5G Core or 5GC). Unlike 4G 
that has fixed Orthogonal Frequency Division Multiplexing (OFDM) parameterization, 5G has multiple OFDM 
parameterizations to address a wide range of spectrum and use cases. We continue to play a significant role in the development 
of LTE, LTE Advanced and LTE Advanced Pro, which are the predominant 4G technologies currently in use.

LTE is incorporated in 3GPP specifications starting from Release 8 and uses OFDMA in the downlink and single carrier 
FDMA (Frequency Division Multiple Access) in the uplink. LTE has two modes, FDD (frequency division duplex) and TDD 
(time division duplex), to support paired and unpaired spectrum, respectively, and continues to evolve as 3GPP defines new 
specifications. 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 technologies through multimode devices. 

LTE Advanced brings many more enhancements, including carrier aggregation, advanced antenna techniques and 
optimization for small cells. Apart from improving the performance of existing networks, there are also new enhancements 
under the umbrella of LTE Advanced Pro, including LTE Direct for proximity-based device-to-device discovery, improved 
LTE broadcast, optimizations of narrowband communications designed for IoT (known as eMTC and NB-IoT) and the ability 
to use LTE Advanced in unlicensed spectrum (LTE Unlicensed) as well as in emerging shared spectrum bands in various 
regions (such as the Citizens Broadband Radio Service, or CBRS, in the United States). There are multiple options for 
deploying LTE Unlicensed for different deployment scenarios.

•  LAA (Licensed Assisted Access), introduced as part of 3GPP Release 13, aggregates unlicensed and licensed 

spectrum in the downlink and is being deployed globally by mobile operators. LAA is a key technology for many 
operators with limited licensed spectrum to deliver Gigabit LTE speeds. 
eLAA (enhanced LAA) introduced as part of 3GPP Release 14, is an evolution of LAA, enables aggregation of 
unlicensed and licensed spectrum in the uplink.

• 

Beginning with Release 14, 3GPP specifications provide enhancements specifically for vehicular communications known 

as cellular vehicle-to-everything (C-V2X), which includes both direct communication (vehicle-to-vehicle, vehicle-to-
infrastructure and vehicle-to-pedestrian) in dedicated spectrum that is independent of a cellular network and cellular 
communications with networks in traditional mobile broadband licensed spectrum. C-V2X is designed to serve as the 
foundation for Intelligent Transportation Systems (ITS), enabling vehicles to communicate with each other and everything 
around them providing non-line-of-sight awareness for enhanced road safety and traffic efficiency. In future 3GPP releases 
(starting in Release 16, which is expected to be completed in June 2020), C-V2X is expected to benefit from the incorporation 
of 5G features, such as high throughput, lower latency and ultra-reliable communication capabilities to enable a higher level of 
performance and predictability as needed for automated driving and other advanced use cases.

As of September 30, 2019, there were approximately 3.8 billion global LTE connections worldwide, representing 
approximately 49% of total cellular connections, up from 41% as of September 30, 2018 (GSMA Intelligence, November 
2019).

As of October 2019, approximately 900 wireless operators have commercially deployed or started testing LTE networks 

and 777 operators have commercially launched LTE in 228 countries, including 308 operators in 135 countries having 
commercially launched LTE Advanced networks (GSA, November 2019).

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The wireless industry is actively developing and commercializing 5G technologies. Initial commercial 5G network 
deployments and device launches began in calendar 2019, and we expect that 5G network deployments and device launches 
will increase over the next several years. Some of our inventions that serve as foundational technologies for 3G and 4G now 
also serve as foundational technologies for 5G. 5G is designed to transform the role of wireless technologies and already 
incorporates or soon will incorporate advancements on 3G/4G features available today, including device-to-device capabilities 
and the use of all different types of spectrum (including licensed, unlicensed and shared spectrum). We continue to play a 
significant role in driving advancements in 5G, including contributing to 3GPP standardization activities that are defining the 
continued evolution of 5G NR and 5GC standards. 

The first global set of 5G standards is incorporated in 3GPP specifications starting from Release 15, which was initially 

completed in March 2018 and subsequently updated in September 2018 and June 2019. Release 15 enables different 
architecture deployment choices of 5G networks while sharing the same radio access technology. The main advantages of 5G 
are its ability to target diverse services with very different technical requirements (from enhanced mobile broadband to 
massive IoT to mission critical services), its utilization of diverse types of spectrum (from the low bands to millimeter bands) 
and its ability to support diverse types of deployment scenarios. Predominant technological components of 5G include the 
ability to address ultra-reliable, low-latency communication, new channel coding schemes to efficiently support large data 
blocks, multiple-input multiple-output (MIMO) to increase coverage and network capacity and mobile millimeter wave to 
increase the data rate offered to users. 5G uses OFDMA in the downlink and either OFDMA or single carrier FDMA in the 
uplink depending on the use case. Like 3G and 4G, 5G supports carrier aggregation across spectrum bands, across FDD and 
TDD and across licensed and unlicensed spectrum (starting with Release 16), and 5G also supports dual connectivity across 
4G and 5G. A key benefit of 5G is its ability to take advantage of very wide channel bandwidth such as 800/400/100 MHz 
(compared to LTE’s 20 MHz maximum bandwidth, which requires carrier aggregation to combine spectrum beyond 20 MHz). 
As with previous cellular generations, 5G is designed to support seamless compatibility with 2G/3G/4G technologies through 
multimode devices. 

As of October 2019, 258 wireless operators in 94 countries have demonstrated, are testing, trialing or have been licensed 

to begin field trials of 5G-enabling and candidate technologies, and an additional 69 wireless operators in 50 countries have 
announced their intentions to make 5G available to their customers by 2022 (GSA, November 2019).

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 provide connectivity through an access point. Wi-Fi systems are based on standards developed by the 
Institute of Electrical and Electronics Engineers (IEEE) in the 802.11 family of standards. 802.11ax, the latest standard, adds 
advanced features such as downlink and uplink OFDMA and uplink multiple-user MIMO to the 802.11 baseline standard. This 
technology primarily targets connectivity for mobile devices, tablets, laptops and other consumer electronic 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 
the existing 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 a solution for “connected home” applications that require long battery life. We 
played a leading role in the development of 802.11ac, 802.11ax, 802.11ay, 802.11ah, 802.11ad and 802.11p, and continue to 
play a lead role in the evolution of 802.11 family of standards. We are actively involved in innovative programs developed in 
the context of the Wi-Fi Alliance, a non-profit organization that drives global Wi-Fi adoption and evolution.

Bluetooth. Bluetooth is a wireless personal area network that provides wireless connectivity between devices over short 

distances ranging from a few centimeters to approximately one hundred meters. Bluetooth technology provides wireless 
connectivity to a wide range of fixed or mobile consumer electronic devices. Bluetooth functionalities are standardized by the 
Bluetooth Special Interest Group in various versions of the specification (from 1.0 to 5.1), which include different 
functionalities, such as enhanced data rate, low energy and mesh technologies. We are a leading contributor to Bluetooth 
technologies in the areas of mobile devices, HID (human interface device), A/V (audio/video) and mesh technologies.

Location Positioning Technologies. Location positioning technologies continue to evolve in order to deliver an enhanced 
commercial location experience and comply with the new mandates on location for E911 calls from the United States Federal 
Communications Commission. We are a key developer of the Assisted-GPS (A-GPS), Assisted Global Navigation Satellite 
System (A-GNSS) and WLAN positioning technologies used in most cellular handsets today. For uses requiring the best 
reliability and accuracy for E911 services and navigational based services, A-GPS, A-GNSS and WLAN provide leading-edge 
solutions.

The industry continues to evolve to support additional inputs for improving the location experience. Our products and 
intellectual property now support multiple constellations for A-GNSS, including: GPS, GLONASS, Galileo and BeiDou; Wi-
Fi-based and Bluetooth-based positioning for WLAN, including, Wi-Fi RSSI (received signal strength indication) and Wi-Fi 
RTT (round-trip time) signals for indoor location; observed time difference of arrival positioning for LTE access (e.g., in rural 

9

and indoor areas); and third-party inertial sensors. The combination of these different location solutions is used to ensure 
accurate location availability in all areas. 

Other Significant Technologies used in Cellular and Certain Consumer Electronic Devices and Networks. We have 
played and continue to play a leading role in developing and/or have acquired many of the other technologies used across the 
wireless system, such as cellular handsets and certain other consumer electronic devices and networks, including:

•  RFFE chips and modules (including power amplifier modules, envelope tracker, antenna tuners, diversity modules, 

• 
• 

RF switches and micro-acoustic RF filters) designed for improved signal performance and reduced power 
consumption, while simplifying the design for manufacturers to develop LTE/5G multimode, multiband devices, 
including sub-6 GHz and mmWave devices;
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; 
the latest version of 3GPP’s codec for multimedia use and for voice/speech use;

• 
• 
•  multimedia transport, including MPEG-DASH (Dynamic Adaptive Streaming over HTTP) enabling advanced 

multimedia experiences;
camera and camcorder functions;
operating system and user interface features; 
on-device artificial intelligence (AI) features, including 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 and 
ultrasonic fingerprint readers for single touch authentication;
volatile (LP-DDR2, 3, 4) and non-volatile (eMMC) memory and related controllers; and
power management systems for improved battery life and device charging.

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Operating Segments

We have three reportable segments. We conduct business primarily through QCT (Qualcomm CDMA Technologies) and 
QTL (Qualcomm Technology Licensing), while QSI (Qualcomm Strategic Initiatives) makes strategic investments. Revenues 
in fiscal 2019, 2018 and 2017 for our reportable segments were as follows (in millions, except percentage data):

QCT

As a percent of total

QTL

As a percent of total

QSI

As a percent of total

$

$

$

2019

2018

2017

$

$

$

14,639

60%

4,591

19%

152

1%

$

$

$

17,282

76%

5,042

22%

100

—%

16,479

74%

6,412

29%

113

1%

QCT Segment. QCT is a leading developer and supplier of integrated circuits and system software based on CDMA, 
OFDMA and other technologies for use in wireless voice and data communications, networking, application processing, 
multimedia and global positioning system products. QCT’s integrated circuit products are sold and its system software is 
licensed to manufacturers that use our products in a broad range of devices in support of CDMA- and OFDMA-based 
technologies, from low-tier, entry-level devices primarily for emerging regions to premium-tier devices, including mobile 
devices (primarily smartphones), tablets, laptops, data modules, handheld wireless computers and gaming devices, access 
points and routers, broadband gateway equipment, data cards and infrastructure equipment, IoT devices and applications, 
other consumer electronics and automotive telematics and infotainment systems. Our 3G/4G/5G modem roadmap delivers 
the latest network technologies across multiple product tiers and devices. This roadmap is the result of extensive 
collaboration with manufacturers, operators, developers, governments and industry standards organizations, as well as our 
years of research into emerging network standards and the development of integrated circuits that take advantage of these 
new standards, while maintaining backward compatibility with existing standards.

The Qualcomm® Snapdragon™ family of integrated circuit products include the Snapdragon mobile, compute and 
automotive platforms. Each platform consists of application processors and wireless connectivity capabilities, including our 
cellular modem that provides core baseband modem functionality for voice and data communications, non-cellular wireless 
connectivity (such as Wi-Fi and Bluetooth) and global positioning functions. Our Snapdragon application processor functions 
include security, graphics, display, audio, video, camera and AI. Our central processing units are designed based on ARM 

10

architecture and are designed to deliver high levels of compute performance at low power. Our Qualcomm® Hexagon™ 
processors are designed to support a variety of signal processing applications, including AI, audio and sensor processing. 
Qualcomm® Adreno™ graphics processing units are designed to deliver high quality graphics performance for visually rich 
3D gaming and user interfaces. In addition to the highly integrated core system on a chip (SoC), we also design and supply 
supporting components, including the RF, PM (Power Management), audio, codecs, speaker amps and additional wireless 
connectivity integrated circuits. These supporting components, in addition to our cellular modems and application processors 
comprising our core SoC, are also sold as individual components. The combination of the Snapdragon SoC, system software 
and supporting components provide an overall platform with optimized performance and efficiency, enabling manufacturers 
to design and deliver powerful, slim and power-efficient devices ready for integration with the complex cellular networks 
worldwide. 

Our portfolio of RF products includes Qualcomm® RFFE components that are designed to simplify the RF design for 

5G front-end, LTE multimode and multiband mobile devices, to reduce power consumption and to improve radio 
performance. QCT offers an advanced portfolio of RFFE products for mobile devices, infrastructure, automotive, industrial 
IoT and other IoT applications. Our technologies provide comprehensive RFFE product offerings with system level 
performance from the modem and transceiver to the antenna that include power tracking, tuning systems, switching, 
multimode-multiband power amplification, low noise amplifiers, complex transmit and receive modules, in addition to 
discrete filtering applications across cellular, automotive, infrastructure, industrial IoT and other IoT industries.

Our wireless connectivity products also consist of integrated circuits and system software for Wi-Fi, Bluetooth, 
frequency modulation (FM) and near field communications (NFC), as well as technologies that support location data and 
services, including GPS, GLONASS, BeiDou and Galileo. Our wireless connectivity products provide additional 
connectivity for mobile devices, tablets, laptops, IoT applications and automotive telematics and infotainment systems. QCT 
also offers standalone Wi-Fi, Bluetooth, fingerprint sensor, applications processor and Ethernet products for mobile devices, 
consumer electronics, computers, IoT applications, other connected devices and automotive telematics and infotainment 
systems. Our networking products include Wi-Fi, Ethernet and Powerline chips, network processors and software. These 
products help enable home and business networks to support the growing number of connected devices, digital media and 
data services. 

Other than for our RFFE modules and RF filter acoustic products, QCT utilizes a fabless production model, which means 

that we do not own or operate foundries for the production of silicon wafers from which our integrated circuits are made. 
Therefore, we primarily rely on independent third-party suppliers to perform the manufacturing and assembly, and most of 
the testing, of our integrated circuits based primarily on our proprietary designs and test programs. Our suppliers also are 
responsible for the procurement of most of the raw materials used in the production of our integrated circuits. Integrated 
circuits are die cut from silicon wafers that have completed the package assembly and test manufacturing processes. The 
semiconductor package supports the electrical contacts that connect the integrated circuit to a circuit board. Die cut from 
silicon wafers are the essential components of all of our integrated circuits and a significant portion of the total integrated 
circuit cost. 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 manufacturing model, we purchase die in singular or wafer form from semiconductor manufacturing foundries and 
contract with separate third-party suppliers for manufacturing services such as wafer bump, probe, assembly and the majority 
of our final test requirements. The primary foundry suppliers for our various digital, analog/mixed-signal, RF and PM 
integrated circuits are Global Foundries, Samsung Electronics, Semiconductor Manufacturing International, Taiwan 
Semiconductor Manufacturing Company (TSMC) and United Microelectronics. The primary semiconductor assembly and 
test suppliers are Advanced Semiconductor Engineering, Amkor Technology, Siliconware Precision Industries and 
STATSChipPAC. The majority of our foundry and semiconductor assembly and test suppliers are located in the Asia-Pacific 
region.

QCT uses internal fabrication facilities to manufacture RFFE modules and RF filter acoustic products, and its 
manufacturing operations consist of front-end and back-end processes. The front-end processes primarily take place at 
manufacturing facilities located in Germany and Singapore and involve the imprinting of substrate 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 located in China, Germany and Singapore.

QCT’s sales are primarily made through standard purchase orders for delivery of products. QCT generally allows 
customers to reschedule delivery dates within 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 in which QCT operates is intensely competitive. 
QCT competes worldwide with a number of U.S. and international designers and manufacturers of semiconductors. As a 

11

result of global expansion by foreign and domestic competitors, technological changes, lengthening replacement cycles for 
mobile devices, device manufacturer concentrations and the potential for further industry consolidation, we anticipate the 
industry to remain very competitive. We believe that the principal competitive factors for our products include performance, 
level of integration, quality, compliance with industry standards, price, time-to-market, system cost, design and engineering 
capabilities, new product innovation, growth and scaling of distribution channels, desire by certain customers to use multiple 
suppliers and customer support. QCT also competes in both single-mode and multimode environments against alternative 
communications technologies. Additional competitive factors exist for QCT product offerings that have expanded into 
adjacent industry segments outside traditional cellular industries, including automotive, computing, IoT and networking. The 
automotive industry is subject to long design-in time frames, long product life cycles and a high degree of regulatory and 
safety requirements, necessitating suppliers to the industry to comply with stringent qualification processes, very low defect 
rates and 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, Cirrus Logic, Cypress 

Semiconductor, HiSilicon, Intel, Marvell, Maxim, MediaTek, Microchip Technology, Murata, Nordic Semiconductor, Nvidia, 
NXP Semiconductors, Qorvo, Realtek Semiconductor, Renesas, Samsung, Sequans Communications, Skyworks and 
Spreadtrum Communications (which is controlled by Tsinghua Unigroup). QCT also faces competition from products 
internally developed by our customers, including some of our largest customers, and from some early-stage companies. Our 
competitors devote significant amounts of their financial, technical and other resources to develop and market competitive 
products and, in some cases, to develop and adopt competitive digital communication or signal processing technologies, and 
those efforts may materially and adversely affect us. Although we have attained a significant position in the wireless 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 use our competitors’ integrated circuit products, to utilize their own internally-
developed integrated circuit products or sell such products to others, including by selling them together with certain of their 
other products, or to choose alternative technologies; lower cost structures or a willingness and ability to accept lower prices 
and lower or negative margins for their products, particularly in China; foreign government support of other technologies or 
competitors or original equipment manufacturers (OEMs) that sell devices that do not contain our chipsets; better known 
brand names; ownership and control of manufacturing facilities and greater expertise in manufacturing processes; more 
extensive relationships with local distribution companies and OEMs in certain geographic regions (such as China); more 
experience in adjacent industry segments outside traditional cellular industries (such as automotive, computing, IoT and 
networking); and a more established presence in certain regions. These relationships may affect customers’ decisions to 
purchase products or license technology from us. Accordingly, new competitors or alliances among competitors could emerge 
and rapidly acquire significant market positions to our detriment.

QTL Segment. QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, 

which, among other rights, includes certain patent rights essential to and/or useful in the manufacture, sale and/or use of 
certain wireless products, including, without limitation, products implementing CDMA2000, WCDMA, CDMA TDD, LTE 
and/or OFDMA-based 5G standards and their derivatives. We have historically licensed our cellular standard-essential 
patents together with other Qualcomm patents that may be useful to such licensed products because in the past, licensees 
typically have desired to obtain the commercial benefits of receiving such broad patent rights from us. However, since 2015, 
our standard practice in China is to offer licenses to our 3G and 4G (and now 5G) cellular standard-essential Chinese patents 
for devices sold for use in China separately from our other patents. In addition, we also offer licenses to only our cellular 
standard-essential patents (including 3G, 4G and 5G) for both single-mode and multimode devices on a worldwide basis, and 
since 2018, an increasing number of new and existing licensees have elected to enter into worldwide license agreements 
covering only our cellular standard essential patents. Going forward, we continue to anticipate that a significant portion of 
QTL’s licensing revenues will be derived from licensees that have entered into license agreements covering only Qualcomm’s 
cellular standard essential patents. Our licensees manufacture wireless products including mobile devices (including 
handsets), other consumer devices (e.g., tablets and laptops), plug-in end user data modem cards and embedded modules for 
incorporation into machine-to-machine devices and certain end user products (excluding handsets and tablets), as well as 
infrastructure equipment required to establish and operate a network and equipment to test networks and cellular devices. 

Since our founding in 1985, we have focused heavily on technology development and innovation. These efforts have 
resulted in a leading intellectual property portfolio related to foundational, system level technologies for the wireless industry. 
We have an extensive portfolio of United States and foreign patents, and we continue to pursue patent applications around the 
world. Our patents have broad coverage in many countries, including Brazil, China, India, Japan, South Korea, Taiwan, the 
United States and 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 (Time Division CDMA), OFDMA-based LTE 
and OFDMA-based 5G products. Our patent portfolio is the most widely and extensively licensed in the industry, with more 

12

than 300 licensees. Additionally, we have a substantial patent portfolio related to key technologies used in communications 
and other devices and/or related services, some of which were developed in industry standards development bodies. These 
include certain video codecs, audio codecs, Wi-Fi, memory interfaces, wireless power, GPS and positioning, broadcast and 
streaming protocols, and short-range communication functionalities, including NFC and Bluetooth. Our patents cover a wide 
range of technologies across the entire wireless system, including the device (handsets and other wireless devices), not just 
the portion of such patented technologies incorporated into chipsets, and the network. Over the years, a number of companies 
have challenged our patent position, but companies in the mobile communications industry generally recognize that any 
company seeking to develop, manufacture and/or sell certain wireless products that use CDMA-based and/or OFDMA-based 
technologies will require a license 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 our industry that hold back certain key technologies, we offer companies substantially our 
entire patent portfolio for use in cellular devices and cell site infrastructure equipment. Our strategy to make our patented 
technologies broadly available has been a catalyst for industry growth, helping to enable a wide range of companies offering 
a broad array of wireless products and features while increasing the capabilities of and/or driving down average and low-end 
selling prices for 3G handsets and other wireless devices. By licensing or otherwise providing rights to use our patents to a 
wide range of equipment manufacturers, encouraging innovative applications, supporting equipment manufacturers with 
integrated chipset and software products and focusing on improving the efficiency of the airlink for wireless operators, we 
have helped 3G and 3G/4G multimode evolve and grow and reduce device pricing, all at a faster pace than the 2G (second 
generation) technologies such as GSM that preceded it. 5G network deployments and commercial 3G/4G/5G multimode 
device sales began in 2019 and will continue into 2020 and beyond. By licensing or otherwise providing rights to use our 
patents to a wide range of equipment manufacturers, 5G will continue to encourage innovative applications through enhanced 
mobile broadband services with lower latency and multi-gigabit user data speeds and bring more capacity and efficiency to 
wireless networks. 

Upon the initial deployment of OFDMA-based networks, the products implementing such technologies generally have 

been multimode and implement OFDMA-based and CDMA-based technologies. The licenses granted under our existing 
license agreements generally cover multimode CDMA/OFDMA (3G/4G/5G) devices, and our licensees are obligated to pay 
royalties under their license agreements for such devices. 

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 such standards bodies that we will offer to license our essential patents for these CDMA 
standards consistent with our commitments to those bodies. We have also informed standards bodies that we hold patents and 
pending patent applications that are potentially essential for LTE standards, including FDD and TDD versions and have 
committed to offer to license our essential patents for these LTE standards consistent with our commitments to those bodies. 
We have informed standards bodies that we hold patents and pending patent applications that are essential for 5G 
technologies and have committed to offer to license our essential patents for these 5G standards consistent with our 
commitments to those bodies. We have made similar commitments with respect to certain other technologies implemented in 
industry standards. 

QTL licensing revenues include license fees and royalties. Licensees pay royalties based on their sales of products 
incorporating or using our licensed intellectual property and may also pay a fixed license fee in one or more installments. 
Sales-based 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). 
We broadly provide per unit royalty caps that apply to certain categories of complete wireless devices, namely smartphones, 
tablets, laptops and smartwatches, and provide for a maximum royalty amount payable per device. Revenues generated from 
royalties are subject to quarterly and annual fluctuations.

The vast majority of QTL revenues have been generated through our licensees’ sales of CDMA2000-based, WCDMA-
based and LTE-based products (including 3G and 3G/4G multimode devices), such as smartphones and feature phones. We 
have invested and continue to invest in both the acquisition and development of OFDMA technology and intellectual 
property and have generated the industry leading patent portfolio applicable to LTE, LTE Advanced and LTE Advanced Pro. 
Some of our inventions that serve as foundational technologies for 3G and 4G now also serve as foundational technologies 
for 5G. We have invested and continue to invest in the development of 5G and continue to play a significant role in driving 
advancements of 5G. Nevertheless, we face competition in 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 of our QCT segment, such as Broadcom. A principal purpose of these arrangements is 
to provide our QCT segment and the counterparties certain freedom of operation with respect to each party’s integrated 

13

circuits business. In every case, these agreements expressly reserve the right for QTL to seek royalties from the customers of 
such integrated circuit suppliers with respect to such suppliers’ customers’ sales of CDMA-, WCDMA- and OFDMA-based 
wireless devices into which 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, sell and/or use certain components (e.g., Application-Specific Integrated Circuits) and related 
software, cellular devices and/or infrastructure equipment. 

We are currently subject to various governmental investigations and private legal proceedings challenging our patent 
licensing practices, which may require us to change our patent licensing practices as described more fully in this Annual 
Report in “Part I, Item 1A. Risk Factors” under the heading “Changes in our patent licensing practices, whether due 
to governmental investigations or private legal proceedings challenging those practices, or otherwise, could adversely impact 
our business and results of operations” and in “Notes to Consolidated Financial Statements, Note 7. Commitments and 
Contingencies.”

QSI Segment. QSI makes strategic investments primarily through our Qualcomm Ventures arm that are focused on 

expanding or opening new opportunities for our technologies as well as supporting the design and introduction of new 
products and services (or enhancing existing products or services). Many of these strategic investments are in early-stage 
companies in a variety of industries and applications, including, but not limited to, artificial intelligence, automotive, digital 
healthcare, enterprise software and solutions, IoT, mobile and networking. Investments primarily include non-marketable 
equity securities and to a lesser extent, non-marketable convertible debt instruments. In addition, QSI segment results include 
revenues and related costs associated with development contracts 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 QSI investments in the foreseeable 
future.

Other Businesses. Nonreportable segments include our Qualcomm Government Technologies or QGOV (formerly 
Qualcomm Cyber Security Solutions) business and other wireless technology and service initiatives. During fiscal 2019, we 
completed the sale of our mobile health nonreportable segment, and we combined our Small Cells nonreportable segment 
into our QCT segment. Prior period segment information has not been adjusted to conform to the new segment presentation 
as such adjustments are insignificant. QGOV provides development and other services and sells related products to U.S. 
government agencies and their contractors. Additional information regarding our operating segments is provided in this 
Annual Report in “Notes to Consolidated Financial Statements, Note 8. Segment Information.” Information regarding 
seasonality is provided in this Annual Report in “Part II, Item 7. Management’s Discussion and Analysis of Financial 
Condition and Results of Operations” in the “Our Business and Operating Segments” section under the heading 
“Seasonality.”

Cost Plan

In the second quarter of fiscal 2018, we announced a Cost Plan designed to align our cost structure to our long-term 
margin targets. As part of this plan, we initiated a series of targeted actions across our businesses with the objective to reduce 
annual costs by $1 billion, excluding incremental costs resulting from any future acquisition of a business. Actions taken 
under this plan have been completed and resulted in us achieving substantially all of this target in fiscal 2019 based on our 
run rate exiting the second quarter of fiscal 2019, excluding litigation costs that were in excess of the baseline spend.

Additional information regarding our Cost Plan is provided in this Annual Report in “Notes to Consolidated Financial 

Statements, Note 10. Cost Plan.”

Corporate Structure

We operate our businesses through our parent company, QUALCOMM Incorporated, and multiple direct and indirect 

subsidiaries. We have developed our corporate structure in order to address various legal, regulatory, tax, contractual 
compliance, operational and other matters. Substantially all of our products and services 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 the vast 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 any patents owned by QUALCOMM Incorporated.

Revenue Concentrations and Significant Customers

A small number of customers/licensees historically have accounted for a significant portion of our consolidated revenues. 

In fiscal 2019, 2018 and 2017, revenues from Apple Inc. and its contract manufacturers (Hon Hai Precision Industry Co., 
Ltd./Foxconn, its affiliates and other suppliers to Apple), Samsung Electronics and combined revenues from GuangDong 

14

OPPO Mobile Telecommunications and vivo Communication Technology, and their respective affiliates (including BBK), 
each comprised 10% or more of consolidated revenues. Revenues from Xiaomi also comprised 10% or more of consolidated 
revenues in fiscal 2019 and 2018. Revenues in fiscal 2018 and 2017 were negatively impacted by our prior dispute with 
Apple Inc. and its contract manufacturers. Revenues in fiscal 2019 were positively impacted by our settlement of such 
dispute in the third quarter of fiscal 2019. We expect to begin recording revenues for new chipset models under our recently 
announced multi-year chipset agreement with Apple in the second half of fiscal 2020. 

Research and Development

The wireless communications industry is characterized by rapid technological change, evolving industry standards and 

frequent new product introductions, requiring a continuous 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 to 
continue to invest in research and development in a variety of ways in an effort to extend the demand for our products, and to 
utilize that research and development in adjacent industry segments outside of traditional cellular industries (such as 
automotive, computing, IoT and networking), including continuing the development of CDMA, OFDMA and other 
technologies (such as RF), developing alternative technologies for certain specialized applications, participating in the 
formulation of new voice and data communication standards and technologies, and assisting in deploying digital voice and 
data communications networks around the world. Our research and development team has a demonstrated track record of 
innovation in voice and data communication technologies and application processor technology, among others.

We continue to invest significant resources towards advancements in OFDMA-based 4G technologies (including LTE) 
and 5G technologies. We also engage in acquisitions and other transactions, such as joint ventures, to meet certain technology 
needs, to obtain development resources or open or expand opportunities for our technologies and to support the design and 
introduction of new products and services (or enhancing existing products and services) for voice and data communications 
and new industry segments outside of the traditional cellular industry. Our most recent significant transaction was the 
formation of, and subsequent acquisition of the remaining minority ownership interest in, RF360 Holdings to enable delivery 
of RFFE modules and RF filters into fully integrated products for mobile devices and IoT applications, among others. See 
“Notes to Consolidated Financial Statements, Note 9. Acquisitions” in this Annual Report for additional information.

We make investments to provide our integrated circuit customers with chipsets designed on leading-edge technology 
nodes that combine multiple technologies for use in consumer devices (e.g., smartphones, tablets and laptops), consumer 
electronics and other products (e.g., access points and routers, data cards and infrastructure equipment). In addition to 3G, 4G 
and 5G technologies, our chipsets support other wireless and wired connectivity technologies, including Wi-Fi, Bluetooth, 
Ethernet, location positioning and Powerline communication. Our integrated chipsets often include multiple technologies, 
including advanced multimode 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 wireless communications and enhance the value of our products and services. These innovations 
are expected to enable our customers to improve the performance or value of 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 to develop and/or advance 4G, 5G and a broad range of other technologies. We 
continue to use our substantial engineering resources and expertise to develop new technologies, applications and services 
and make them available to licensees to help grow the communications industry and generate new or expanded licensing 
opportunities.

We also make investments in opportunities that leverage our existing technical and business expertise to deploy new and 

expanded product areas, such as RFFE, and enter into adjacent industry segments, such as products for automotive, 
computing, IoT (including the connected home, smart cities, wearables, voice and music and robotics) and networking, 
among others.

Sales and Marketing

Sales 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 and/or market development funds with our customers. Our Corporate Marketing department 

15

provides company information on our Internet site and through other channels regarding our products, strategies and 
technology to industry analysts and media.

Competition

Competition faced by our operating segments is discussed under Operating Segments. Competition in the wireless 

communications industry throughout the world continues to increase at a rapid pace as consumers, businesses and 
governments realize the potential of wireless communications products and services. We have facilitated competition in the 
wireless communications industry by licensing our technologies to a large number of manufacturers. Although we have 
attained a significant 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 use our competitors’ 
integrated circuit products, to utilize their own internally-developed integrated circuit products or sell such products to others, 
including by selling them together with certain of their other products, or to choose alternative technologies; lower cost 
structures or a willingness and ability to accept lower prices and lower or negative margins for their products, particularly in 
China; foreign government support of other technologies or competitors or original equipment manufacturers (OEMs) that 
sell devices that do not contain our chipsets; better known brand names; ownership and control of manufacturing facilities 
and greater expertise in manufacturing processes; more extensive relationships with local distribution companies and OEMs 
in certain geographic regions (such as China); more experience in adjacent industry segments outside traditional cellular 
industries (such as automotive, computing, IoT and networking); and a more established presence in certain regions. These 
relationships may affect customers’ decisions to purchase products or license technology from us. Accordingly, new 
competitors or alliances among competitors could 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 as additional companies compete with our products or services based on 3G, 4G, 
5G or other technologies. Although we intend to continue to make substantial investments in developing new products and 
technologies and improving existing products and technologies to strengthen and/or maintain our competitive position, 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 competition continues to intensify. See also the 
Risk Factor entitled “Our industry is subject to competition in an environment of rapid technological changes. Our success 
depends in part on our ability to adapt to such changes and compete effectively; and such changes and competition could 
result in decreased demand for our products or declining average selling prices for our products or those of our customers or 
licensees.”

Corporate Responsibility and Sustainability

We strive to better our local and global communities through ethical business practices, socially empowering technology 

applications, educational and environmental programs and employee diversity and volunteerism.

•  Our Governance. We aim to demonstrate accountability, transparency, integrity and ethical business practices 

throughout our operations and interactions with 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, 

innovation is encouraged, and opportunities for training, growth and advancement are available for all employees.
•  Our Community. We have strategic relationships with a wide range of local organizations and programs that develop 

and strengthen communities worldwide.

•  Our Commitment to STEM Education. We aim to promote and improve science, technology, engineering and math 

(STEM) education at all levels and expand opportunities for underrepresented students in STEM careers.

•  Our Environment. We aim to expand our operations while minimizing our carbon footprint, conserving water and 

reducing waste.

•  Qualcomm® Wireless Reach™ Initiative. We invest in strategic programs that foster entrepreneurship, aid in public 
safety, enhance delivery of health care, enrich teaching and learning and improve environmental sustainability 
through the use of advanced wireless technologies.

Employees

At September 29, 2019, we employed approximately 37,000 full-time, part-time and temporary employees. During fiscal 

2019, the number of employees increased by approximately 1,600, primarily due to increases in engineering resources, 
partially offset by actions taken under our Cost Plan.

16

Available Information

Our 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, proxy statements 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 be filed with or furnished to the SEC. Our SEC reports and other financial information can be accessed through 
the investor relations section of 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.

Information about our Executive Officers

Our executive officers (and their ages at September 29, 2019) are as follows:

Steve Mollenkopf, age 50, has served as Chief Executive Officer since March 2014 and as a director since December 
2013. He served as Chief Executive Officer-elect and President from December 2013 to March 2014 and as President and 
Chief Operating Officer from November 2011 to December 2013. In addition, he served as Executive Vice President and 
Group President from September 2010 to November 2011 and as Executive Vice President and President, Qualcomm CDMA 
Technologies (QCT) from August 2008 to September 2010. Mr. Mollenkopf joined Qualcomm in 1994 as an engineer and 
throughout his tenure at Qualcomm has held several other technical and leadership positions. Mr. Mollenkopf served as a 
member of the board of directors of General Electric Company from November 2016 to April 2018. Mr. Mollenkopf holds a 
B.S. degree in Electrical Engineering from Virginia Tech and an M.S. degree in Electrical Engineering from the University of 
Michigan.

Cristiano R. Amon, age 49, has served as President, Qualcomm Incorporated since January 2018. He served as Executive 

Vice President, Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated (QTI) and President, QCT from 
November 2015 to January 2018. He served as Executive Vice President, QTI and Co-President, QCT from October 2012 to 
November 2015, Senior Vice President, Qualcomm Incorporated and Co-President, QCT from June 2012 to October 2012 
and as Senior Vice President, QCT Product Management from October 2007 to June 2012. Mr. Amon joined Qualcomm in 
1995 as an engineer and throughout his tenure at Qualcomm has held several other technical and leadership positions. Mr. 
Amon holds a B.S. degree in Electrical Engineering from UNICAMP, the State University of Campinas, Brazil.

Brian T. Modoff, age 60, 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., 
a provider of financial services, from March 1999 to October 2015. Prior to joining Deutsche Bank, Mr. Modoff was a 
research analyst at several financial institutions from November 1993 to March 1999. Mr. Modoff previously worked in 
defense electronics, including at Rockwell International in manufacturing management, and for the U.S. Navy as a 
communications technician. Mr. Modoff holds a B.A. degree in Economics from California State University, Fullerton and a 
Master of International Management from the Thunderbird School of Global Management.

Akash Palkhiwala, age 44, has served as Executive Vice President and Chief Financial Officer since November 2019. He 

served as Senior Vice President and Interim Chief Financial Officer from August 2019 to November 2019. He served as 
Senior Vice President, (QCT) Finance, QTI from December 2015 to August 2019, and Senior Vice President and Treasurer, 
Qualcomm Incorporated from October 2014 to December 2015. Mr. Palkhiwala served as Vice President, (QCT) Finance, 
QTI from October 2012 to October 2014 and Vice President, (QCT) Finance from October 2009 to October 2012. He served 
in various other finance roles since joining the Company in March 2001. Prior to joining Qualcomm, Mr. Palkhiwala was an 
Analyst at KeyBank. Mr. Palkhiwala has an undergraduate degree in Mechanical Engineering from L.D. College of 
Engineering in India and an M.B.A from the University of Maryland.

Alexander H. Rogers, age 62, has served as Executive Vice President and President, Qualcomm Technology Licensing 
(QTL) since October 2016. He served as Senior Vice President and President, QTL from September 2016 to October 2016, 
Senior Vice President, Deputy General Counsel and General Manager, QTL from March 2016 to September 2016, Senior 
Vice President and Deputy General Counsel from October 2015 to March 2016 and Senior Vice President and Legal Counsel 
from April 2007 to October 2015. Prior to transitioning to QTL, Mr. Rogers led Qualcomm’s litigation group. Mr. Rogers 
joined Qualcomm in January 2001 as an attorney. Prior to joining Qualcomm, Mr. Rogers was a partner at the law firm of 
Gray, Cary, Ware & Friedenrich (now DLA Piper), specializing in intellectual property and commercial litigation. Mr. Rogers 
holds 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 68, has served as Executive Vice President, General Counsel and Corporate Secretary since 
October 2007. He served as Senior Vice President, General Counsel and Corporate Secretary of Apple Inc. from November 

17

2006 to October 2007. From May 1975 to November 2006, Mr. Rosenberg held numerous positions at IBM Corporation, 
including Senior Vice President and General Counsel. Mr. Rosenberg has served as a member of the board of directors of 
NuVasive, Inc. since February 2016 and is presently NuVasive’s lead independent director. Mr. Rosenberg holds a B.S. 
degree in Mathematics from the State University of New York at Stony Brook and a J.D. degree from St. John’s University 
School of Law.

Michelle Sterling, age 52, has served as Executive Vice President, Human Resources since May 2015. She served as 

Senior Vice President, Human Resources from October 2007 to May 2015. Ms. Sterling joined Qualcomm in 1994 and 
throughout her tenure at Qualcomm has held several other human resources and leadership positions. Ms. Sterling has served 
as a member of the board of directors of Digital Turbine, Inc. since June 2019. Ms. Sterling holds a B.S. degree in Business 
Management from the University of Redlands.

James H. Thompson, age 55, has served as Executive Vice President, Engineering, QTI and Chief Technology Officer 
since March 2017. He served as Executive Vice President, Engineering, QTI 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 at Qualcomm held several other technical and leadership positions. Dr. 
Thompson holds B.S., M.S. and Ph.D. degrees in Electrical Engineering from the University of Wisconsin.

Item 1A. Risk Factors

You should consider each of the following factors in evaluating our business and our prospects. The risks and 

uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or 
that we currently consider immaterial may also negatively impact our business and results of operations and require 
significant management time and attention. In that case, the trading price of our common stock could decline. You should 
also consider the other information set forth in this Annual Report in evaluating our business and our prospects, including but 
not limited to our financial statements and the related notes, and “Part II, Item 7. Management’s Discussion and Analysis of 
Financial Condition and Results of Operations.” References to “and” and “or” should be read to include the other as well as 
“and/or,” as appropriate.

Risks Related to Our Businesses

Our revenues depend on commercial network deployments, expansions and upgrades of CDMA, OFDMA and other 
communications technologies, including 5G; our customers’ 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 primarily wireless. We depend on operators of wireless networks and our customers and licensees to 
adopt and implement the latest generation of these technologies for use in their networks, devices and services. We also 
depend on our customers and licensees to develop devices and services based on these technologies with value-added features 
to drive consumer demand for new 3G/4G and 3G/4G/5G multimode devices, as well as 3G, 4G and 5G single-mode devices, 
and to establish the selling prices 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 new device types and into 
industries and applications beyond traditional cellular communications, such as automotive, computing, IoT (including the 
connected home, smart cities, wearables, voice and music and robotics) and networking, among others.

We have historically been successful during wireless technology transitions, including 3G and 4G. The next generation 
of wireless technologies is 5G, which we expect will empower a new era of connected devices and will be utilized not only in 
handsets but in new device types, industries and applications beyond traditional cellular communications, as described above 
(see also Part I, Item 1, “Business” for further description of 5G). Initial commercial deployments of 5G networks and 
devices have begun and will continue into fiscal 2020 and beyond. We believe it is important that we remain a leader in 5G 
technology development, standardization, intellectual property creation and licensing, and that we develop, commercialize 
and be a leading supplier of 5G integrated circuit products and services, in order to sustain and grow our business long-term.

18

Our revenues and growth in revenues could be negatively impacted, our business may be harmed and our substantial 

investments in these technologies may not provide us an adequate return, if:

•  wireless operators and industries beyond traditional cellular communications deploy alternative technologies;
•  wireless operators delay next-generation network deployments, expansions or upgrades or delay moving customers 

to 3G/4G and 3G/4G/5G multimode devices, as well as 4G and 5G single-mode devices;

•  LTE, an OFDMA-based wireless technology, is not more widely deployed or further commercial deployment is 

• 

delayed;
government regulators delay making sufficient spectrum available for 4G and 5G wireless technologies, including 
unlicensed spectrum and shared spectrum technologies, thereby delaying or precluding the initial deployment or 
expanded deployment of these technologies;

•  wireless operators delay or do not drive improvements in 4G or 5G, or 3G/4G or 3G/4G/5G multimode network 

• 

• 

performance and capacity;
our customers’ and licensees’ revenues and sales of products, particularly premium-tier products, and services using 
these technologies, and average selling prices (ASPs) of such products, decline, do not grow or do not grow 
meaningfully due to, for example, the maturity of smartphone penetration in developed regions;
our intellectual property and technical leadership included in the continued 5G standardization effort is different 
than in 3G and 4G standards;
the continued standardization or commercial deployment of 5G technologies is delayed; 

• 
•  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; or
consumers’ rates of replacement of smartphones and other computing devices decline, do not grow or do not grow 
meaningfully.

• 

Our industry is subject to competition in an environment of rapid technological changes. Our success depends in part on 
our ability to adapt to such changes and compete effectively; and such changes and competition could result in decreased 
demand for our products or declining average selling prices for our products or those of our customers or licensees. 

Our products, services and technologies face significant competition. We expect competition to increase as our current 

competitors expand their product offerings or reduce the prices of their products as part of a strategy to maintain existing 
business and customers or attract new business and customers, as new opportunities develop and as new competitors enter the 
industry. Competition in wireless communications is affected by various factors that include, among others: device 
manufacturer concentrations; vertical integration; growth in demand, consumption and competition in certain geographic 
regions; government intervention or support of national industries or competitors; evolving industry standards and business 
models; evolving methods of transmission of voice and data communications; increasing data traffic and 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 licensed, shared and 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 and consumer demand for new 3G/
4G and 3G/4G/5G multimode devices, as well as 3G, 4G and 5G single-mode devices; turnkey, integrated products that 
incorporate hardware, software, user interface, applications and reference designs; scalability; and the ability of the system 
technology to meet customers’ immediate and future network requirements. We anticipate that additional competitors will 
introduce products as a result of growth opportunities in wireless communications, the trend toward global expansion by 
foreign and domestic competitors, technological and public policy changes and relatively low barriers to entry in certain 
segments of the industry. Additionally, the semiconductor industry has experienced and may continue to 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, RFFE, graphics and other processors, camera and connectivity) and with smaller geometry process 
technologies that drive both performance and lower power consumption;
develop and offer integrated circuit products at competitive cost and price points to effectively cover both emerging 
and developed geographic regions and all device tiers;
drive the adoption of our integrated circuit products into the most popular device models and across a broad 
spectrum of devices, such as smartphones, tablets, laptops and other computing devices, automobiles, wearables, 
voice and music and other connected devices and infrastructure products;

19

•  maintain or accelerate demand for our integrated circuit products at the premium device tier, while also driving the 

• 

• 

• 

• 

• 

• 

• 

• 

• 

adoption of our 5G products into high, mid- and low-tier devices across all regions;
continue to be a leader in 4G and 5G technology evolution and continue to innovate and introduce 4G and 5G 
turnkey, integrated products and services that differentiate us from our competition;
remain a leader in 5G technology development, standardization, intellectual property creation and licensing, and 
develop, commercialize and be a leading supplier of 5G integrated circuit products and services; 
increase or accelerate demand for our semiconductor component products, including RFFE, and our wireless 
connectivity products, including networking products for consumers, carriers and enterprise equipment and 
connected devices;
become a leading supplier of RFFE products, which are designed to address cellular radio frequency band 
fragmentation while improving radio frequency performance and assist original equipment manufacturers in 
developing multiband, multimode mobile devices; 
create standalone value and contribute to the success of our existing businesses through acquisitions, joint ventures 
and other transactions, and by developing customer, licensee, vendor, distributor and other channel relationships in 
new industry segments and with disruptive technologies, products and services, such as products for automotive, 
computing, IoT (including the connected home, smart cities, wearables, voice and music and robotics) and 
networking, among others; 
identify potential acquisition targets that will grow or sustain our business or address strategic needs, reach 
agreement on terms acceptable to us, close the transactions and effectively integrate these new businesses, products 
and technologies; 
be a leader serving original equipment manufacturers (OEMs), high level operating systems (HLOS) providers, 
operators, cloud providers and other industry participants 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 infrastructure platforms to industry participants that effectively commercialize new devices 
using these platforms; and
continue to develop brand recognition to effectively compete against better known companies in computing and 
other consumer driven segments and to deepen our presence in significant emerging regions and China.

We compete with many different semiconductor companies, ranging from multinational companies with integrated 
research and development, manufacturing, sales and marketing organizations across a broad spectrum of product lines, to 
companies that are focused on a single application market segment or standard product, including those that produce products 
for automotive, computing, IoT and networking applications. Most of these competitors compete with us with respect to 
some, but not all, of our businesses. Companies that design integrated circuits based on CDMA, OFDMA, Wi-Fi or their 
derivatives are generally competitors or potential competitors. Examples (some of which are strategic partners of ours in 
other areas) include Broadcom, Cirrus Logic, Cypress Semiconductor, HiSilicon, Intel, Marvell, Maxim, MediaTek, 
Microchip Technology, Murata, Nordic Semiconductor, Nvidia, NXP Semiconductors, Qorvo, Realtek Semiconductor, 
Renesas, Samsung, Sequans Communications, Skyworks 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: 
motivation by our customers in certain circumstances to use our competitors’ integrated circuit products, to utilize their own 
internally-developed integrated circuit products or sell such products to others, or to choose alternative technologies; lower 
cost structures or a willingness and ability to accept lower prices or lower or negative margins for their products, particularly 
in China; foreign government support of other technologies, competitors or OEMs that sell devices that do not contain our 
chipsets; better known brand names; ownership and control of manufacturing facilities and greater expertise in manufacturing 
processes; more extensive relationships with local distribution companies and OEMs in certain geographic regions (such as 
China); more experience in adjacent industry segments outside traditional cellular industries (such as automotive, computing, 
IoT and networking); and a more established presence in certain regions. 

In particular, certain of our largest integrated circuit customers develop their own integrated circuit products, which they 
have in the past utilized, and currently utilize, in certain of their devices and may in the future choose to utilize in certain (or 
all) of their devices, rather than our products (and they may sell their integrated circuit products to third parties, discretely or 
together with certain of their other products, in competition with us). Also, Apple, which has historically been one of our 
largest customers, now utilizes products of one of our competitors in many of their devices rather than our products and is 
solely utilizing one of our competitor’s products in its most recent smartphone launch. Apple may continue to use our 
competitors’ products in one or more of its future devices and may develop and utilize its own modem products, rather than 
our products, in one or more of its future devices. 

20

Further, certain of our competitors develop and sell multiple components (including integrated circuit products) for use 

in devices and sell those components together to device manufacturers. Our competitors’ sales of multiple components put us 
(and our discrete integrated circuit products) at a competitive disadvantage. Certain of our competitors also develop and sell 
infrastructure equipment for wireless networks and can optimize their integrated circuit products to perform on such networks 
to a degree that we are not able to, which again puts us at a competitive disadvantage.

Competition in any or all product tiers may result in the loss of business or customers, which would negatively impact 
our revenues, results of operations and cash flows. Such competition may also reduce average selling prices for our chipset 
products or the products of our customers and licensees. Certain of these dynamics are particularly pronounced in emerging 
regions and China where competitors may have lower cost structures or may have a willingness and ability to accept lower 
prices or lower or negative margins on their products (particularly in China). Reductions in the average selling prices of our 
chipset products, without a corresponding increase in volumes, would negatively impact our revenues, and without 
corresponding decreases in average unit costs, 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.

We derive a significant portion of our revenues from a small number of customers and licensees, which increasingly 
includes a small number of Chinese OEMs. If revenues derived from these customers or licensees 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 foreseeable future. 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. Chinese OEMs continue to 
grow their device share in China and are increasing their device share in regions outside of China, and we derive a significant 
and increasing portion of our revenues from a small number of these OEMs. In addition, certain of our largest integrated 
circuit customers develop their own integrated circuit products, which they have in the past utilized, and currently utilize, in 
certain of their devices and may in the future choose to utilize in certain (or all) of their devices, rather than our products (and 
they may sell their integrated circuit products to third parties, discretely or together with certain of their other products, in 
competition with us). Also, Apple, which has historically been one of our largest customers, utilizes products of one of our 
competitors in many of their devices rather than our products and is solely utilizing one of our competitor’s products in its 
most recent smartphone launch. In April 2019, we entered into a new multi-year chipset supply agreement with Apple. We do 
not expect to begin recording revenues under this agreement until the second half of fiscal 2020. However, Apple may 
continue to use our competitors’ products in one or more of its future devices and may develop and utilize its own modem 
products, rather than our products, in one or more of its future devices. 

Similarly, certain of our Chinese OEM customers have developed and others may in the future develop their own 

integrated circuit products and use such integrated circuit products, or other integrated circuit products, in their devices rather 
than our integrated circuit products, whether due to pressure from the Chinese government as part of its broader economic 
policies, the OEMs’ concerns over losing access to our integrated circuit products as a result of U.S./Chinese trade tensions, 
or otherwise.

Further, political actions, including trade and/or national security protection policies, or other actions by governments, 

have in the past, currently are and could in the future limit or prevent us from transacting business with certain of our 
customers, or limit or prevent certain of our customers from transacting business with us. 

Finally, we spend a significant amount of engineering and development time, funds and resources in understanding our 

key customers’ feedback and/or specifications and attempt to incorporate such input into our product launches and 
technologies. These efforts may not require or result in purchase commitments from such customers or we may have lower 
purchases from such customers than expected, and consequently, we may not achieve the anticipated revenues from these 
efforts, or these efforts may result in non-recoverable costs.

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 by any of these customers, whether due to the use of their own integrated circuit products 
or our competitors’ integrated circuit products, government restrictions or otherwise, would reduce our revenues and could 
harm our ability to achieve or sustain expected results of operations, and a delay of significant purchases, even if only 
temporary, would reduce our 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 and development. Further, the concentration of device share among a 
few companies, and the corresponding purchasing power of these companies, may result in lower prices 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 revenues and margins. In addition, the timing and size of purchases by our significant customers may be impacted by 

21

the timing of such customers’ new or next generation product introductions, over which we have no control, and the timing 
and success of such introductions may cause our revenues and results of operations to fluctuate. Accordingly, if current 
industry dynamics 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.

Further, to the extent Apple purchases our modem products, it purchases our Mobile Data Modem (MDM) products, 

which do not include our integrated application processor technology, and which have lower revenue and margin 
contributions than our combined modem and application processor products. To the extent Apple takes device share from our 
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, sell their own devices. If 

we fail to effectively partner or continue partnering with these companies, or with their partners or customers, they may 
decide not to purchase (either directly or through their contract manufacturers), 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 such litigation, including but not limited to injunctions against devices that incorporate our 
products or intellectual property, and rulings on certain patent law or patent licensing issues that create new legal precedent, 
could impact our business, particularly if such action impacts one of our larger customers.

Although we have more than 300 licensees, our QTL segment derives a significant portion of its revenues from a limited 

number of licensees, which increasingly includes a small number of Chinese OEMs. In the event that one or more of our 
significant licensees fail to meet their reporting and payment obligations, or we are unable to renew or modify one or more of 
such license agreements under similar terms, our revenues, results of operations and cash flows would be adversely impacted. 
Moreover, the future growth and success 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 and sustain customer acceptance. We have no control over 
the product development, sales efforts or pricing of products by our licensees, and our licensees might not be successful. 
Reductions in sales of our licensees’ products, or reductions in the average selling prices of wireless devices sold by our 
licensees without a sufficient increase in the volumes of such devices sold, would generally have an adverse effect on our 
licensing revenues. Such adverse impact may be mitigated by the per unit royalty caps that apply to certain categories of 
complete wireless devices, namely smartphones, tablets, laptops and smartwatches.

We derive a significant portion of our revenues from the premium-tier device segment. If sales of premium-tier devices 
decrease, or sales of our 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 have experienced, and expect to continue to experience, slowing growth in the 
premium-tier device segment due to, among other factors, lengthening replacement cycles in developed regions, where 
premium-tier smartphones are common; increasing consumer demand in emerging regions and China where premium-tier 
smartphones are less common and replacement cycles are on average longer than in developed regions and are continuing to 
lengthen; and a maturing premium-tier smartphone industry in which demand is increasingly driven by new product launches 
and innovation cycles.

In addition, as discussed in the prior risk factor, our industry is experiencing concentration of device share at the 

premium tier among a few companies, which gives them significant leverage. Further, certain of those companies have in the 
past utilized, currently utilize and may in the future utilize their own internally-developed integrated circuit products or our 
competitors’ integrated circuit products rather than our products in all or a portion of their devices. These dynamics may 
result in reduced sales of or lower prices for our premium-tier integrated circuit products.

A reduction in sales of premium-tier devices, a reduction in sales of our premium-tier integrated circuit products (which 
have a higher revenue and margin contribution than our lower-tier integrated circuit products) or a shift in share away from 
OEMs that utilize our products to OEMs that do not utilize our products, would reduce our revenues and margins and may 
harm our ability to achieve or sustain expected financial 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 intellectual property may require the investment of substantial management time and financial 
resources and may result in legal decisions or actions by governments, courts, regulators or agencies, Standards 
Development Organizations (SDOs) or other industry organizations that harm our business. 

22

From time to time, companies initiate various strategies to attempt to negotiate, renegotiate, reduce and/or eliminate their 
need to pay royalties to us for the use of our intellectual property. These strategies have included: (i) litigation, often alleging 
infringement of patents held by such companies, patent misuse, patent exhaustion, patent invalidity or unenforceability of our 
patents 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 (and/or the plain 
language) of their contracts with us; (iii) appeals to governmental authorities; (iv) collective action, including working with 
wireless operators, standards bodies, other like-minded companies and organizations, on both formal and informal bases, to 
adopt intellectual property policies and practices that could have the effect of limiting returns on intellectual property 
innovations; (v) lobbying governmental regulators and elected officials for the purpose of seeking the reduction of royalty 
rates or the base on which royalties are calculated, seeking to impose some form of compulsory licensing or weakening a 
patent holder’s ability to enforce its rights or obtain a fair return for such rights; and (vi) various attempts by licensees 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 or not paid royalties owed to us under 
their license agreements or reported to us in a manner that is not in compliance with their contractual obligations, and certain 
companies have yet to enter into or have delayed entering into or renewing license agreements with us for their use of our 
intellectual property. Further, certain licensees and companies are currently engaged in such behavior and they or others may 
engage in such behavior in the future. The fact that one or more licensees dispute, underreport, underpay, do not report or do 
not pay royalties owed to us may encourage other licensees to take similar actions and may encourage other licensees or 
unlicensed companies to delay entering into, or not enter into, new license agreements. Further, to the extent such licensees 
and companies increase their device share, the negative impact of their underreporting, underpayment, non-payment or non-
reporting on our business, revenues, results of operations, financial condition and cash flows will be exacerbated.

We have been in the past and are currently subject to various litigation and governmental investigations and proceedings, 

including the lawsuit filed against us by the United States Federal Trade Commission (FTC). Certain of these matters are 
described more fully in this Annual Report in “Notes to Consolidated Financial Statements, Note 7. Commitments and 
Contingencies.” We may become subject to other litigation or governmental investigations or proceedings in the future. 
Additionally, certain of our direct and indirect customers and licensees have pursued, and others may in the future pursue, 
litigation or arbitration against us related to our business. Unfavorable resolutions of one or more of these matters have had 
and could in the future have a material adverse effect on our business, revenues, results of operations, financial condition and 
cash flows. See the Risk Factors below entitled “Our business, particularly our licensing business, may suffer as a result of 
adverse rulings in government investigations or proceedings” and “Changes in our patent licensing practices, whether due 
to governmental investigations or private legal proceedings challenging those practices, or otherwise, could adversely 
impact our business and results of operations.” 

In addition, in connection with our participation in SDOs, we, like other patent owners, generally have made contractual 
commitments to such organizations to license those of our patents that would necessarily be infringed by standard-compliant 
products as set forth in those commitments. Some manufacturers and users of standard-compliant products advance 
interpretations of these commitments that are adverse to our licensing business, including interpretations that would limit the 
amount of royalties that we could collect on the licensing of our standard-essential patent portfolio.

Further, some companies or entities have proposed significant changes to existing intellectual property policies for 
implementation by SDOs and other industry organizations with the goal of significantly devaluing standard-essential patents. 
For example, some have put forth proposals which would require a maximum aggregate intellectual property royalty rate for 
the use of all standard-essential patents owned by all of the member companies to be applied to the selling price of any 
product implementing the relevant standard. They have further proposed that such maximum aggregate royalty rate be 
apportioned to each member company with standard-essential patents based upon the number of standard-essential patents 
held by such company. Others have proposed that injunctions should not be an available remedy for infringement of standard-
essential patents and have made proposals that could severely limit damage awards and other remedies by courts for patent 
infringement (e.g., by severely limiting the base upon which the royalty rate may be applied). A number of these strategies 
are purportedly based 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 (or other 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 adverse to 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 by limiting or eliminating our ability to collect royalties (or by reducing the royalties we can 
collect) on all or a portion of our standard-essential patent portfolio, limiting our return on investment with respect to new 

23

technologies, limiting our ability to seek injunctions against infringers of our standard-essential patents, constraining our 
ability to make licensing commitments when submitting our technology for inclusion in future standards (which could make 
our technology less likely to be included in such standards) or forcing us to work outside of SDOs or other industry groups to 
promote our new technologies, and our revenues, results of operations and cash flows could be negatively impacted. In 
addition, the legal and other costs associated with asserting or defending our positions have been and continue to be 
significant. We assume that such challenges, regardless of their merits, will continue into the foreseeable future and will 
require the investment of substantial management time and financial resources.

Our business, particularly our licensing business, may suffer as a result of adverse rulings in government investigations 
or proceedings.

We have been in the past and are currently subject to various governmental investigations and proceedings, particularly 

with respect to our licensing business, including the lawsuit filed against us by the FTC. Certain of these matters are 
described more fully in this Annual Report in “Notes to Consolidated Financial Statements, Note 7. Commitments and 
Contingencies.” Key allegations or findings in those matters include, among others, that we violate FRAND licensing 
commitments by refusing to grant licenses to chipset makers, that our royalty rates are too high, that the base on which our 
royalties are calculated should be something less than the wholesale (i.e., licensee’s) selling price of the applicable device 
(minus certain permitted deductions), that we unlawfully require customers to execute a patent license before we sell them 
cellular modem chipsets, that we have entered into exclusive agreements with chipset customers that foreclose competition, 
and that we violate antitrust laws, engage in anticompetitive conduct and unfair methods of competition. We may become 
subject to other litigation or governmental investigations or proceedings 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, revenues, results of operations, financial condition and cash flows. Depending on the matter, various 
remedies that could result from an unfavorable resolution include, among others, the loss of our ability to enforce one or 
more of our patents; injunctions; monetary damages or fines or other orders to pay money; the issuance of orders to cease 
certain conduct or modify our business practices, such as requiring us to reduce our royalty rates, reduce the base on which 
our royalties are calculated, grant patent licenses to chipset manufacturers, sell chipsets to unlicensed OEMs or modify or 
renegotiate some or all of our existing license agreements; and determinations that some or all of our license agreements are 
invalid or unenforceable. If some or all of our license agreements are declared invalid or unenforceable and/or we are 
required to renegotiate these license agreements, we may not receive, or may not be able to recognize, some or any licensing 
or royalty revenues under the impacted license agreements unless and until we enter into new license agreements; and even 
licensees whose license agreements are not impacted may demand to renegotiate their agreements or invoke the dispute 
resolution provision in their agreements, and we may not be able to recognize some or any licensing or royalty revenues 
under such agreements. The renegotiation of license agreements could lead to arbitration or litigation to resolve the licensing 
terms (which could be less favorable to us than existing terms), each of which could take months or possibly years. Licensees 
may underreport, underpay, not report or not pay royalties owed to us pending the conclusion of such negotiations, arbitration 
or litigation. In addition, we may be sued for alleged overpayments of past royalties paid to us, including private antitrust 
actions seeking treble damages under U.S. antitrust laws. Further, if our appeal in the FTC lawsuit is unsuccessful, it could 
have a material adverse effect on our business. Any such event could result in a materially negative impact on our financial 
condition, in which case we would have to significantly cut costs and other uses of cash, including in research and 
development, significantly impairing our ability to maintain product and technology leadership and invest in next generation 
technologies such as 5G. Further, depending on the breadth and severity of the circumstances above, we may have to reduce 
or eliminate our capital return programs, and our ability to timely pay our indebtedness may be impacted. If these events 
occur, our financial outlook and stock price could decline, possibly significantly. Further, a governmental body in a particular 
country or region may successfully assert and impose remedies with effects that extend beyond the borders of that country or 
region. 

These challenges have required, and we expect that they will continue to require, the investment of significant 
management time and attention and have resulted, and we expect that they will continue to result, in increased legal costs 
until the respective matters are resolved. 

Changes in our patent licensing practices, whether due to governmental investigations or private legal proceedings 
challenging those practices, or otherwise, could adversely impact our business and results of operations.

As described in the Risk Factor above entitled “Our business, particularly our licensing business, may suffer as a result 

of adverse rulings in government investigations or proceedings,” we have been in the past and are currently subject to various 
governmental investigations and proceedings and private legal proceedings challenging our patent licensing and chipset sales 
practices, including the lawsuit filed against us by the FTC. Certain of these matters are described more fully in this Annual 
Report in “Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.” We believe that one intent 

24

of these investigations and 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 may become subject to other litigation or governmental investigations or 
proceedings in the future. 

We historically licensed our cellular standard-essential patents together with our other patents that may be useful to 
licensed products because licensees desired to obtain the commercial benefits of receiving such broad patent rights from us. 
However, we also licensed only our cellular standard-essential patents to certain licensees who requested such licenses. Since 
2015, our standard practice in China is to offer licenses to our 3G and 4G (and now 5G) cellular standard-essential Chinese 
patents for devices sold for use in China separately from our other patents. In addition, we also offer licenses to only our 
cellular standard-essential patents (including 3G, 4G and 5G) for both single-mode and multimode devices on a worldwide 
basis, and since 2018, an increasing number of new and existing licensees have elected to enter into worldwide license 
agreements covering only our cellular standard-essential patents. Going forward, we continue to anticipate that a significant 
portion of our licensing revenues will be derived from licensees that have entered into license agreements covering only our 
cellular standard-essential patents. Our royalty rates for licenses to only our cellular standard-essential patents are lower than 
our royalty rates for licenses to substantially all of our patent portfolio. If more licensees choose a license to only our cellular 
standard-essential patents instead of a portfolio license than has historically been the case, our licensing revenues and 
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 the royalties previously received for licenses of substantially all of our patent portfolio as compared 
to licenses of only our cellular standard-essential patents or there 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 (which could lead to implementing a more complex, 

multi-level licensing structure in which we license certain portions of our patent portfolio to chipset manufacturers and other 
portions to device manufacturers), we would incur additional transaction costs, which may be significant, and we could incur 
delays in recognizing revenues until license negotiations were completed. In addition, our licensing revenues and earnings 
would be negatively 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, earnings 

and cash flows would be negatively impacted absent a 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 are calculated, our revenues, 
results of operations and cash flows would be negatively impacted unless there was a sufficient increase in the volume of 
sales of devices upon which royalties are paid 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).

If we were required to sell chipsets to OEMs that do not have a license to our patents, our licensing program could be 
negatively impacted by patent exhaustion claims raised by such unlicensed OEMs (i.e., claims that our sale of chipsets to 
such OEMs forecloses us from asserting any patents substantially embodied by the chipsets against such OEMs). Such sales 
would provide OEMs with a defense in the event we asserted our patents against them to obtain licensing revenue for those 
patents. This would have a material adverse effect on our licensing program and our results of operations, financial condition 
and cash flows.

To the extent that we were required to implement any of these new licensing and/or business practices, including by 
modifying or renegotiating our existing license agreements or pursuing other commercial arrangements, we would incur 
additional transaction costs, which may be significant, and we could 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 of such outcomes. In addition, if we were required 
to make modifications to our licensing practices in one jurisdiction, licensees or governmental agencies in other jurisdictions 
may attempt to obtain similar outcomes for themselves or for such other jurisdictions, as applicable.

Finally, if our appeal in the FTC lawsuit is unsuccessful, it could have a material adverse effect on our business. 

The enforcement and protection of our intellectual property rights may be expensive, could fail to prevent 
misappropriation or unauthorized use of our intellectual property rights, could result in the loss of our ability to enforce 
one or more patents, and 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 by ineffective enforcement of laws in such 
jurisdictions.

We rely primarily on patent, copyright, trademark and trade secret laws, as well as nondisclosure and confidentiality 
agreements, international treaties and other 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 

25

and time consuming. The steps we have taken have not always prevented, and we cannot be certain the steps we will take in 
the future will prevent, the misappropriation or unauthorized use of our proprietary information and technologies, particularly 
in foreign countries where the laws may not protect our proprietary intellectual property rights as fully or as readily as U.S. 
laws or where the enforcement of such laws may be lacking or ineffective. 

Some industry participants who have a vested interest in devaluing patents in general, or standard-essential patents in 
particular, have mounted attacks on certain patent systems, increasing the likelihood of changes to established patent laws. In 
the United States, there is continued discussion regarding potential patent law changes and current and potential future 
litigation regarding patents, the outcomes of which could be detrimental to our licensing business. 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 our 
intellectual property rights to the same extent as the laws in the United States. We expect that the European Union (EU) will 
adopt a unitary patent system in the next few years that may broadly impact that region’s patent regime. We cannot predict 
with certainty the long-term effects of any potential 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, with respect to intellectual property enforcement or 
licensing or the adoption of standards, will not be changed in the future in a way detrimental to our licensing program or to 
the sale or use of our products or technologies.

We have had, currently have, and may in the future have, difficulty in certain circumstances in protecting or enforcing 

our intellectual property rights and contracts, including collecting royalties for use of our patent portfolio due to, among 
others: refusal by certain licensees to report and pay all or a portion of the royalties they owe to us; policies of foreign 
governments; challenges to our licensing practices under competition laws; adoption of mandatory licensing provisions by 
foreign jurisdictions; failure of foreign courts to recognize and enforce judgments of contract breach and damages issued by 
courts in the United States; and challenges before competition agencies to our licensing business and the pricing and 
integration of additional features and functionality into our chipset products. Certain licensees have disputed, underreported, 
underpaid, not reported or not paid royalties owed 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 companies have yet to enter into or have delayed 
entering into or renewing license agreements for their use of our intellectual property. Further, certain licensees and 
companies are currently engaged in such behavior and they or others may engage in such behavior in the future. The fact that 
one or more licensees dispute, underreport, underpay, do not report or do not pay royalties owed to us may encourage other 
licensees to take similar actions and may encourage other licensees or unlicensed companies to delay entering into, or not 
enter into, new license agreements. Additionally, although our license agreements provide us with the right to audit the books 
and records of licensees, audits can be expensive, time consuming, incomplete and subject to dispute. Further, certain 
licensees may not comply with the obligation to provide full access to their books and records. To the extent we do not 
aggressively enforce our rights under our license agreements, licensees may not comply with their existing license 
agreements, and to the extent we do not aggressively pursue unlicensed companies to enter into license agreements with us 
for their use of our intellectual property, other unlicensed companies may not enter into license agreements. Similarly, we 
provide access to certain of our intellectual property and proprietary and confidential business information to our direct and 
indirect customers and licensees, who have in the past and may in the future wrongfully use such intellectual property and 
information or wrongfully disclose such intellectual property and information to third parties, including our competitors.

We have engaged in litigation and arbitration in the past and may need to further litigate or arbitrate in the future to 

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

Our growth increasingly depends on our ability to extend our technologies, products and services into new and expanded 
product areas, such as RFFE, and adjacent industry segments and applications outside of traditional cellular industries, 
such as automotive, computing, IoT and networking, among others. Our research, development and other investments in 
these new and expanded product areas, industry segments and applications, and related technologies, products and 
services, as well as in our existing technologies, products and services and new technologies, such as 5G, may not 
generate operating income or contribute to future results of operations that meet our expectations.

26

Our industry is subject to rapid technological change, evolving industry standards and frequent new product 
introductions, and we must make substantial research, development and other investments, such as acquisitions, in new 
products, services and technologies to compete successfully. Technological innovations generally require significant research 
and development efforts before they are commercially viable. While we continue to invest significant resources toward 
advancements primarily in support of 4G- and 5G-based technologies, we also invest in new and expanded product areas, and 
adjacent industry segments and applications, by leveraging our existing technical and business expertise and through 
acquisitions.

In particular, our future growth significantly depends on new and expanded product areas, such as RFFE, and adjacent 
industry segments and applications outside of traditional cellular industries, such as automotive, computing, IoT (including 
the connected home, smart cities, wearables, voice and music and robotics) and networking, among others; our ability to 
develop leading and cost-effective technologies, products and services for new and expanded product areas, adjacent industry 
segments and applications; and third parties incorporating our technologies, products and services into devices used in these 
product areas, industry segments and applications. Accordingly, we intend to continue to make substantial investments in 
these new and expanded product areas and adjacent industry segments and applications, and in developing new products, 
services and technologies for these product areas, industry segments and applications. 

Our growth also depends significantly on our ability to develop and patent 5G technologies, and to develop and 

commercialize products using 5G technologies.

However, our research, development and other investments in these new and expanded product areas and adjacent 
industry segments and applications, and corresponding technologies, products and services, as well as in our existing, 
technologies, products and services and new technologies, such as 5G, use of licensed, shared and unlicensed spectrum and 
convergence of cellular and Wi-Fi, may not succeed due to, among other reasons: we may not be issued patents on the 
technologies we develop; the technologies we develop may not be incorporated into relevant standards; new and expanded 
product areas and adjacent industry segments, applications and consumer demand may not develop or grow as anticipated; 
our strategies or the strategies of our customers, licensees or partners may not be successful; improvements in alternate 
technologies in ways that reduce the advantages we anticipate from our investments; competitors’ technologies, products or 
services being more cost effective, having more capabilities or fewer limitations or being brought to market faster than our 
new technologies, products and services; we may not be able to develop, or our competitors may have more established and/
or stronger, customer, vendor, distributor or other channel relationships; and competitors having longer operating histories in 
industry segments that are new to us. We may also underestimate the costs of or overestimate the future revenues or margins 
that could result from these investments, and these investments may not, or may take many years to, generate material 
returns. 

Further, the automotive industry is subject to long design-in time frames, long product life cycles and a high degree of 
regulatory and safety requirements, necessitating suppliers to the industry to comply with stringent qualification processes, 
very low 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 services are not successful, or are not successful in the time frame we anticipate, 
we may incur significant costs and asset impairments, our business may not grow meaningfully, our revenues and margins 
may be negatively impacted, and our reputation may be harmed.

There are numerous risks associated with the operation and control of our manufacturing facilities, including a higher 
portion of fixed costs relative to a fabless model, environmental compliance and liability, exposure to natural disasters, 
timely supply of equipment and materials, and various manufacturing issues.

While our QCT segment has historically utilized a fabless production model (which means that we do not own or operate 

foundries for the production of silicon wafers from which our integrated circuits are made), we own and operate various 
facilities that manufacture our RFFE modules and RF filter acoustic products. Manufacturing facilities are characterized by a 
higher portion of fixed costs relative to a fabless model. We may be faced with a decline in the utilization rates of our 
manufacturing facilities due to decreases in demand for our products, including in less favorable industry environments. 
During such periods, our manufacturing facilities could operate at lower capacity levels, while the fixed costs associated with 
full capacity continue to be incurred, resulting in lower gross profit.

We are subject to many environmental, health and safety laws and regulations in each jurisdiction in which we operate 
our manufacturing facilities, which govern, among other things, emissions of pollutants into the air, wastewater discharges, 
the use and handling of hazardous substances, waste disposal, the investigation and remediation of soil and ground water 
contamination and the health and safety of our employees. We are also required to obtain and maintain environmental permits 
from governmental authorities for certain of our operations. While we continue to take measures to comply, we cannot make 
assurances that we will be at all times in compliance with such laws, regulations and permits. Certain environmental laws 

27

impose strict, and in certain circumstances, joint and several, liability on current or previous owners or operators of real 
property for the cost of investigation, removal or remediation of hazardous substances. Certain of these laws also assess 
liability on persons who arrange 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 held liable 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 conflicts, were to damage, destroy or disrupt our manufacturing facilities, it could disrupt our 
operations, delay new production and shipments of inventory and result in costly repairs, replacements or other costs. In 
addition, natural disasters or geopolitical conflicts may result in disruptions in transportation, distribution channels and 
supply chains, and 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 multiple suppliers, 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 and other 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 of supply due to a 
rapid increase in demand, which could impact production and prevent us from supplying products to our customers. If the 
supply-demand balance is disrupted, it may considerably increase costs of manufacturing due to increased prices we pay for 
raw materials. From time to time, suppliers may extend lead times, limit the amounts supplied to us or increase prices due to 
capacity constraints or other factors. Additionally, supply and costs of raw materials may be negatively impacted by trade 
and/or national security protection policies, such as tariffs, or actions by governments that limit or prevent us from 
transacting business with certain companies or that limit or prevent certain companies from transacting business with us, or 
escalating trade tensions, particularly with countries in Asia. Further, it may be difficult or impossible to substitute one piece 
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 our manufacturing operations.

Our manufacturing processes are highly complex, require advanced and costly equipment and must be continuously 
modified to improve yields and performance. 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 a timely, cost-effective or competitive manner. Further, to 
remain competitive and meet customer demand, we may be required to improve our facilities and process technologies and 
carry out extensive research and development, each of which may require investment of significant amounts of capital and 
may have a material adverse effect on our results of operations, financial condition and cash flows. 

Finally, we typically begin manufacturing our products using our or our customers’ forecasts of customer demand, which 
are based on a number of assumptions and estimates and are generally not covered by purchase commitments. As a result, we 
incur inventory and manufacturing costs in advance of anticipated sales, which sales ultimately may not materialize or may 
be lower than expected. If we or our customer overestimate customer demand that is not under a binding commitment from 
our customer, we may experience higher inventory carrying and operating costs and/or increased excess or obsolete 
inventory, which would negatively impact our results of operations. 

The continued and future success of our licensing programs requires us to continue to evolve our patent portfolio, and 
our licensing programs may be impacted by the proliferation of devices in new industry segments such as automotive, 
computing, IoT and networking, as well as the need to renew or renegotiate license agreements that are expiring or to 
cover additional future patents.

We own a very strong portfolio of issued and pending patents related to 3G, 4G, 5G and other technologies. It is critical 
that we continue to evolve our patent portfolio, particularly in 5G. If we do not maintain a strong portfolio that is applicable 
to current and future standards, products and services, particularly 5G, our future licensing revenues could be negatively 
impacted.

 In addition, new connectivity and 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 automotive, computing, IoT and networking industry segments. 
Standards, even de facto standards, that develop as these technologies mature, in particular those that do 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 
products used in cellular communications. Although we believe that our patented technologies are essential and useful to the 
commercialization of such services, any royalties we receive may be lower than those we receive from our current licensing 
program.

Further, 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 a result, there are agreements with some licensees where later patents are not 
licensed by or to us. Additionally, all of our patent license agreements in China that were entered into in 2015 or thereafter, as 

28

well as our recent worldwide cellular standard-essential patent only agreements, are effective for a specified term. In order to 
license or to obtain a license to such later patents or after the expiration of the specified term, and to receive royalties after the 
expiration date of the specified term, we will need to extend or modify such license agreements or enter into new license 
agreements with such licensees more frequently than we have done historically. In particular, our license agreements with 
certain of our key Chinese licensees expire at the end of calendar year 2019. We might not be able to extend or modify those 
license agreements, or enter into new license agreements, in the future without negatively affecting the material terms and 
conditions of our license agreements with such licensees, and such modifications or new agreements may negatively impact 
our revenues. In some circumstances, we may extend, modify or enter into new license agreements as a result of arbitration or 
litigation, and terms imposed by arbitrators or courts may be less favorable to us than existing terms. If there is a delay in 
extending, modifying or entering into a new license agreement with a licensee, there would be a delay in our ability to 
recognize revenues related to that licensee’s product sales. Further, if we are unable to reach agreement on such modifications 
or new agreements, it could result in patent infringement 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 production model. If we fail to execute supply strategies that provide technology leadership, 
supply assurance and low cost, our business and results of operations may be harmed. 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 wafers from which our integrated circuits are made. Other than the facilities we own that 
manufacture our RFFE modules and RF filter acoustic products, we rely on independent third-party suppliers to perform the 
manufacturing and assembly, and most of the testing, of our integrated circuits. Our suppliers are also responsible for the 
procurement of most of the raw 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 manufacturing model, we 
purchase die in singular or wafer form from semiconductor manufacturing foundries and contract with separate third-party 
suppliers for manufacturing services such as wafer bump, probe, assembly and the majority of our final test requirements. 
The semiconductor manufacturing foundries that supply products to our QCT segment are primarily located in Asia, as are 
our primary warehouses where we store finished goods for fulfillment of customer orders. 

The following could have an adverse effect on our ability to meet customer demand and negatively impact our revenues, 

business operations, profitability and 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 raw materials, 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 to smaller 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 or production delays as a result of qualifying a new supplier and commencing volume production 
or testing in the event of a loss of, or a decision to add or change, a supplier; and
natural disasters or geopolitical conflicts impacting our suppliers.

Additionally, supply and costs of raw materials may be negatively impacted by trade or national security protection 
policies, such as tariffs, or actions by governments that limit or prevent us from transacting business with certain companies 
or that limit or prevent certain companies from transacting business with us, or escalating trade tensions, particularly with 
countries in Asia. 

While we have established alternate suppliers for certain technologies, we rely on sole- or limited-source suppliers for 

certain products, subjecting us to significant 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 require significant 
levels of support to bring complex technologies to production. As a result, we may invest a significant amount of effort and 
resources and incur higher costs 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 could increase our manufacturing 
costs. Our arrangements with our suppliers may obligate us to incur costs to manufacture and test our products that do not 
decrease at the same rate as decreases in pricing to our customers. Our ability, and that of our suppliers, to develop or 

29

maintain leading process technologies, including transitions to smaller geometry process technologies, and to effectively 
compete with the manufacturing processes and performance of our competitors, could impact our ability to introduce new 
products and meet customer demand, could increase our costs (possibly decreasing our margins) and could subject us to the 
risk of excess inventories. Any of the above could negatively impact our business, results of operations and 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 do not 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 incur additional costs related to those commitments or make non-refundable payments for capacity 
commitments that are not used.

Our suppliers or potential alternate suppliers may manufacture CDMA- or OFDMA-based integrated circuits, for 
themselves or for other companies, that compete with our products. Such suppliers have in the past and could again elect to 
allocate raw materials and manufacturing capacity to their own products or products of our competitors 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 suppliers will 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. To the extent we are unable to obtain adequate supply, we 
may be obligated to make payment to our customers for such shortfalls. 

Additionally, we place orders with our suppliers using our and our customers’ forecasts of customer demand, which are 
based on a number of assumptions and estimates. As we move to smaller geometry process technologies, the manufacturing 
lead-time increases. As a result, the orders we place with our suppliers are generally only partially covered by commitments 
from our customers. If we, or our customers, overestimate customer demand that is not under a binding commitment from our 
customer, we may experience increased excess or obsolete inventory, 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 products using our technologies or other technologies used in our industry. These claims have 
resulted and may again result in our involvement in litigation. We may not prevail in such litigation given, among other 
factors, the complex technical issues and inherent uncertainties in intellectual property litigation. If any of our products or 
services were found to infringe another company’s intellectual property rights, we could be subject to an injunction or be 
required to redesign our products or services, which could be costly, or to license such rights or pay damages or other 
compensation to such other company. If we are unable to redesign our products or services, license such intellectual property 
rights used in our products or services or otherwise distribute our products (e.g., through a licensed supplier), we could be 
prohibited from making and selling such products or providing such services. Similarly, our suppliers could be found to 
infringe another company’s intellectual property rights, and such suppliers could then be enjoined from providing products or 
services to us.

In any potential dispute involving us and another company’s 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 semiconductor assembly and test service providers against certain types of liability and damages arising from qualifying 
claims of patent infringement by products or services sold or provided by us, or by intellectual property provided by us to our 
chipset foundries and semiconductor assembly and test service providers. Reimbursements under indemnification 
arrangements could have an adverse effect on our results of operations and cash flows. Furthermore, any such litigation could 
severely disrupt the supply of our products and the businesses of our chipset customers and their customers, which in turn 
could harm our relationships with them and could result in a decline in our chipset sales or a reduction in our licensees’ sales, 
causing a corresponding decline in our chipset or licensing revenues. Any claims, regardless of their merit, could be time 
consuming to address, result in costly litigation, divert the efforts of our technical and management personnel or cause 
product release or shipment delays, any of which could have an adverse effect on our results of operations and cash flows.

We may continue to be involved in litigation and may have to appear in front of administrative bodies (such as the 
United States International Trade Commission) to defend against patent assertions against our products by companies, some 
of whom are attempting to gain competitive advantage or leverage in 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, for example, monetary 

30

damages or fines or other orders to pay money, royalty payments, injunctions on the sale of certain of our integrated circuit 
products (or on the sale of our customers’ devices using such products) or the issuance of orders to cease certain conduct or 
modify our business practices. Further, a governmental body in a particular country or region may assert, and may be 
successful in imposing, remedies with effects that extend beyond the borders of that country or region. In addition, a negative 
outcome in any such proceeding could severely disrupt the business of our chipset customers and their wireless operator 
customers, which in turn could harm our relationships with them and could result in a decline in our worldwide chipset sales 
or a reduction in our licensees’ sales to wireless operators, causing corresponding declines in our chipset or licensing 
revenues.

Certain legal matters, which may include 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, or be unable to consummate planned strategic 
acquisitions, which could adversely affect our results of operations or fail to enhance stockholder value.

We engage in strategic acquisitions and other transactions, including joint ventures, and make investments, which we 
believe are important to the future of our business, with the goal of maximizing stockholder value. From time to time, we 
acquire businesses and other assets, including patents, technology, wireless spectrum and other intangible assets, enter into 
joint ventures or other strategic transactions and purchase minority equity interests in or make loans to companies, including 
those that may be private and early-stage. Our strategic activities are generally focused on opening or expanding 
opportunities for our products and technologies and supporting the design and introduction of new products and services (or 
enhancing existing products or services) for voice and data communications and new industry segments. Many of our 
strategic activities entail a high degree of risk and require the use of significant amounts of capital, and investments may not 
become liquid for several years after 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 our technologies, products or services. We may underestimate the 
costs or overestimate the benefits, including product, revenue, cost and other synergies and growth opportunities that we 
expect to realize, and we may not achieve those benefits. 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 ownership interests. In addition, we may record 
impairment charges related to our strategic activities. Any losses or impairment charges that we incur related to strategic 
activities 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 strategic assets 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 and operational control, depends in part upon our ability to integrate the businesses in an 
efficient and effective manner and achieve anticipated synergies, and we may not be successful in these efforts. Such 
integration is complex and time consuming and involves significant challenges, including, among others: retaining key 
employees; successfully integrating new employees, technology, products, processes, operations (including manufacturing 
operations), sales and distribution channels, business models and business systems; retaining customers and suppliers of the 
businesses; consolidating research and development and supply operations; minimizing the diversion of management’s 
attention from ongoing business matters; consolidating corporate and administrative infrastructures; and managing the 
increased scale, complexity and globalization of our business, operations and employee base. We may not derive any 
commercial value from associated technologies or products or from future technologies or products based on these 
technologies, and we may be subject to liabilities that are not covered by indemnification protection that we may obtain, and 
we may become subject to litigation. Additionally, we may not be successful in entering or expanding into new sales or 
distribution channels, business or operational models (including manufacturing), geographic regions, industry segments or 
categories of products served 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 adversely affected, and we may not enhance stockholder value by engaging in these transactions.

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

government agencies. Certain agencies in the past have, and may in the future, deny the transaction or fail to approve in a 
timely manner, resulting in us not realizing the anticipated benefits of the transaction. Future acquisitions or other strategic 
investments may be more difficult, complex or expensive to the extent that our reputation for our ability to consummate 
acquisitions has been harmed. Further, if U.S./China trade relations remain strained, our ability to consummate any 
transaction that would require approval from the State Administration for Market Regulation (SAMR) in China may be 
severely impacted.

31

We are subject to various laws, regulations, policies and standards. Our business may suffer as a result of existing, new or 
amended laws, regulations, policies or standards, 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 government policies and the specifications of international, national and regional 
communications standards bodies. Compliance with existing laws, regulations, policies and standards, the adoption of new 
laws, regulations, policies or standards, changes in the interpretation of existing laws, regulations, policies or standards, 
changes in the regulation of our activities by a government or standards body 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 or products, protection of intellectual property, trade and 
trade protection including tariffs, cybersecurity, foreign currency, investments or loans, spectrum availability and license 
issuance, adoption of standards, the provision of device subsidies by wireless operators to their customers, taxation, export 
control, privacy and data protection, environmental protection, health and safety, labor and employment, human rights, 
corporate governance, public disclosure or business conduct, could have an adverse effect on our business and results of 
operations.

Government policies, particularly in China, that regulate the amount and timing of funds that may flow out of a country 

have impacted and may continue to impact the timing of our receipt of and/or ability to receive payments from our customers 
and licensees in such countries, which may negatively impact our cash flows.

Further, China has implemented, and other countries or regions may implement, cybersecurity laws that require that our 

overall information technology security environment meet certain standards and/or to be certified. Such laws may be 
complex, ambiguous and subject to interpretation, which may create uncertainty regarding compliance. As a result, our 
efforts to comply with such laws may be expensive and may fail, which could adversely affect our business, results of 
operations and 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 agencies or branches of the government, trade or national security protection policies, or political 
changes, could result in our incurring higher costs, could negatively impact our ability to timely consummate strategic 
transactions and could have other negative impacts on our business and the businesses of our customers and licensees.

Import/export regulations, such as the U.S. Export Administration Regulations administered by the U.S. Department of 
Commerce, are complex, change frequently, have generally become more stringent over time and have intensified under the 
current U.S. administration. If our customers or suppliers fail to comply with these regulations, we may be required to 
suspend activities with these customers or suppliers, which could negatively impact our results of operations. Additionally, 
we may be required to incur significant expense to comply with, or to remedy violations of, these regulations.

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 costs to us. The imposition of tariffs on raw 
materials or our products could also have a negative impact on our revenues and results of operations. We are also subject to 
laws and regulations impacting our manufacturing operations. See the Risk Factor entitled “There are numerous risks 
associated with the operation and control of our manufacturing facilities, including a higher portion of fixed costs relative to a 
fabless model, environmental compliance and liability, exposure to natural disasters, timely supply of equipment and 
materials, and various manufacturing issues.”

Regulations in the United States require that we determine whether certain materials used in our products, referred to as 

conflict minerals, originated in the Democratic Republic of the Congo or an adjoining country (collectively, the Covered 
Countries), or were from recycled or scrap sources. Other countries and regions are imposing similar regulations, which may 
require us to undertake additional verification and reporting, including regarding countries in addition to the Covered 
Countries and minerals in addition to conflict minerals. The verification and reporting requirements, in addition to customer 
demands for conflict free sourcing, impose additional costs on us and on our suppliers and may limit the sources or increase 
the 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 indirectly finance or benefit armed groups in the Covered Countries, we may face challenges with 
our customers that place us at a competitive disadvantage, and our reputation may be harmed. Similarly, other laws and 
regulations have been adopted or proposed that require additional transparency regarding the employment practices of our 
suppliers, and any failure to maintain responsible sourcing practices could also adversely affect our relationships with 
customers and our reputation.

32

Laws, regulations, policies and standards are complex and changing and may create uncertainty regarding compliance. 
Laws, regulations, policies and standards 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 affect our business, results 
of operations and cash flows. New laws, regulations, policies and standards or evolving interpretations of legal requirements 
may cause us to incur higher costs as we revise current practices, policies 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 will continue to see, an increase in customers requesting that we develop products, including 
software associated with our integrated circuit products, that incorporate open source software elements and operate in an 
open source environment, which, under certain open source licenses, may offer accessibility to a portion of a product’s source 
code and may expose related intellectual property to adverse licensing conditions. Licensing of such software may impose 
certain obligations on us 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 derivative works 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 a particular type of license that is 
different than what we customarily use to license our software. Furthermore, in the course of product development, we may 
make contributions to third party open source projects that could obligate our intellectual property to adverse licensing 
conditions. For example, to encourage the growth of a software ecosystem that is interoperable with our products, we may 
need to contribute certain implementations under the open source licensing terms that govern such projects, which may 
adversely impact certain of our associated intellectual property. Developing open source products, while adequately 
protecting the intellectual property rights upon which our licensing business depends, may prove burdensome and time-
consuming under certain circumstances, thereby placing us at a competitive disadvantage, and we may not adequately protect 
our intellectual property rights. Also, our use and our customers’ use of open source software may subject our products and 
our customers’ products to governmental scrutiny and delays in product certification, which could cause customers to view 
our products as less desirable than our competitors’ products. While we believe we have taken appropriate steps and employ 
adequate controls to protect our intellectual property rights, our contributions to and use of open source software presents 
risks that could have an adverse effect on these rights and on our business.

We operate in the highly cyclical semiconductor industry, which is subject to significant downturns that may adversely 
impact our business. Our stock price, earnings and the fair value of our investments are subject to substantial quarterly 
and annual fluctuations due to this dynamic and others, and to market downturns generally.

The semiconductor industry is highly cyclical and characterized by constant and rapid technological change, price 
erosion, evolving technical standards, frequent new product introductions, short product life cycles (for both semiconductors 
and for many of the products in which they are used) and fluctuations in product supply and demand. From time to time, 
these factors, together with changes in general economic conditions, cause significant upturns and downturns in the 
semiconductor industry. Periods of downturns have been characterized by diminished demand for end-user products, high 
inventory levels, periods of inventory adjustment, underutilization of manufacturing capacity, changes in revenue mix and 
erosion of average selling prices. We expect our business to continue to be subject to cyclical downturns, even when overall 
economic conditions are relatively stable. If we cannot offset semiconductor industry or market downturns, our revenues may 
decline, and our financial condition and results of operations may be adversely impacted.

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 price of our stock and earnings include those identified above and throughout this Risk 
Factors section; volatility of the stock market in general and technology-based and semiconductor companies in particular; 
announcements concerning us, our suppliers, our competitors or our customers or licensees; and variations between our 
actual financial results or guidance and expectations of securities analysts or investors, among others. Further, increased 
volatility in the financial markets and overall economic conditions may reduce the amounts that we realize in the future on 
our cash equivalents and marketable securities and may reduce our earnings as a result of any reductions in the fair values of 
marketable securities.

In the past, securities class action litigation has been brought against companies following periods of volatility in the 
market price of their securities. Due to changes 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 and divert management’s attention and our 
resources. Certain legal matters, including certain securities litigation brought against us, are described more fully in this 
Annual Report in “Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.”

33

There are risks associated with our indebtedness and our significant stock repurchase program.

Our outstanding indebtedness and any additional indebtedness we incur may have negative consequences 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 general corporate or other purposes;
limiting our flexibility in planning for, or reacting to, changes in our business, our industry and the market; and
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 economic and political conditions, industry cycles and financial, business and other factors, including factors 
which negatively impact our cash flows, such as licensees withholding some or all of the royalty payments they owe to us or 
our paying fines or modifying our business practices in connection with regulatory investigations or litigation, many of which 
are beyond our control. If we are unable to generate sufficient cash flow from operations in the future to service our debt, we 
may be required to, among other things: refinance or restructure all or a portion of our indebtedness; reduce or delay planned 
capital or operating expenditures; reduce or eliminate our dividend payments; 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 on economically favorable terms or at all, and if prevailing interest rates at the time of any such refinancing or 
restructuring are higher than our current rates, interest expense related to such refinancing or restructuring would increase. If 
there are adverse changes in the ratings assigned to our debt securities by credit rating agencies, our borrowing costs, our 
ability to access debt in the future and the terms of such debt could be adversely affected.

Our current outstanding variable rate indebtedness uses LIBOR as a benchmark for establishing the interest rate. LIBOR 

is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms may 
cause LIBOR to disappear entirely after 2021 or to perform differently than in the past. We expect that reasonable alternatives 
to LIBOR will be created and implemented prior to the 2021 target date. Fallback provisions are being written into LIBOR-
based contracts to attempt to reduce the risk of sudden and unpredictable increases in the cost of variable rate indebtedness. 
However, we cannot predict the consequences and timing of these developments. 

We have implemented a stock repurchase program to repurchase up to $30 billion of our outstanding common stock. 

This stock repurchase program has significantly reduced and will continue to reduce the amount of cash that we have 
available to fund our operations, including research and development, working capital, capital expenditures, acquisitions, 
investments, dividends and other corporate purposes; and increases our exposure to adverse economic, market, industry and 
competitive conditions and developments, and other changes in our business and our industry. In addition, this significant 
decrease in our cash reserves exacerbates the risks described above associated with our indebtedness.

Our business and operations could suffer in the event of security breaches of our information technology systems, or 
other misappropriation of our intellectual property or proprietary or confidential information.

Third parties regularly attempt to gain unauthorized access to our information technology systems, and most of such 

attempts are increasingly more sophisticated. These attempts, which might be related to industrial or other espionage, 
criminal hackers or state-sponsored intrusions, include trying to covertly introduce malware to our computers and networks, 
including those in our manufacturing operations, and impersonating authorized users, among others. In addition, third party 
suppliers that we may rely on to store and/or process our confidential information may also be subject to similar attacks. Such 
attempts could result in the misappropriation, theft, misuse, disclosure or loss or destruction of the intellectual property, or the 
proprietary, confidential or personal information, of us or our employees, customers, licensees, suppliers or other third 
parties, as well as damage to or disruptions in our information technology systems. These threats are constantly evolving, 
thereby increasing the difficulty of successfully defending against them or implementing adequate preventative measures.

We seek to detect and investigate all security incidents and to prevent their recurrence, but attempts to gain unauthorized 

access to our information technology systems may be successful, and in some cases, we might be unaware of an incident or 
its magnitude and effects. The misappropriation, theft, misuse, disclosure or loss or destruction of the intellectual property, or 
the proprietary, confidential or personal information, of us or our employees, customers, licensees, suppliers or other third 
parties, could harm our competitive position, reduce the value of our investment in research and development and other 
strategic initiatives, cause us to lose business, damage our reputation, subject us to legal or regulatory proceedings, cause us 
to incur other loss or liability and otherwise adversely affect our business. We expect to continue to devote significant 
resources to the security of our information technology systems.

34

In addition, employees and former employees, in particular former employees who become employees of our 

competitors, customers or licensees, may misappropriate, use, publish or provide to our competitors, customers, licensees or 
other third parties our intellectual property or proprietary or confidential business information. This risk is exacerbated as 
competitors for talent, particularly engineering talent, increasingly attempt to hire our employees. See the Risk Factor entitled 
“We may not be able to attract and retain qualified employees.” Similarly, we provide access to certain of our intellectual 
property or proprietary or confidential business information to our direct and indirect customers and licensees and certain of 
our consultants, who may wrongfully use such intellectual property or information, or wrongfully disclose such intellectual 
property or information to third parties, including our competitors.

Potential tax liabilities could adversely affect our results of operations.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required 

in determining our provision for income taxes. We regularly are subject to examination of our tax returns and reports by 
taxing authorities in the United States federal jurisdiction and various state and foreign jurisdictions, most notably in 
countries where we earn a routine return and the tax authorities believe substantial value-add activities are performed. Our 
current examinations are at various stages with respect to assessments, 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 giving rise to a revision become known. Although we believe that our tax 
estimates are reasonable, the final determination of tax audits and any related legal proceedings could materially differ from 
amounts reflected in our historical income tax provisions and accruals. In such case, our income tax provision, results of 
operations and cash flows in the period or periods in which that determination is made could be negatively affected.

The United States Treasury Department has issued proposed regulations on several provisions of the Tax Legislation, 
including foreign tax credits, FDII, BEAT and interest expense deduction limitations, which are expected to be finalized in 
the next several months. When finalized, these proposed regulations may adversely affect our provision for income taxes, 
results of operations and/or cash flows.

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, our Singapore tax rate is expected to increase in fiscal 2022 and again in fiscal 2027. If we 
do not meet the criteria required to retain such incentives, our Singapore tax rate could increase prior to fiscal 2022, and our 
results of operations and cash 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. Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit 
shifting (BEPS) project that was undertaken by the Organization for Economic Co-operation and Development (OECD). The 
OECD, which represents a coalition of member countries, recommended changes to numerous long-standing tax principles 
related to transfer pricing. These changes, as adopted by countries, may increase tax uncertainty and may adversely affect our 
provision for income taxes, results of operations and cash flows. Partially to address BEPS, we moved certain IP from 
Singapore to the United States. As a result, if tax rates were to increase in the United States, our results of operations, cash 
flows and financial condition could be adversely affected.

Global, regional or local economic conditions, or political actions including trade and/or national security protection 
policies, such as tariffs, that impact the mobile communications industry or the other industries in which we operate could 
negatively affect 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, a slow-down in economic growth, political actions including 

trade and/or national security protection policies, such as tariffs, or actions by governments that limit or prevent us from 
transacting business with certain companies or that limit or prevent certain companies from transacting business with us, 
particularly in geographic regions with high concentrations of wireless voice and data users or high concentrations of our 
customers or licensees, could have adverse, wide-ranging effects on demand for our products and services and for the 
products and services of our customers or licensees, particularly equipment manufacturers or others in the wireless 
communications industry who buy their products, such as wireless operators. Any prolonged economic downturn or “trade 
war” may result in a decrease in demand for our products and technologies; a decrease in demand for the products of our 
customers or licensees; the insolvency of key suppliers, customers or licensees; delays in reporting or payments from our 
licensees or customers; failures by counterparties; and negative effects on wireless device inventories. In addition, our 
customers’ ability to purchase or pay for our products and services and network operators’ ability to upgrade their wireless 
networks could be adversely affected by economic conditions, leading to a reduction, cancelation or delay of orders for our 
products and services.

35

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 ability to continue to identify, attract, retain and motivate them. Implementing our business 
strategy requires specialized engineering and other talent, as our revenues are highly dependent on technological and product 
innovations. The market for employees in our industry is extremely competitive, and competitors for talent, particularly 
engineering talent, increasingly attempt to hire, and to varying degrees have been successful in hiring, our employees, 
including by establishing local offices near our headquarters in San Diego, California. A number of such competitors for 
talent are significantly larger than us and are able to offer compensation in excess of what we are able to offer. Further, 
existing immigration laws make 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 talent even 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 of our products.

Our customers sell their products throughout the world in various currencies. Our consolidated revenues from 

international customers and licensees accounted for a significant portion of our total revenues in each of the last three fiscal 
years. Adverse movements in currency exchange rates may negatively affect our business, revenues, results of operations and 
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 in reduced demand for those products or downward pressure on average selling 
prices; 

•  Certain of our revenues that are derived from products that are sold in foreign currencies could decrease, resulting in 

lower revenues, cash flows and margins; 

•  Certain of our revenues, such as royalties, that are derived from licensee or customer sales denominated in foreign 

currencies could decrease, resulting in lower revenues and cash flows;

•  Our foreign suppliers may raise their prices if they are impacted by currency fluctuations, resulting in higher than 

expected costs, and lower margins and cash flows; 

•  Certain of our costs that are denominated in foreign currencies could increase, resulting in higher than expected 

• 

costs and cash outflows; and
Foreign exchange hedging exposes us to counterparty risk and may require the payment of structuring fees. If the 
foreign exchange hedges do not qualify for hedge accounting, the hedge results may cause earnings volatility. The 
foreign exchange hedging activities are designed to lessen earnings volatility; therefore, hedges may reduce the 
impact of currency fluctuations to certain revenues and costs.

Failures in our products or services, or in the products or services of our customers or licensees, including those resulting 
from security vulnerabilities, defects or errors, could harm our business.

The use of devices containing our products to interact with untrusted systems or otherwise access untrusted content 
creates a risk of exposing the system hardware and software in those devices to malicious attacks. While we continue to focus 
on this issue and are taking measures to safeguard our products from cybersecurity threats, device capabilities continue to 
evolve, enabling more elaborate functionality and applications, and increasing the risk of security failures. Further, our 
products are inherently complex and may contain defects or errors that are detected only when the products are in use. 
Development of products and features in new domains of technology and the migration to integrated circuit technologies with 
smaller geometric feature sizes are complex, add risk to manufacturing yields and reliability and increase the likelihood of 
product defects or errors. Because our products and services are responsible for critical functions in our customers’ products 
and networks, security failures, defects or errors in our products or services could have an adverse impact on us, on our 
customers and the end users of our customers’ products. Such adverse impact could include shipment delays; write-offs of 
our inventories, property, plant and equipment and intangible assets; unfavorable purchase commitments; a shift of business 
to our competitors; a decrease in demand for connected devices and wireless services; damage to our reputation and our 
customer relationships; regulatory actions; and other financial liability or harm to our business. In addition, security failures, 
defects or errors in the products of our customers or licensees could have an adverse impact on our results of operations and 
cash 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. Further, failures, defects or errors in our products or those of our customers or licensees entail 
the risk of product liability claims or recalls.

36

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

At September 29, 2019, we occupied the following facilities (square footage in millions):

Owned facilities

Leased facilities

Total

United States

Other
Countries

Total

4.4

0.9

5.3

0.4

5.3

5.7

4.8

6.2

11.0

Our 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 QCT segment also operates leased manufacturing facilities in Germany, China and Singapore. We also own 
and lease properties around the world for use as sales and administrative offices and research and development centers, 
primarily in the United States and India. Our facility leases expire at varying dates through 2032, not including renewals that 
are at our option. Several other owned and leased facilities are under construction totaling approximately 1.3 million 
additional square feet, primarily related to the construction of new facilities in India and a new manufacturing facility in 
Singapore.

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 is substantially utilized. We do not identify or allocate facilities by operating 
segment. Additional information on net property, plant and equipment by geography is provided in this Annual Report in 
“Notes to Consolidated Financial Statements, Note 8. Segment Information.” In the future, we may need to purchase, build or 
lease additional facilities to meet the requirements projected in our long-term business plan.

Item 3. Legal and Regulatory Proceedings

Information 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 no assurance, we believe that the ultimate outcome of these 
other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash 
flows.

Item 4. Mine Safety Disclosures

Not applicable.

37

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 
Securities

Market Information and Dividends

Our common stock is traded on the NASDAQ Global Select Market (NASDAQ) under the symbol “QCOM.” At 

November 4, 2019, there were 6,683 holders of record of our common stock. 

We intend to continue to pay quarterly dividends, subject to capital availability and 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 potential future 
capital requirements, including those relating to research and development, creation and expansion of sales and distribution 
channels, investments and acquisitions, legal risks, withholding of payments by one or more of our significant licensees and/
or customers, fines by government agencies and/or adverse rulings by a court or arbitrator in a legal matter, stock repurchase 
programs, debt issuances, changes in federal and state income tax law and changes to our business model.

Share-Based Compensation

We primarily issue restricted stock units under our equity compensation plans, which are part of a broad-based, long-

term retention program that is intended to attract 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, restricted stock, unrestricted stock, restricted stock units, performance units, performance shares, 
deferred compensation awards and other stock-based awards. Restricted stock 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 to ten years from 
the grant date. The Board of Directors may amend or terminate the 2016 Plan at any time, with certain amendments also 
requiring stockholder approval.

Additional information regarding our share-based compensation plans and plan activity for fiscal 2019, 2018 and 2017 is 

provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 5. Employee Benefit Plans.”

Issuer Purchases of Equity Securities

Issuer purchases of equity securities during the fourth quarter of fiscal 2019 were:

Average
Price Paid
Per Share
(1)

Total Number of
Shares 
Purchased

(In thousands)

Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs

Approximate Dollar 
Value of Shares that 
May Yet Be
Purchased Under the 
Plans or Programs 
(2)

(In thousands)

(In millions)

76.01

71.94

77.07

2,368

$

2,502

4,489

68,682

78,041

2,368

$

2,502

4,489

68,682

78,041

7,589

7,409

7,063

7,063

July 1, 2019 to July 28, 2019

July 29, 2019 to August 25, 2019

August 26, 2019 to September 29, 2019

Other repurchases

Accelerated share repurchases (3)

Total

(1)  Average Price Paid Per Share excludes cash paid for commissions.

(2)  On July 26, 2018, we announced a repurchase program authorizing us to repurchase up to $30 billion of our common stock. At 

September 29, 2019, $7.1 billion remained authorized for repurchase. The stock repurchase program has no expiration date. Since 
September 29, 2019, we repurchased and retired 3.9 million shares of common stock for $300 million. Shares withheld to satisfy 
statutory tax withholding requirements related to the vesting of share-based awards are not issued or considered stock repurchases 
under our stock repurchase program and, therefore, are excluded from the table above.

(3)  In September 2018, we entered into three accelerated share repurchase agreements (ASR Agreements) to repurchase an aggregate of 
$16.0 billion of our common stock. During the fourth quarter of fiscal 2018, 178.4 million shares were initially delivered to us under 
the ASR Agreements and were retired. The ASR Agreements were completed during the fourth quarter of fiscal 2019, and an 

38

additional 68.7 million shares were delivered to us and were retired, comprising the final delivery of shares under the ASR 
Agreements. In total, 247.1 million shares were delivered to us under the ASR Agreements at an average price per share of $64.76.

39

Item 6. Selected Financial Data

The following data should be read in conjunction with the annual consolidated financial statements, related notes and 
other financial information appearing elsewhere herein. We have revised our prior period financial statements for the years 
ended September 30, 2018 and September 24, 2017 to reflect the correction of an immaterial error as described in this Annual 
Report in Notes to Consolidated Financial Statements, “Note 1. Significant Accounting Policies” and “Note 12. Revision of 
Prior Period Financial Statements.”

5,776

5,271

3.26

3.22

1.80

30,947

50,796

1,000

9,969

817

31,414

Years Ended (1)

September 29,
2019

September 30,
2018

September 24,
2017

September 25,
2016

September 27,
2015

(In millions, except per share data)

$

24,273

$

22,611

$

22,258

$

23,554

$

25,281

7,667

4,386

621

(4,964)

2,581

2,445

3.63

3.59

2.48

(3.39)

(3.39)

2.38

1.66

1.64

2.20

6,495

5,705

3.84

3.81

2.02

Statement of Operations Data:

Revenues (2)

Operating income

Net income (loss) attributable to Qualcomm (2)

Per Share Data:
Basic earnings (loss) per share attributable to
Qualcomm:
Diluted earnings (loss) per share attributable to
Qualcomm:

Dividends per share announced

Balance Sheet Data:

Cash, cash equivalents and marketable securities (3)

$

12,296

$

12,123

$

38,578

$

32,350

$

Total assets (3)

Short-term debt (4)

Long-term debt (5)

Other long-term liabilities (6)

Total stockholders’ equity (3)

32,957

2,496

13,437

4,516

4,909

32,718

1,005

15,365

3,537

807

65,498

2,495

19,398

2,432

30,725

52,359

1,749

10,008

895

31,768

(1)  Our fiscal year ends on the last Sunday in September. The fiscal year ended September 29, 2019, September 24, 2017, September 25, 

2016 and September 27, 2015 each included 52 weeks. The fiscal year ended September 30, 2018 included 53 weeks.

(2)  Revenues in fiscal 2019 included $4.7 billion resulting from the settlement with Apple and its contract manufacturers. Revenues in 
fiscal 2019 also reflected the impact of the adoption of the new revenue recognition guidance in the first quarter of fiscal 2019. 
Operating income in fiscal 2019 was impacted by a $275 million charge attributed to a fine imposed by the European Commission 
(EC) and $213 million in net charges related to our Cost Plan. Additionally, net income for fiscal 2019 was impacted by a $2.5 billion 
charge to income tax expense resulting from the derecognition of a deferred tax asset related to the distributed intellectual property 
and a tax benefit of $570 million due to establishing new U.S. net deferred tax assets from making certain check-the-box elections.

Revenues in fiscal 2018 were negatively impacted by our prior dispute with Apple and its contract manufacturers, partially offset by 
$600 million paid under an interim agreement with Huawei. Operating income in fiscal 2018 was further impacted by a $2.0 billion 
charge related to a fee in connection with the termination of a purchase agreement to acquire NXP Semiconductors N.V., a $1.2 billion 
charge related to a fine imposed by the EC and $629 million in charges related to our Cost Plan, partially offset by a $676 million 
benefit resulting from a settlement with the Taiwan Fair Trade Commission (TFTC). Additionally, net loss for fiscal 2018 was 
impacted by the $5.7 billion charge related to the Tax Legislation.

Revenues in fiscal 2017 were negatively impacted by actions taken by Apple and its contract manufacturers and Huawei, who did not 
fully report or fully pay royalties due in the last three quarters of fiscal 2017, as well as a $940 million reduction to revenues recorded 
related to the BlackBerry arbitration. Operating income was further impacted by $927 million and $778 million in charges related to 
the fines imposed by the Korea Fair Trade Commission and TFTC, respectively. 

(3)  In the fourth quarter of fiscal 2018, we announced a stock repurchase program authorizing us to repurchase up to $30 billion of our 

common stock. Under this program, we completed a tender offer and paid an aggregate of $5.1 billion to repurchase shares of our 
common stock and entered into three accelerated share repurchase agreements to repurchase an aggregate of $16.0 billion of our 

40

 
 
 
 
 
 
 
 
common stock, resulting in significant reductions to the balances of our cash, cash equivalents and marketable securities, total assets 
and total stockholders’ equity.

(4)  Short-term debt was comprised of outstanding commercial paper and, in fiscal 2019 and fiscal 2017, the current portion of long-term 

debt.

(5)  Long-term debt was comprised of floating- and fixed-rate notes.

(6)  Other long-term liabilities in this balance sheet data includes non-current income taxes payable and excludes unearned revenues.

41

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to historical information, the following discussion contains forward-looking statements that are subject to 

risks and uncertainties. Actual results may 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” and elsewhere 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 financial statements and related notes included in “Part II, Item 8. Financial Statements and 
Supplementary Data” of this Annual Report. 

Fiscal 2019 Overview

Revenues were $24.3 billion, an increase of 7% from fiscal 2018, with net income of $4.4 billion, compared to net loss of 

$5.0 billion in fiscal 2018. Highlights and other events from fiscal 2019 included: 

• 

From October 2018 through September 2019, approximately 1.4 billion smartphones are estimated to have shipped 
globally, representing a year-over-year decrease of approximately 4% (IDC, Mobile Phone Tracker, 2019Q3), 
primarily driven by further lengthening of replacement cycles, particularly in developed regions and China where 
consumer demand is increasingly driven by new product launches and/or innovation cycles as the industry transitions 
to 5G.

•  QCT results in fiscal 2019 were negatively impacted by lower modem sales to Apple.

• 

In April 2019, we entered into settlement agreements with Apple and its contract manufacturers to dismiss all 
outstanding litigation between the parties. We also entered into a six-year global patent license agreement with Apple, 
effective as of April 1, 2019, which includes an option for Apple to extend for two additional years, and a multi-year 
chipset supply agreement with Apple. In the third quarter of fiscal 2019, we recognized licensing revenues of $4.7 
billion resulting from the settlement, consisting of a payment from Apple and the release of certain of our obligations 
to pay Apple and its contract manufacturers customer-related liabilities. In addition, our QTL results for the third and 
fourth quarters of fiscal 2019 included royalties from Apple and its contract manufacturers for sales made in such 
quarters.

•  QTL results in fiscal 2019 reflected certain reductions made in the per unit royalty caps (which provide a maximum 
royalty amount payable per device) in fiscal 2019 and 2018. While we expect these changes to enhance stability for 
the long term, they negatively impacted QTL royalty revenues in fiscal 2019. In addition, an increasing number of 
new and existing licensees have elected to enter into worldwide license agreements covering only our cellular 
standard essential patents, resulting in lower QTL royalty revenues in fiscal 2019. 

•  QTL revenues in fiscal 2019 included $450 million paid under a second interim agreement with Huawei that 
concluded in the third quarter of fiscal 2019, and although negotiations continue, we have not reached a final 
agreement with Huawei. This represents a minimum, non-refundable amount for royalties due and does not reflect the 
full amount of royalties due under the underlying license agreement. We did not record any revenues in the fourth 
quarter of fiscal 2019 for royalties due on the sales of Huawei’s products. 

• 

• 

• 

In May 2019, in United States Federal Trade Commission (FTC) v. QUALCOMM Incorporated, the court issued an 
Order ruling against us and imposing certain injunctive relief. We disagree with the court’s conclusions, interpretation 
of the facts and application of the law. Accordingly, we filed a motion to stay certain of the remedies with, and have 
appealed the decision to, the Ninth Circuit Court of Appeals (Ninth Circuit). In August 2019, our partial motion to 
stay was granted in its entirety by the Ninth Circuit. The impact of the Order and the Ninth Circuit granting our 
motion for partial stay did not have a material impact to QTL licensing revenues recognized in fiscal 2019 based on 
facts and factors currently known by us.

In July 2019, the European Commission (EC) issued a decision ruling that between 2009 and 2011 we engaged in 
predatory pricing with respect to two customers and imposed a fine (2019 EC fine) of approximately 242 million 
Euros, which resulted in a $275 million charge to other expenses in the third quarter of fiscal 2019. In October 2019, 
we filed an appeal of the EC’s decision, and we provided a financial guarantee to satisfy the obligation in lieu of a 
cash payment while we appeal the EC’s decision.

In the second quarter of fiscal 2018, we announced a Cost Plan designed to align our cost structure to our long-term 
margin targets. As part of this plan, we initiated a series of targeted actions across our businesses with the objective to 
reduce annual costs by $1 billion, excluding incremental costs resulting from any future acquisition of a business. 
Actions taken under this plan have been completed and resulted in us achieving substantially all of this target in fiscal 

42

2019 based on our run rate exiting the second quarter of fiscal 2019, excluding litigation costs that were in excess of 
the baseline spend. We recorded net restructuring and restructuring-related charges of $213 million in fiscal 
2019 related to our Cost Plan.

•  Beginning in fiscal 2019, certain provisions of the 2017 U.S. Tax Cuts and Jobs Act (the Tax Legislation) became 

effective, including new taxes on certain foreign income. Our estimated annual effective tax rate for fiscal 2019 
reflected the effects of these provisions of the Tax Legislation, and it also included the effects of tax elections made 
by several of our foreign subsidiaries in the first quarter of fiscal 2019 to be treated as U.S. branches for federal 
income tax purposes effective beginning in fiscal 2018 and 2019, which resulted in an income tax benefit of $570 
million recorded discretely in the first quarter of fiscal 2019.

•  During the third quarter of fiscal 2019, the United States Treasury Department issued new temporary regulations that 

resulted in a change to the deductibility of dividend income received by a U.S. stockholder from a foreign 
corporation. As a result of this change, pursuant to an agreement with the Internal Revenue Service, we relinquished 
the federal tax basis step-up of intellectual property that was distributed in fiscal 2018 by one of our foreign 
subsidiaries to a U.S. subsidiary. Therefore, the related deferred tax asset was derecognized, resulting in a $2.5 billion 
charge to income tax expense in the third quarter of fiscal 2019. 

Our Business and Operating Segments

We develop and commercialize foundational technologies and products used in mobile devices and other wireless 
products. We derive revenues principally from sales of integrated circuit products and licensing our intellectual property, 
including patents 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 (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology 
Licensing) licensing business. QCT develops and supplies integrated circuits and system software based on CDMA, OFDMA 
and other technologies for use in mobile devices (primarily smartphones), tablets, laptops, data modules, handheld wireless 
computers and gaming devices, access points and routers, broadband gateway equipment, data cards and infrastructure 
equipment, IoT devices and applications, other consumer electronics and automotive telematics and infotainment systems. 
QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which, among other 
rights, includes certain patent rights essential to and/or useful in the manufacture, sale and/or use of certain wireless products. 
Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments. We also have nonreportable 
segments, including Qualcomm Government Technologies or QGOV (formerly Qualcomm Cyber Security Solutions) and 
other wireless technology and service initiatives. 

Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries. 

Substantially all of our products and services 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 the vast 
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 any patents owned by QUALCOMM 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 much of our intellectual property are incorporated into consumer wireless 
devices, which are subject to seasonality and other fluctuations in demand. Our revenues have historically fluctuated based 
on consumer demand for devices, as well as on the timing of customer/licensee device launches and/or innovation cycles 
(such as the transition to the next generation of wireless technologies). This has resulted in fluctuations in QCT revenues in 
advance of and during device launches incorporating our products and in QTL revenues when the related royalties were 
recognized, which prior to fiscal 2019 was when licensees reported their sales and beginning in fiscal 2019 was when the 
licensees’ sales occurred. Our historical trends were impacted by our prior dispute with Apple and its contract manufacturers, 
which was settled in April 2019. We expect to begin recording revenues for new chipset models under our recently 
announced multi-year chipset agreement with Apple in the second half of fiscal 2020. These trends may or may not continue 
in the future. Further, the trends for QTL have been, and/or may in the future be, impacted by disputes and/or resolutions with 
licensees and/or governmental investigations or proceedings, including the lawsuit filed against us by the FTC.

43

Results of Operations

Revenues (in millions)

Equipment and services

Licensing

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

$

$

14,611

$

17,400

$

16,647

$

(2,789) $

9,662

5,211

5,611

4,451

24,273

$

22,611

$

22,258

$

1,662

$

753

(400)

353

2019 vs. 2018
The increase in revenues in fiscal 2019 was primarily due to:

+  $4.7 billion in licensing revenues recorded in the third quarter of fiscal 2019 resulting from the settlement with Apple 

and its contract manufacturers (which were not allocated to our segment results)
$2.7 billion in lower equipment and services revenues from our QCT segment
$451 million in lower licensing revenues from our QTL segment

- 
- 

2018 vs. 2017
The increase in revenues in fiscal 2018 was primarily due to:

+  $962 million reduction to licensing revenues recorded in fiscal 2017 related to the BlackBerry arbitration (which was 

not allocated to our segment results)

+  $745 million in higher equipment and services revenues from our QCT segment
- 
- 

$1.4 billion in lower licensing revenues from our QTL segment
$100 million reduction to licensing revenues recorded in fiscal 2018 related to a portion of a business arrangement 
that resolved a legal dispute (which was not allocated to our segment results)

Costs and Expenses (in millions, except percentages)

Cost of revenues

Gross margin

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

$

8,599

$

10,244

$

9,792

$

(1,645) $

452

65%

55%

56%

2019 vs. 2018
The increase in margin percentage in fiscal 2019 was primarily due to:

+  higher licensing revenues resulting from the settlement with Apple and its contract manufacturers in fiscal 2019

2018 vs. 2017
The decrease in margin percentage in fiscal 2018 was primarily due to:

- 
- 

+ 

decrease in higher margin QTL licensing revenues as a proportion of total revenues
reduction to licensing revenues recorded in fiscal 2018 related to a portion of a business arrangement that resolved a 
legal dispute
reduction to licensing revenues recorded in fiscal 2017 related to the BlackBerry arbitration

Our margin percentage may continue to fluctuate in future periods depending on the mix of segment results as well as 
products sold, competitive pricing, new product introduction costs and other factors, including disputes and/or resolutions with 
licensees and/or governmental investigations or proceedings, including the lawsuit filed against us by the FTC. 

Research and development

$

5,398

$

5,625

$

5,485

$

(227)

$

140

% of revenues

22%

25%

25%

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

44

2019 vs. 2018
The dollar decrease in research and development expenses in fiscal 2019 was primarily due to:

- 

$221 million decrease primarily driven by actions taken under our Cost Plan, partially offset by higher share-based 
compensation expense and higher employee cash incentive programs

2018 vs. 2017
The dollar increase in research and development expenses in fiscal 2018 was primarily due to:

+  $168 million, net of cost decreases driven by actions taken under our Cost Plan, in higher costs related to the 

development of wireless and integrated circuit technologies, including 5G technologies and RFFE technologies from 
the formation of RF360 Holdings in the second quarter of fiscal 2017
$30 million impairment charge on certain intangible assets recorded in fiscal 2017

- 

In fiscal 2018, all of the costs ($474 million) related to pre-commercial research and development of 5G technologies 

were included in unallocated corporate research and development expenses. Beginning in fiscal 2019, all research and 
development costs associated with 5G technologies were included in segment results. Additionally, beginning in fiscal 2019, 
certain research and development costs associated with early research and development that were historically included in our 
QCT segment were allocated to our QTL segment. The net effect of these changes negatively impacted QTL’s EBT by $489 
million in fiscal 2019 and positively impacted QCT’s EBT by $160 million in fiscal 2019.

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

Selling, general and administrative

$

2,195

$

2,986

$

2,658

$

(791)

$

328

% of revenues

9%

13%

12%

2019 vs. 2018
The dollar decrease in selling, general and administrative expenses in fiscal 2019 was primarily due to:

- 

- 

- 
- 

$287 million in lower professional fees and costs, primarily driven by Broadcom’s withdrawn takeover proposal in 
fiscal 2018 and our then proposed acquisition of NXP Semiconductors N.V. (NXP) in fiscal 2018
$235 million in lower litigation costs, primarily resulting from the settlement of our prior dispute with Apple and its 
contract manufacturers and the end of the District Court trial in the lawsuit filed against us by the FTC 
$162 million in lower employee-related expenses, primarily driven by actions taken under our Cost Plan
$75 million in lower sales and marketing expenses, primarily driven by actions taken under our Cost Plan

2018 vs. 2017
The dollar increase in selling, general and administrative expenses in fiscal 2018 was primarily due to:

+  $325 million in higher litigation costs, with total litigation costs of $554 million and $229 million in fiscal 2018 and 

fiscal 2017, respectively 

+  $45 million in bad debt expense recorded in fiscal 2018
+  $42 million in higher professional fees and costs related to other legal matters, which was primarily driven by 

Broadcom’s withdrawn takeover proposal, partially offset by lower third-party acquisition and integration services 
fees
$40 million in lower amortization expense, primarily from the formation of RF360 Holdings
$37 million in lower share-based compensation expense, primarily due to actions taken under our Cost Plan

- 
- 

Other

$

414

$

3,135

$

1,742

$

(2,721) $

1,393

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

2019
Other expenses in fiscal 2019 consisted of:

+  $275 million charge related to the 2019 EC fine
+  $213 million net charges related to our Cost Plan
- 

$43 million gain due to the partial recovery of a fine imposed in fiscal 2009 resulting from our appeal of the Korea 
Fair Trade Commission (KFTC) decision
$31 million gain related to a favorable legal settlement

- 

2018
Other expenses in fiscal 2018 consisted of:

+  $2.0 billion charge related to a fee in connection with the termination of a purchase agreement to acquire NXP 

45

+  $1.2 billion charge related to a fine imposed by the EC
+  $629 million in restructuring and restructuring-related charges related to our Cost Plan
- 

$676 million benefit related to the settlement of the Taiwan Fair Trade Commission (TFTC) investigation

2017
Other expense in fiscal 2017 consisted of:

+  $927 million charge related to the KFTC fine, including related foreign currency losses
+  $778 million charge related to the TFTC fine
+  $37 million in restructuring and restructuring-related charges related to our 2015 Strategic Realignment Plan

Interest Expense and Investment and Other Income, Net (in millions)

Interest expense

Investment and other income, net

Interest and dividend income

Net gains on marketable securities

Net gains on other investments

$

$

Impairment losses on marketable securities and
other investments

Net (losses) gains on derivative instruments

Equity in net losses of investees
Net gains (losses) on foreign currency
transactions

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

627

$

768

$

494

$

(141) $

274

316

288

68

(135)

(14)

(93)

11

$

625

$

41

83

(75)

(27)

(145)

37

619

456

74

(177)

32

(74)

(30)

$

(309) $

247

(15)

(60)

13

52

(26)

$

441

$

539

$

900

$

(98) $

6

(415)

9

102

(59)

(71)

67

(361)

In the fourth quarter of fiscal 2018, we implemented a stock repurchase program to repurchase up to $30 billion of our 
outstanding common stock. Stock repurchases made under this program have significantly reduced the amount of our cash, 
cash equivalents and marketable securities, resulting in a decrease to interest and dividend income in fiscal 2019. The increase 
in net gains on marketable securities in fiscal 2019 was primarily driven by gains resulting from the initial public offering of 
certain non-marketable equity investments.

The increase in interest expense in fiscal 2018 was primarily due to the issuance of an aggregate principal amount of 
$11.0 billion of unsecured floating- and fixed-rate notes in May 2017, of which $4.0 billion were repaid between May and 
August 2018. 

In the first quarter of fiscal 2017, we began divesting a substantial portion of our marketable securities portfolio in order 
to finance, in part, the then proposed acquisition of NXP. As a result, we recorded net realized gains and impairment losses on 
such marketable securities that we sold and expected to sell before their anticipated recovery, respectively, in fiscal 2017. 

Income Tax Expense (in millions. except percentages)

Income tax expense

Effective tax rate

N/M - Not meaningful

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

$

3,095

$

5,356

$

543

$

(2,261)

$

4,813

41%

N/M

18%

46

 
The following table summarizes the primary factors that caused our annual tax provision to differ from the expected 

income tax provision at the United States federal statutory rate (in millions):

2019

2018

2017

Expected income tax provision at federal statutory tax rate

$

1,571

$

State income tax provision, net of federal benefit

Derecognition of deferred tax asset on distributed intellectual property

Benefits from establishing new U.S. net deferred tax assets

Benefits from foreign-derived intangible income (FDII) deduction

Benefits related to the research and development tax credit

Benefits from foreign income taxed at other than U.S. rates

Nondeductible charges (reversals) related to the EC, KFTC and TFTC investigations

Impact of changes in tax reserves and audit settlements for prior year tax positions

Taxes on undistributed foreign earnings

Toll Charge from U.S. tax reform

Valuation allowance on deferred tax asset related to NXP termination fee

Remeasurement of deferred taxes due to changes in statutory rate due to U.S. tax
reform

Other

Income tax expense

10

2,472

(570)

(419)

(110)

(54)

51

20

8

—

—

—

116

97

2

—

—

—

(136)

(834)

(119)

—

87

5,236

494

443

86

$

1,045

8

—

—

—

(81)

(963)

363

111

—

—

—

—

60

$

3,095

$

5,356

$

543

The 2017 Tax Cuts and Jobs Act (the Tax Legislation), which was enacted during the first quarter of fiscal 2018, 

significantly revised the United States corporate income tax by, among other things, lowering the corporate income tax rate to 
21% and imposing a one-time repatriation tax on deemed repatriated earnings and profits of U.S.-owned foreign subsidiaries 
(the Toll Charge). The Tax Legislation fundamentally changed the taxation of multinational entities, including a shift from a 
system of worldwide taxation with deferral to a hybrid territorial system, featuring a participation exemption regime with 
current taxation of certain foreign income, a minimum tax on low-taxed foreign earnings and new measures to deter base 
erosion and promote U.S. production. As a fiscal-year taxpayer, certain provisions of the Tax Legislation became effective 
starting at the beginning of fiscal 2019, including GILTI (global intangible low-taxed income), a new tax on income of 
foreign corporations, BEAT (base-erosion and anti-abuse tax) and FDII (foreign-derived intangible income). In response to 
the Tax Legislation and to better align our profits with our activities, we implemented certain tax restructuring in fiscal 2018 
and 2019. As a result, beginning in fiscal 2019, substantially all of our income is in the U.S., of which a significant portion 
qualifies for preferential treatment as FDII at a 13% effective tax rate. The impact of GILTI and BEAT is negligible. 
Accordingly, our annual effective tax rate for fiscal 2019 reflected the effects of these provisions of the Tax Legislation. Our 
annual effective tax rate for fiscal 2018 reflected a blended federal statutory rate of approximately 25%.

As a result of the Tax Legislation, in fiscal 2019, several of our foreign subsidiaries made tax elections to be treated as 
U.S. branches for federal income tax purposes (commonly referred to as “check-the-box” elections) effective beginning in 
fiscal 2018 and 2019. As a result of making these check-the-box elections, we recorded a tax benefit of $570 million in fiscal 
2019. Additionally, in fiscal 2019, the United States Treasury Department issued new temporary regulations that resulted in a 
change to the deductibility of dividend income received by a U.S. stockholder from a foreign corporation. As a result of this 
change, pursuant to an agreement with the Internal Revenue Service, we relinquished the federal tax basis step-up of 
intellectual property that was distributed in fiscal 2018 by one of our foreign subsidiaries to a U.S. subsidiary. Therefore, the 
related deferred tax asset was derecognized, resulting in a $2.5 billion charge to income tax expense in fiscal 2019.

Income tax expense for fiscal 2019 also reflected benefits from our FDII deduction (including the impact of the Apple 
settlement) and research and development credits, as well as the impact of the 2019 EC fine, which is not deductible for tax 
purposes.

In fiscal 2018, as a result of the Tax Legislation, we recorded a charge of $5.7 billion to income tax expense, comprised 
of $5.2 billion related to the estimated Toll Charge and $438 million resulting from the remeasurement of U.S. deferred tax 
assets and liabilities that existed at the end of fiscal 2017 at a lower enacted corporate income tax rate, which included a $135 
million tax benefit in fiscal 2018 related to the remeasurement of a U.S. deferred tax liability that was established as a result 
of a change in one of our positions due to the Tax Legislation. 

47

Income tax expense for fiscal 2018 was also impacted by the charge recorded in the fourth quarter of fiscal 2018 related 

to the termination fee paid to NXP, which did not result in a tax benefit after the consideration of realizability of such loss. 
Fiscal 2018 and 2017 income tax expense was impacted by the EC, KFTC and TFTC fines, and settlement with the TFTC, 
which were not deductible for tax purposes (or taxable in the case of the settlement) and portions of which were attributable 
to foreign jurisdictions and to the United States. These impacts were partially offset in fiscal 2018 and 2017 by lower U.S. 
revenues primarily related to decreased royalty revenues from Apple’s contract manufacturers and, for fiscal 2017, a payment 
to BlackBerry in connection with an arbitration decision.

Income tax expense for fiscal 2017 also reflected the increase in our Singapore tax rate as a result of the expiration of 

certain of our tax incentives in March 2017, which was substantially offset by tax benefits resulting from the increase in our 
Singapore tax rate in effect when certain deferred tax assets reversed. During the third quarter of fiscal 2018, we entered into 
a new tax incentive agreement in Singapore that results in a reduced tax rate from March 2017 through March 2022, provided 
that we meet specified employment and investment criteria in Singapore. Our Singapore tax rate will increase in March 2022 
as a result of expiration of these incentives and again in March 2027 upon the expiration of tax incentives under a prior 
agreement. Without these tax incentives, our fiscal 2018 income tax expense would have been higher. During fiscal 2018, one 
of our Singapore subsidiaries distributed certain intellectual property to a U.S. subsidiary, substantially reducing the benefit 
of these tax incentives going forward. 

Unrecognized tax benefits were $1.7 billion and $217 million at September 29, 2019 and September 30, 2018, 

respectively. The increase in unrecognized tax benefits in fiscal 2019 was primarily due to our plan to apply for a refund of 
Korean withholding tax (which had an insignificant impact to our income tax provision) as a result of recent court rulings in 
Korea, among other factors. If successful, the refund will result in a corresponding reduction in U.S. foreign tax credits. We 
are subject to income taxes in the United States and numerous foreign jurisdictions and are currently under examination by 
various tax authorities worldwide, primarily related to transfer pricing. These examinations are at various stages with respect 
to assessments, 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. As of September 29, 2019, we believe that adequate amounts have been reserved for based on facts 
known. However, the final determination of tax audits and any related legal proceedings could materially differ from amounts 
reflected in our income tax provision and the related accruals. 

Segment Results

The following should be read in conjunction with the fiscal 2019, 2018 and 2017 results of operations for each reportable 

segment included in this Annual Report in “Notes to Consolidated Financial Statements, Note 8. Segment Information.”

QCT Segment (in millions, except percentages)

Revenues

Equipment and services

Licensing

Total revenues

EBT (1)

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

$

$

$

14,318

321

14,639

2,143

$

$

$

17,060

222

17,282

2,966

$

$

$

16,315

164

16,479

2,747

$

$

$

(2,742)

99

(2,643)

(823)

$

$

$

745

58

803

219

EBT as a % of revenues

15%

17%

17%

(2%)

—%

(1)  Earnings (loss) before taxes.

 Beginning in fiscal 2019, we combined our Small Cells business, which sells products designed for the implementation 

of small cells to address the challenge of meeting the increased demand for mobile data, into our QCT segment. Revenues and 
operating results related to the Small Cells business were included in nonreportable segments through the end of fiscal 2018. 
Prior period segment information has not been adjusted to conform to the new segment presentation as such adjustments are 
insignificant. 

Equipment and services revenues mostly relate to sales of Mobile Station Modem (MSM™), Radio Frequency (RF), 
Power Management (PM) and wireless connectivity integrated circuits. MSM integrated circuits include our stand-alone 
Mobile Data Modems and Snapdragon platforms, including processors and modems. Approximately 650 million, 855 million 
and 804 million MSM integrated circuits were sold during fiscal 2019, 2018 and 2017, respectively.

48

2019 vs. 2018
The decrease in QCT equipment and services revenues was primarily due to:

- 

- 

$2.7 billion in lower MSM and accompanying unit shipments, primarily driven by lower modem sales to Apple and a 
decline in demand from OEMs in China
$515 million in lower connectivity product revenues, primarily driven by a decline in demand for Wi-Fi and 
Bluetooth products from OEMs in China

+  $552 million in higher revenues per MSM and accompanying unit shipment, primarily driven by a favorable shift in 

mix related to our premium-tier products

QCT EBT as a percentage of revenues decreased in fiscal 2019 primarily due to:

lower QCT revenues

- 
+  decrease in operating expenses, primarily driven by a decrease in the amount of research and development expense 

allocated to QCT in fiscal 2019 and actions under our Cost Plan

QCT accounts receivable decreased by 33% in fiscal 2019 from $1.36 billion to $908 million, primarily due to the 
decrease in revenues, as well as the impact of settling certain receivables in connection with the settlement agreements with 
Apple and its contract manufacturers. QCT inventories decreased by 17% in fiscal 2019 from $1.68 billion to $1.40 billion, 
primarily due to a decrease in the overall quantity of units on hand.

2018 vs. 2017
The increase in QCT equipment and services revenues in fiscal 2018 was primarily due to:

+  $825 million in higher RFFE product revenues primarily related to revenues from RF360 Holdings, which was 

formed in the second quarter of fiscal 2017, and reflected the impact of eliminating a one-month reporting lag in 
fiscal 2018

+  $737 million in higher MSM and accompanying unit shipments primarily driven by higher demand from OEMs in 

China, partially offset by a decline in share at Apple
$719 million decrease due to lower average selling prices and unfavorable product mix 
$83 million in lower connectivity product revenues

- 
- 

QCT EBT as a percentage of revenues remained flat in fiscal 2018 primarily due to an unchanged gross margin 

percentage, driven by the net effect of lower average selling prices and lower-margin product mix, offset by lower average unit 
costs.

QTL Segment (in millions, except percentages)

Licensing revenues

EBT

EBT as a % of revenues

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

$

$

4,591

2,954

$

$

5,042

3,404

$

$

6,412

5,142

$

$

(451)

(450)

$

$

(1,370)

(1,738)

64%

68%

80%

(4%)

(12%)

QTL results in fiscal 2019 reflected the adoption of new revenue recognition guidance that requires us to estimate and 

recognize QTL royalties in the period in which the associated sales occur, resulting in an acceleration of royalty revenues by 
one quarter as compared to prior periods. Prior period results have not been adjusted for the adoption of the new accounting 
guidance. 

As a result of the settlement with Apple and its contract manufacturers, QTL results for fiscal 2019 included royalties 
from Apple and its contract manufactures for sales made in the June 2019 and September 2019 quarters. Revenues in the first 
six months of fiscal 2019 and all of fiscal 2018 did not include royalties due on sales of Apple or other products by Apple’s 
contract manufacturers.

QTL revenues in fiscal 2019 included $450 million of royalties due under a second interim agreement with Huawei that 
concluded in the third quarter of fiscal 2019, and although negotiations continue, we have not reached a final agreement with 
Huawei. We did not record any revenues in the fourth quarter of fiscal 2019 for royalties due on the sales of Huawei’s 
products. QTL revenues in fiscal 2018 included $600 million paid under an interim agreement with Huawei for royalties due 
after the second quarter of fiscal 2017. These payments represent minimum, non-refundable amounts for royalties due and do 
not reflect the full amount of royalties due under the underlying license agreement.

We did not record any revenues in the third or fourth quarter of fiscal 2017 for royalties due on the sales of Apple or other 
products by Apple’s contract manufacturers and Huawei’s products, and Huawei underpaid royalties due in the second quarter 
of fiscal 2017, which negatively impacted QTL revenues. Royalty revenues related to the products of Apple’s contract 
manufacturers and Huawei were approximately $1.7 billion in fiscal 2017.

49

2019 vs. 2018
QTL licensing revenues in fiscal 2019, which primarily related to royalties due on sales made by our licensees in the 
December 2018, March 2019, June 2019 and September 2019 quarters, decreased compared to licensing revenues in fiscal 
2018, which primarily related to royalties due on sales made by our licensees in the September 2017, December 2017, March 
2018 and June 2018 quarters, primarily due to:

- 

$757 million in lower estimated revenues per unit compared to revenues per reported unit, in part reflecting licensees 
entering into new 5G multimode license agreements with rights to our cellular standard-essential patents only 
(compared to previous licenses which also included rights to certain other non-cellular essential patents), and 
decreases in our per unit royalty caps
$150 million in lower royalty revenues from Huawei under the interim agreements

- 
+  $484 million increase in estimated sales of 3G/4G/5G-based products (including multimode products) compared to 

reported sales of 3G/4G-based products, primarily due to the new license agreement with Apple, partially offset by a 
decline in unit demand and a shift in OEM share towards Huawei

QTL EBT as a percentage of revenues decreased in fiscal 2019 primarily due to:

- 

- 
+ 

higher research and development costs due to an increase in the amount of research and development expense 
allocated to QTL in fiscal 2019
lower QTL revenues
lower selling, general and administrative expenses, primarily from lower litigation costs and lower bad debt expense 

QTL accounts receivable increased by 5% in fiscal 2019 from $1.47 billion to $1.54 billion, primarily due to the adoption 

of the new revenue recognition guidance, partially offset by the impact of settling approximately $960 million of receivables 
that were related to the short payment in the second quarter of fiscal 2017 of royalties due from Apple’s contract 
manufacturers in connection with the settlement agreements with Apple and its contract manufacturers.

2018 vs. 2017
Excluding the impact of the prior dispute with Apple and its contract manufacturers, as well as the dispute with Huawei, QTL 
licensing revenues in fiscal 2018 further decreased primarily due to:

- 

$177 million in lower royalty revenues recognized related to devices sold in prior periods from certain other licensees

QTL EBT as a percentage of revenue decreased in fiscal 2018 primarily due to:

- 
- 

higher selling, general and administrative expenses resulting primarily from higher litigation costs
lower QTL revenues

QSI Segment (in millions)

Equipment and services revenues

EBT

$

$

152

344

$

$

100

24

$

$

113

65

$

$

52

320

$

$

(13)

(41)

2019

2018

2017

2019 vs. 2018
Change

2018 vs. 2017
Change

2019 vs. 2018
The increase in QSI EBT in fiscal 2019 was primarily due to:

+   $270 million increase in net gains on investments, primarily driven by gains resulting from the initial public offering 

of certain non-marketable equity investments

+  $91 million increase resulting from higher revenues and lower costs associated with certain development contracts 

with an equity method investee

-   $41 million increase in impairment losses on investments, primarily related to an equity method investee

QSI segment assets, which primarily consist of marketable and non-marketable equity investments, increased by 34% in 

fiscal 2019 from $1.28 billion to $1.71 billion, primarily due to recording certain non-marketable equity investments at fair 
value upon becoming publicly traded and acquiring non-marketable equity investments.

2018 vs. 2017
The decrease in QSI EBT in fiscal 2018 was primarily due to:
-   $14 million decrease in net gains on investments
-   $14 million increase in our share of losses in equity method investments
-   $13 million decrease resulting from lower revenues from certain development contracts with one of our equity 

method investees

Looking Forward

In the coming years, we expect consumer demand for 3G/4G multimode and 4G products and services to decline as new 
consumer demand for 3G/4G/5G multimode and 5G products and services ramp around the world. We expect growth in new 
50

device categories and industries, resulting from the expanding adoption of certain technologies that are already commonly 
used in smartphones by industry segments outside traditional cellular industries, such as automotive, computing, IoT and 
networking.

As we look forward to the next several months and beyond, we expect our business to be impacted by the following key 

items:

• 

In May 2019, in United States Federal Trade Commission (FTC) v. QUALCOMM Incorporated, the court issued an 
Order ruling against us and imposing certain injunctive relief. We disagree with the court’s conclusions, 
interpretation of the facts and application of the law. Accordingly, we filed a motion to stay certain of the remedies 
with, and have appealed the decision to, the Ninth Circuit Court of Appeals (Ninth Circuit). In August 2019, our 
partial motion to stay was granted in its entirety by the Ninth Circuit. Regulatory authorities in certain jurisdictions 
have investigated our business practices and instituted proceedings against us, and they or other regulatory 
authorities may do so in the future. Additionally, certain of our direct and indirect customers and licensees have 
pursued, and others may in the future pursue, litigation or arbitration against us related to our business. Unfavorable 
resolutions of one or more of these matters have had and could in the future have a material adverse effect on our 
business, revenues, results of operations, financial condition and cash flows. Depending on the matter, various 
remedies that could result from an unfavorable resolution include, among others, the loss of our ability to enforce 
one or more of our patents; injunctions; monetary damages or fines or other orders to pay money; the issuance of 
orders to cease certain conduct or modify our business practices, such as requiring us to reduce our royalty rates, 
reduce the base on which our royalties are calculated, grant patent licenses to chipset manufacturers, sell chipsets to 
unlicensed OEMs or modify or renegotiate some or all of our existing license agreements; and determinations that 
some or all of our license agreements are invalid or unenforceable. These activities have required, and we expect 
that they will continue to require, the investment of significant management time and attention and have resulted, 
and we expect that they will continue to result, in increased legal costs until the respective matters are resolved. See 
“Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies” and “Part I, Item 1A. Risk 
Factors” included in this Annual Report, including the Risk Factors entitled “Efforts by some communications 
equipment manufacturers or their customers to avoid paying fair and reasonable royalties for the use of our 
intellectual property may require the investment of substantial management time and financial resources and may 
result in legal decisions or actions by governments, courts, regulators or agencies, Standards Development 
Organizations (SDOs) or other industry organizations that harm our business,” “Our business, particularly our 
licensing business, may suffer as a result of adverse rulings in government investigations or proceedings” and 
“Changes in our patent licensing practices, whether due to governmental investigations or private legal proceedings 
challenging those practices, or otherwise, could adversely impact our business and results of operations.”

• 

In fiscal 2019, we entered into a second interim agreement with Huawei under which we recognized $450 million of 
royalty revenues in fiscal 2019. These payments do not reflect the full amount of royalties due under the underlying 
license agreement. The second interim agreement concluded in the third quarter of fiscal 2019, and although 
negotiations continue, we have not reached a final agreement with Huawei. We did not record any revenues in the 
fourth quarter of fiscal 2019 for royalties due on the sales of Huawei’s products. If no agreement is reached, Huawei 
may not make any other payments or may not make full payments due under the underlying license agreement, 
which may result in significant legal costs and will negatively impact our future revenues, as well as our financial 
condition, results of operations and cash flows, until the dispute is resolved. 

•  We expect our business, particularly QCT, to continue to be impacted by industry dynamics, including:

• 

Increased concentration of device share among a few companies, particularly within the premium tier, 
resulting in significant supply chain leverage for those companies, and exacerbating the negative impact to 
our business and financial results to the extent those companies do not utilize our chipsets. For example, 
Huawei has taken, and we believe will continue to take, share in China from other Chinese OEMs, 
negatively impacting QCT as we sell a limited number of chipsets to Huawei as compared to many of those 
other OEMs, and the negative impact to our overall business of Huawei share gains at the expense of other 
Chinese OEMs may be further exacerbated if Huawei continues to not pay us royalties or does not make 
full payment due to us under its license agreement;

•  Decisions by companies to utilize their own internally-developed integrated circuit products and/or sell 

such products to others, including by selling them together with certain of their other products;

•  Decisions by certain companies to utilize our competitors’ integrated circuit products in all or a portion of 
their devices. For example, we have not been the sole supplier of modems for iPhone products beginning 

51

with products that launched in September 2016, as Apple utilizes modems from one of our competitors in a 
portion of such devices. Apple is solely using one of our competitors’ modems, rather than our modems, in 
its 2019 iPhone release. For new chipset models, QCT does not expect to begin recording revenues under 
our recently announced multi-year chipset agreement with Apple until the second half of fiscal 2020; 

Intense competition, particularly in China, as our competitors expand their product offerings and/or reduce 
the prices of their products as part of a strategy to attract new and/or retain existing customers;

Slow-down in handset demand as the industry transitions from 4G to 5G and continued reduction in 
demand in developed regions and China; 

• 

• 

•  Lengthened handset replacement cycles and consumer demand, which is increasingly driven by new 

product launches and/or innovation cycles; and

•  Continued growth of device share by Chinese OEMs in China and in regions outside of China.

•  Current U.S./China trade relations and/or national security protection policies may negatively impact our business, 

growth prospects and results of operations.

• 

Initial commercial 5G network deployments and device launches have begun and will continue into fiscal 2020 and 
beyond. We believe that 5G technologies will empower a new era of smartphones and connected devices. We also 
believe that 5G will drive transformation across industries beyond traditional cellular communications that will 
create new business models and new services. We believe it is important that we remain a leader in 5G technology 
development, standardization, intellectual property creation and licensing of 5G technologies, and to be a leading 
developer and supplier of 5G integrated circuit products in order to sustain and grow our business long term.

•  We continue to invest significant resources to develop our wireless baseband chipsets, and our converged 

computing/communications (Snapdragon) chipsets, which incorporate technologies in the following areas, among 
others: advancements in 4G and 5G, OFDM-based Wi-Fi, RF, connectivity, power management, graphics, audio and 
video codecs, multimedia, artificial intelligence and virtual/augmented reality, and all of which contribute to the 
expansion of our intellectual property portfolio. We are also investing in targeted opportunities that leverage our 
existing technical and business expertise to deploy new business models and enter and/or expand into new industry 
segments and applications, such as products for automotive, computing, IoT (including the connected home, smart 
cities, wearables, voice and music and robotics) and networking, 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 wireless value chain and governments as to the benefits of our licensing program and our 
extensive technology investments in promoting a highly competitive and innovative wireless industry. However, we expect 
that certain companies may continue to be dissatisfied with the need to pay reasonable royalties for the use of our technology 
and not welcome the success of our licensing program in enabling new, highly cost-effective competitors to their products. 
Accordingly, such companies, and/or governments or regulators, may 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. 

52

Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from 
operations and cash provided by our debt programs. The following table presents selected financial information related to our 
liquidity as of and for the years ended September 29, 2019 and September 30, 2018 (in millions, except percentages):

2019

2018

$ Change

% Change

Cash, cash equivalents and marketable securities

$

12,296

$

12,123

$

Accounts receivable, net

Inventories

Short-term debt

Long-term debt

Net cash provided by operating activities

Net cash (used) provided by investing activities

Net cash used by financing activities

2,471

1,400

2,496

13,437

7,286

(806)

(6,386)

2,904

1,693

1,005

15,365

3,908

2,381

(31,500)

173

(433)

(293)

1,491

(1,928)

3,378

(3,187)

25,114

1%

(15%)

(17%)

148%

(13%)

86%

(134%)

(80%)

The net increase in cash, cash equivalents and marketable securities was primarily due to net cash provided by operating 

activities and $414 million in proceeds from issuance of common stock, partially offset by $3.0 billion in cash dividends 
paid, $1.8 billion in payments to repurchase shares of our common stock, a $1.2 billion payment of purchase consideration 
related to RF360 Holdings, $887 million in capital expenditures, $503 million in net repayments under our commercial paper 
program and $266 million in payments of tax withholdings related to the vesting of share-based awards. The net increase in 
total cash provided by operating activities reflected the settlement with Apple and its contract manufacturers, as well as lower 
segment revenues and the impact of timing of payments of customer-related liabilities.

Our days sales outstanding, on a consolidated basis, increased to 47 days at September 29, 2019 compared to 30 days at 

September 30, 2018. The increase in days sales outstanding was primarily due to the adoption of the new revenue recognition 
guidance in fiscal 2019. The decrease in accounts receivable was primarily due to the settlement with Apple and its contract 
manufacturers and a decrease in integrated circuit shipments, partially offset by the adoption of the new revenue recognition 
guidance in fiscal 2019. The decrease in inventories was primarily due to a decrease in the overall quantity of units on hand 
to align with near-term demand.  

Debt. In May 2017, we issued an aggregate principal amount of $11.0 billion in nine tranches of unsecured floating- and 
fixed-rate notes, of which $7.0 billion remains outstanding with maturity dates in 2023 through 2047. Effective interest rates 
were between 2.70% and 4.47% at September 29, 2019. Interest is payable in arrears quarterly for the floating-rate notes and 
semi-annually for the fixed-rate notes.

In May 2015, we issued an aggregate principal amount of $10.0 billion in eight tranches of unsecured floating- and 
fixed-rate notes, of which $8.5 billion remains outstanding with maturity dates in 2020 through 2045. Effective interest rates 
were between 2.64% and 4.73% at September 29, 2019. Interest is payable in arrears quarterly for the floating-rate notes and 
semi-annually for the fixed-rate notes. 

Our Revolving Credit Facility provides for unsecured revolving facility loans, swing line loans and letters of credit in the 

aggregate amount of up to $5.0 billion, of which $530 million and $4.47 billion will expire in February 2020 and November 
2021, respectively. At September 29, 2019, no amounts were outstanding under the 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 program are used for general corporate purposes. At September 29, 2019, we had $499 million 
of commercial paper outstanding with a weighted-average net interest rate of 2.17% and weighted-average remaining days to 
maturity of 41 days.

 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 acquisitions and strategic investments, acceptable interest rates and changes in corporate income 
tax law, among other factors.

Additional information regarding our outstanding debt at September 29, 2019 is provided in this Annual Report in 

“Notes to Consolidated Financial Statements, Note 6. Debt.” 

Income Taxes. The Tax Legislation, which was signed into law during the first quarter of fiscal 2018, resulted in a $5.2 
billion charge recognized in fiscal 2018 related to the Toll Charge. After application of certain tax credits (including excess 
tax credits generated in fiscal 2019), the total cash payment is expected to be $2.5 billion. The first payment was made in 

53

January 2019. At September 29, 2019, we estimated future cash payments of $2.3 billion, payable in installments over the 
next seven years. At September 29, 2019, $209 million was included in other current liabilities, reflecting our next 
installment due in January 2020.

Additional information regarding our income taxes is provided in this Annual Report in “Notes to Consolidated Financial 

Statements, Note 3. Income Taxes.”

Capital Return Program. The following table summarizes stock repurchases, before commissions, and dividends paid 

during fiscal 2019, 2018 and 2017 (in millions, except per-share amounts):

2019

2018

2017

Stock Repurchase Program
Average Price
Paid Per Share
(1)

Amount

Shares

Dividends

Total

Per Share

Amount

Amount

95.8

$

66.18

$

1,793

$

2.48

$

2,968

$

278.8

22.8

65.41

58.87

22,569

1,342

2.38

2.20

3,466

3,252

4,761

26,035

4,594

(1)  Average Price Paid Per Share in fiscal 2018 and 2019 excludes the impact of the three accelerated share repurchase agreements (the 
ASR Agreements) executed in September 2018 and completed in September 2019. The average price per share under the ASR 
Agreements was $64.76. 

In fiscal 2018, we announced a stock repurchase program authorizing us to repurchase up to $30.0 billion of our 

common stock. In fiscal 2018, we entered into the ASR Agreements to repurchase an aggregate of $16.0 billion of our 
common stock, with 178.4 million shares initially delivered to us under the ASR Agreements and retired. The ASR 
Agreements were completed during the fourth quarter of fiscal 2019, and an additional 68.7 million shares were delivered to 
us, comprising the final delivery of shares under the ASR Agreements. In total, 247.1 million shares were delivered to us 
under the ASR Agreements. In fiscal 2019, we repurchased and retired an additional 27.1 million shares of our common stock 
for $1.8 billion, before commissions. At September 29, 2019, $7.1 billion remained authorized for repurchase under the stock 
repurchase program. Since September 29, 2019, we repurchased and retired 3.9 million shares of common stock for $300 
million.

Our stock repurchase program has significantly reduced and we expect that it will continue to reduce the amount of cash 

that we have available to fund our operations including research and development, working capital, capital expenditures, 
acquisitions, investments, dividends and other corporate purposes; and increases our exposure to adverse economic, market, 
industry and competitive conditions and developments, and other changes in our business and our industry. This stock 
repurchase program has no expiration date. However, we periodically evaluate repurchases as a means of returning capital to 
stockholders to determine when and if repurchases are in the best interests of our stockholders and may accelerate, suspend, 
delay or discontinue repurchases at any time.

On October 15, 2019, we announced a cash dividend of $0.62 per share on our common stock, payable on December 19, 
2019 to stockholders of record as of the close of business on December 5, 2019. We intend to continue to use cash dividends 
as a means of returning capital to stockholders, subject to capital availability and our view that cash dividends are in the best 
interests of our stockholders, among other factors.

Additional Capital Requirements. We believe our cash, cash equivalents and marketable securities, our expected cash 
flow generated from operations and our expected financing activities will satisfy our working and other capital requirements 
for at least the next 12 months based on our current business plans. Recent and expected working and other capital 
requirements, in addition to the above matters, also include the items described below:

•  Our purchase obligations at September 29, 2019, some of which relate to research and development activities and 
capital expenditures, totaled $2.9 billion and $286 million for fiscal 2020 and 2021, respectively, and $178 million 
thereafter. 

•  Our research and development expenditures were $5.4 billion in fiscal 2019 and $5.6 billion in fiscal 2018, and we 

expect to continue to invest heavily in research and development for new technologies, applications and services for 
voice and data communications.

•  Cash outflows for capital expenditures were $887 million in fiscal 2019 and $784 million in fiscal 2018. We expect 
to continue to incur capital expenditures in the future to support our business, including research and development 
activities. 

54

•  At September 29, 2019, $1.4 billion was accrued related to two fines imposed by the EC (based on the exchange rate 
at September 29, 2019, including related foreign currency gains and accrued interest). We have provided financial 
guarantees in lieu of cash payment to satisfy the obligations while we appeal the EU’s decisions. 

•  We expect to continue making strategic investments and acquisitions, the amounts of which could vary significantly, 
to open new opportunities for our technologies, obtain development resources, grow our patent portfolio or pursue 
new businesses.

Further, regulatory authorities in certain jurisdictions have investigated our business practices and instituted proceedings 

against us, including the lawsuit filed against us by the FTC, in which a ruling was issued in favor of the FTC in May 2019, 
and they or other regulatory authorities may do so in the future. Additionally, certain of our direct and indirect customers and 
licensees, have pursued, and others may in the future pursue, litigation or arbitration against us related to our business. 
Unfavorable resolutions of one or more of these matters have had and could in the future have a material adverse effect on 
our business, revenues, results of operations, financial condition and cash flows. See “Notes to Consolidated Financial 
Statements, Note 7. Commitments and Contingencies” and “Part I, Item 1A. Risk Factors” in this Annual Report. 

Contractual Obligations/Off-Balance Sheet Arrangements

We have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in 

the notes to our consolidated financial 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 29, 2019 (in millions):

Total

2020

2021-2022

2023-2024

Beyond
2024

No
Expiration
Date

Purchase obligations (1)

Operating lease obligations

Capital lease obligations (2)

Equity funding and financing commitments (3)

Long-term debt (4)

Other long-term liabilities (5)(6)

$

3,390

$

2,926

$

385

28

154

15,500

2,974

138

17

5

2,000

250

$

394

163

11

1

2,000

453

69

49

—

1

3,500

574

$

1

$

35

—

—

8,000

1,136

Total contractual obligations

$

22,431

$

5,336

$

3,022

$

4,193

$

9,172

$

—

—

—

147

—

561

708

(1)  Purchase obligations primarily relate to integrated circuit product inventory obligations, which 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 
purchase commitments is generally allowed but requires payment of costs incurred through the date of cancelation, and in some cases, 
incremental fees related to capacity underutilization. 

(2)  Amounts represent future minimum lease payments including interest payments. Capital lease obligations were included in other 

current liabilities and other noncurrent liabilities in the consolidated balance sheet at September 29, 2019.

(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 the future. Other long-term liabilities as presented in this table include the related current portions, as 
applicable.

(6)  Our consolidated balance sheet at September 29, 2019 included $1.6 billion in other noncurrent liabilities for uncertain tax positions, 

which primarily relate to a reduction of U.S. foreign tax credits that will occur if we are successful in our claim for a refund of Korean 
withholding tax (for which a $1.4 billion receivable was recorded at September 29, 2019). The majority of this liability will be payable 
when we receive the Korean tax refund, with the remainder payable over periods up to and including the last payment of the Toll 
Charge in January 2026. The future payments related to uncertain tax positions recorded as other noncurrent liabilities have not been 
presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.

55

Additional information regarding our financial commitments at September 29, 2019 is provided in this Annual Report in 

“Notes to Consolidated Financial Statements, Note 3. Income Taxes,” “Note 6. Debt” and “Note 7. Commitments and 
Contingencies.”

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in 
the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues 
and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical and anticipated results 
and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions 
as to future events. By their nature, estimates are subject to an inherent degree of uncertainty. Although we believe that our 
estimates and the assumptions supporting our assessments are reasonable, actual results that differ from our estimates could 
be material to our consolidated financial statements. A summary of our significant accounting policies is included in this 
Annual Report in “Notes to Consolidated Financial Statements, Note 1. Significant Accounting Policies.” We consider the 
following accounting estimates to be critical in the preparation of our consolidated financial statements.

Revenue Recognition. We derive revenues principally from sales of integrated circuit products and licensing of our 
intellectual property. We grant licenses or otherwise provide rights to use portions of our intellectual property portfolio, 
which, among other rights, includes certain patent rights essential to and/or useful in the manufacture, sale or use of certain 
wireless products. Licensees pay royalties based on their sales of products incorporating or using our licensed intellectual 
property and may also pay a fixed license fee in one or more installments. Sales-based 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). We broadly provide per unit royalty caps that apply to 
certain categories of complete wireless devices, namely smartphones, tablets, laptops and smartwatches, and provide for a 
maximum royalty amount payable per device. We estimate and recognize sales-based royalties on such licensed products in 
the period in which the associated sales occur, subject to certain constraints on our ability to estimate such royalties. Our 
estimates of sales-based royalties are based largely on an assessment of the volume of devices supplied into the market that 
incorporate or use our licensed intellectual property. We estimate sales-based royalties taking into consideration the mix of 
such sales on a licensee-by-licensee basis, as well as the licensees’ average wholesale prices of such products, and consider 
all information (historical, current and forecasted, which may include certain estimates from licensees) that is reasonably 
available to us. We also consider in our estimates of sales-based royalties any changes in pricing we plan or expect to make. 
Our 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. As a result of recognizing revenues in the period in which the licensees’ 
sales occur using estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new 
information becomes available, primarily resulting from actual amounts reported by our licensees.  

From time to time, regulatory authorities investigate our business practices, particularly with respect to our licensing 

business, and institute proceedings against us. Depending on the matter, various remedies that could result from an 
unfavorable resolution include, among others, the loss of our ability to enforce one or more of our patents; injunctions; 
monetary damages or fines or other orders to pay money; the issuance of orders to cease certain conduct or modify our 
business practices, such as requiring us to reduce our royalty rates, reduce the base on which our royalties are calculated, 
grant patent licenses to chipset manufacturers, sell chipsets to unlicensed OEMs or modify or renegotiate some or all of our 
existing license agreements; and determinations that some or all of our license agreements are invalid or unenforceable. 
Additionally, from time to time, companies initiate various strategies in an attempt to negotiate, renegotiate, reduce and/or 
eliminate their need to pay royalties to us for the use of our intellectual property, which may include disputing, 
underreporting, underpaying, not reporting and/or not paying royalties owed to us under their license agreements with us, or 
reporting to us in a manner that is not in compliance with their contractual obligations. In such cases, we estimate and 
recognize licensing revenues only when we have a contract, as defined in the revenue recognition guidance, and to the extent 
it is probable that a significant reversal of cumulative revenues recognized will not occur, both of which may require 
significant judgment. We analyze the risk of a significant revenue reversal considering both the likelihood and magnitude of 
the reversal and, if necessary, constrain the amount of estimated revenues recognized in order to mitigate this risk, which may 
result in recognizing revenues less than amounts contractually owed to us.  

In May 2019, in United States Federal Trade Commission (FTC) v. QUALCOMM Incorporated, the court issued an 
Order ruling against us and imposing certain injunctive relief (see “Notes to Consolidated Financial Statements, Note 7. 
Commitments and Contingencies”). In August 2019, the U.S. Court of Appeals for the Ninth Circuit granted in its entirety 
Qualcomm’s request for a partial stay of the injunction. While we believe that our business practices do not violate either 
antitrust law or our FRAND (fair, reasonable and non-discriminatory) licensing commitments, significant evaluation and 
judgment were required in determining the impact of such ruling on the amount of licensing revenues estimated and 

56

 
recognized in fiscal 2019. This included, among other items: (i) evaluating whether our license agreements remain valid and 
enforceable, (ii) evaluating licensees’ conduct and whether they remain committed to perform their respective obligations and 
(iii) determining the expected impact, if any, to revenues of any license agreements that may be renegotiated and/or are newly 
entered into. Based on this evaluation, the impact of the ruling was not material to QTL licensing revenues in fiscal 2019 
based on facts and factors currently known by us. As new information becomes available, we may be required to make 
adjustments to revenues in subsequent periods to reflect changes in estimates and/or this matter could have a material adverse 
effect on our ability to recognize future licensing revenues.  

Impairment of Other Investments. We hold investments in non-marketable equity instruments in privately held 
companies, including those accounted for under the equity method. Non-marketable equity instruments do not have readily 
determinable fair values and are accounted for under the equity method or based on initial cost minus impairment, if any, plus 
or minus adjustments resulting from observable price changes in orderly transactions for identical or similar securities. Many 
of these investments are in early-stage companies, which are inherently risky because the markets for the technologies or 
products of these companies are uncertain and may never develop. We monitor our investments for events or circumstances 
that could indicate the investments are impaired, such as a deterioration in the investee’s financial condition and business 
forecasts and lower valuations in recently completed or anticipated financings, and we record impairment losses in earnings 
when we believe an investment has experienced a decline in value (such decline in value must be considered other-than-
temporary for equity method investments).

Valuation of Inventories. Inventories are valued at the lower of cost and 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 from customers as well as purchase commitment projections provided by customers, 
among other things. This valuation also requires us to make judgments and assumptions based on information currently 
available about market conditions, including competition, product pricing, product life cycle and development plans. As we 
move to smaller geometry process technologies, the manufacturing lead-time increases, resulting in an increased reliance on 
our own forecasts of customer demand, rather than our customers’ forecasts. If we overestimate demand for our products, the 
amount of our loss will be impacted by our contractual ability to reduce inventory purchases from our suppliers. Our 
assumptions of future product demand are inherently uncertain, and changes in our estimates and assumptions may cause us 
to realize material write-downs in the future. 

Valuation of Goodwill and Other Indefinite-Lived and Long-Lived Assets. Our business combinations typically result 
in the recording of goodwill, other intangible assets and/or property, plant and equipment, and the recorded values of those 
assets may become impaired in the future. We also acquire intangible assets and property, plant and equipment in other types 
of transactions. The determination of the recorded value of intangible assets acquired in a business combination requires 
management to make estimates and assumptions that affect our consolidated financial statements. For intangible assets 
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 clearly evident) are used to establish their recorded values, unless the values of neither the assets 
received nor the assets transferred are determinable within reasonable limits, in which case the assets received are measured 
based on the carrying values of the assets transferred. Valuation techniques consistent with the market approach, income 
approach and/or cost approach are used to measure fair value. An estimate of fair value can be affected by many assumptions 
that require significant judgment. For example, the income approach generally requires us to use assumptions to estimate 
future cash flows including those related to total addressable market, pricing and share forecasts, competition, technology 
obsolescence, future tax rates and discount rates. Our estimate of the fair value of certain assets may differ materially from 
that determined 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 events 

or changes in circumstances indicate that the assets may be impaired. Long-lived assets, such as property, plant and 
equipment and intangible assets subject to amortization, are reviewed for impairment when events or changes in 
circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Our judgments regarding 
the existence of impairment indicators and future cash flows related to goodwill and other indefinite-lived intangible assets 
and long-lived assets may be based on operational performance of our businesses, market conditions, expected selling price 
and/or other factors. Although there are inherent uncertainties in this assessment process, the estimates and assumptions we 
use, including estimates of future cash flows and discount rates, are consistent with our internal planning, when appropriate. 
If these estimates or their related assumptions change in the future, we may be required to record an impairment charge on a 
portion 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, and that goodwill or other long-lived assets 
associated with our acquired businesses are impaired. Any resulting impairment loss could have an adverse impact on our 

57

 
financial condition and results of operations. During fiscal 2019, 2018 and 2017, we recorded $203 million, $273 million and 
$76 million, respectively, in impairment charges for goodwill, other indefinite-lived intangible assets and long-lived assets. 
The estimated fair values of our QCT and QTL reporting units were substantially in excess of their respective carrying values 
at September 29, 2019. 

Legal and Regulatory Proceedings. We are currently involved in certain legal and regulatory proceedings, and we intend 

to continue to vigorously defend ourselves. Litigation and investigations are inherently uncertain, and we face difficulties in 
evaluating or estimating likely outcomes or ranges of possible loss in antitrust and trade regulation investigations in 
particular. Investigations by antitrust and trade regulation agencies are not conducted in a consistent manner across 
jurisdictions. Further, each country and agency has different sets of laws, rules and regulations, both substantive and 
procedural, as well as different legal principles, theories and potential remedies, and some agencies may seek to use the 
investigation to advance domestic policy goals. Depending on the jurisdiction, these investigations can involve non-
transparent procedures under which we may not receive access to evidence relied upon by the enforcement agency or that 
may be exculpatory and may not be informed of the specific legal theories or evidence considered or relied upon by the 
agency. Unlike in civil litigation in the United States, in foreign proceedings, we may not be entitled to discovery or 
depositions, allowed to cross-examine witnesses or confront our accusers. As a result, we may not be aware of, and may not 
be entitled to know, all allegations against us, or the information or documents provided to, or discovered or prepared by, the 
agency. Accordingly, we may have little or no idea what an agency’s intent is with respect to liability, penalties or the timing 
of a decision. In many cases the agencies are given significant discretion, and any available precedent may have limited, if 
any, predictive value in their jurisdictions, much less in other jurisdictions. Accordingly, we cannot predict the outcome of 
these matters. 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 potentially available. These remedies may 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 to modify our business practices. 

If there is at least a reasonable possibility that a material loss may have been incurred associated with pending legal and 

regulatory proceedings, we disclose such fact, and if reasonably estimable, we provide an estimate of the possible loss or 
range of possible loss. We record our best estimate of a loss related to pending legal and regulatory proceedings when the loss 
is considered probable and the amount can be reasonably estimated. Where a range of loss can be reasonably estimated with 
no best estimate in the range, we record the minimum estimated liability. As additional information becomes available, we 
assess the potential liability related to pending legal and regulatory proceedings and revise our estimates and update our 
disclosures accordingly. Significant judgment is required in both the determination of probability and the determination as to 
whether 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 positions involves dealing with uncertainties in the application of complex tax laws and 
regulations in various taxing jurisdictions. In addition, the application of tax laws and regulations is subject to legal and 
factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of 
changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Significant judgments and 
estimates are required in determining our provision for income taxes, including those related to special deductions such as 
FDII (foreign-derived intangible income), tax incentives, intercompany research and development cost-sharing arrangements, 
transfer pricing, tax credits and the realizability of deferred tax assets. While we believe we have appropriate support for the 
positions we have taken or that we plan to take on our tax returns, we regularly assess the potential outcomes of examinations 
by taxing authorities in determining the adequacy of our provision for income taxes. Therefore, the actual liability for U.S. or 
foreign taxes may be materially different from our estimates, which could result in the need to record additional tax liabilities 
or potentially reverse previously recorded tax liabilities. We are participating in the Internal Revenue Service (IRS) 
Compliance Assurance Process program whereby we endeavor to agree with the IRS on the treatment of all issues 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.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements and the impact of those pronouncements, if any, on our 
consolidated financial statements is provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 1. 
Significant Accounting Policies.”

58

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Marketable Securities

We have made investments in marketable equity securities of companies of varying size, style, industry and geography 
and changes in investment allocations may affect the price volatility of our investments. On July 26, 2018, we announced that 
we had been authorized to repurchase up to $30 billion of our common stock. The actions taken pursuant to our stock 
repurchase program have significantly reduced the amount of cash available to fund our investments in marketable securities. 

Equity Price Risk. At September 29, 2019, the recorded value of our marketable equity securities was $418 million. A 
10% decrease in the market price of our marketable equity securities at September 29, 2019 would have caused a decrease in 
the carrying amounts of these securities of $42 million. A 10% decrease in the market price of our marketable equity 
securities at September 30, 2018 would have caused a decrease in the carrying amounts of these securities of $17 million.

Interest Rate Risk. We invest a portion of our cash in a number of diversified fixed- and floating-rate securities 

consisting of cash equivalents, marketable debt securities and demand deposits that are subject to interest rate risk. Changes 
in the general level of interest rates can affect the fair value of our investment 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 our marketable securities 
portfolio and changes in portfolio allocation, the fair value of our investment portfolio is subject to lower interest rate risk. At 
September 29, 2019 and September 30, 2018, a hypothetical increase in interest rates of 100 basis points across the entire 
yield curve on our holdings would have resulted in a negligible decrease in the fair value of our holdings. 

Other Investments

Equity 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 investments through initial public offerings, mergers and private sales. 
Consequently, we could incur impairment losses or realized losses on all or a part of the values of our non-marketable equity 
investments. At September 29, 2019, the aggregate carrying value of our non-marketable equity investments was included in 
other noncurrent assets and was $1.1 billion.

Debt and Interest Rate Swap Agreements

Interest Rate Risk. At September 29, 2019, we have an aggregate principal amount of $15.5 billion of unsecured 
floating- and fixed-rate notes with varying maturity dates. We have also entered into interest rate swaps with an aggregate 
notional amount of $1.8 billion to effectively convert certain fixed-rate interest payments into floating-rate payments. The 
interest rates on our floating-rate notes and interest rate swaps are based on LIBOR. At September 29, 2019, a hypothetical 
increase in LIBOR-based interest rates of 100 basis points would cause our interest expense to increase by $18 million on an 
annualized basis as it relates to our floating-rate notes and interest rate swap agreements. At September 30, 2018, a 
hypothetical increase in LIBOR-based interest rates of 100 basis points would have caused our interest expense to increase by 
$22 million 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 29, 2019, we had $499 million of commercial paper outstanding, with original maturities of less than 
three 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. Significant Accounting Policies” and 
“Notes to Consolidated Financial Statements, Note 6. Debt.”

Foreign Exchange Risk 

We manage our exposure to foreign exchange market risks, when deemed appropriate, through the use of derivative 
financial instruments, including foreign currency forward and option contracts with financial counterparties. We utilize such 
derivative financial instruments for hedging or risk management purposes rather than for speculative purposes. 
Counterparties to our derivative contracts are all major banking institutions. In the event of the financial insolvency or 
distress of a counterparty to our derivative financial instruments, we may be unable to settle transactions if the counterparty 
does not provide us with sufficient collateral to secure its net settlement obligations to us, which could have a negative impact 
on our results. A description of our foreign currency accounting policies is provided in this Annual Report in “Notes to 
Consolidated Financial Statements, Note 1. Significant Accounting Policies.”

59

Foreign Currency Options. At September 29, 2019, our net asset related to foreign currency options designated as 
hedges of foreign currency risk on royalties earned from certain licensees was negligible. If our forecasted royalty revenues 
for currencies in which we hedge were to decline by 20% and foreign exchange rates were to change unfavorably by 20% in 
our hedged foreign currency, we would not incur a loss as our hedge positions would continue to be fully effective. Based on 
forecasts at September 30, 2018, assuming the same hypothetical market conditions, we would also not have incurred a loss.

Foreign Currency Forwards. At September 29, 2019, our net asset related to foreign currency forward contracts 
designated as hedges of foreign currency risk on certain operating expenditure transactions was negligible. If our forecasted 
operating expenditures for currencies in which we hedge were to decline by 20% and foreign exchange rates were to change 
unfavorably by 20% in our hedged foreign currency, we would incur a negligible loss. Based on forecasts at September 30, 
2018, assuming the same hypothetical market conditions, a negligible loss would also have been incurred.

At September 29, 2019, our net asset related to foreign currency forward contracts not designated as hedging instruments 

used to manage foreign currency risk on certain receivables and payables was negligible. If the foreign exchange rates were 
to change unfavorably by 20% in our hedged foreign currency, 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 value of the related receivables and/or 
payables being economically hedged. Based on forecasts at September 30, 2018, assuming the same hypothetical market 
conditions, we would also not have incurred a loss.

Net Investment Hedges. At September 29, 2019, we have designated $1.4 billion of foreign currency-denominated 

liabilities as hedges of our net investment in certain foreign subsidiaries. If foreign exchange rates were to change 
unfavorably by 10% in our hedged foreign currency, there would be an increase of $136 million in the accumulated other 
comprehensive loss attributable to the cumulative translation adjustment at September 29, 2019 related to our net investment 
hedges. The change in value recorded in cumulative translation adjustment would be expected to offset a corresponding 
foreign currency translation gain or loss from our investment in foreign subsidiaries.

Functional Currency. Financial assets and liabilities held by consolidated subsidiaries that are not denominated in the 

functional currency of those entities are subject to the effects of currency fluctuations and may affect reported earnings. As a 
global company, we face exposure to adverse movements in foreign currency exchange rates. We may hedge currency 
exposures associated with certain assets and liabilities denominated in nonfunctional currencies and certain anticipated 
nonfunctional currency transactions. As a result, we could experience unanticipated gains or losses on anticipated foreign 
currency cash flows, as well as economic loss with respect to the recoverability of investments. While we may hedge certain 
transactions with non-U.S. customers, declines in currency values in certain regions may, if not reversed, adversely affect 
future product sales because our products may become more expensive to purchase in the countries of the affected currencies.

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 Data

Our consolidated financial statements at September 29, 2019 and September 30, 2018 and for each of the three years in 

the period ended September 29, 2019 and 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 Disclosure

None.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and our 
principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such terms are defined 
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this 
evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and 
procedures were effective as of the end of the period covered by this Annual Report.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as 
such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, 
including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness 
of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) 

60

issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under this 
framework, our management concluded that our internal control over financial reporting was effective as of September 29, 
2019.

PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited our consolidated financial 

statements included in this Annual Report, has also audited the effectiveness of our internal control over financial reporting as 
of September 29, 2019, as stated in its report which appears on pages F-1 through F-4 in this Annual Report.

Inherent Limitations over Internal Controls

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of 

financial reporting and the preparation of consolidated financial statements for external purposes in accordance with 
generally accepted accounting principles. Our internal control over financial reporting includes 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 with generally accepted accounting principles, and that our receipts and 
expenditures are being made only in accordance with authorizations of our management and directors; and

iii.  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or 

disposition of our assets that could have a material 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 not prevent or detect material misstatements on a timely 
basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may 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 Reporting

There were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2019 that have 

materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

61

Part III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item regarding directors is incorporated by reference to our 2020 Proxy Statement to be 

filed with the SEC in connection with our 2020 Annual Meeting of Stockholders (2020 Proxy Statement) in “Proposal 1: 
Election of Directors” under the heading “Nominees for Election.” Certain information required by this item regarding 
executive officers is set forth in Item 1 of Part I of this Report under the heading “Executive Officers.” The information 
required by this item regarding corporate governance is incorporated by reference to our 2020 Proxy Statement in the section 
titled “Corporate Governance” under the headings “Code of Ethics and Corporate Governance Principles and Practices,” 
“Board Meetings, Committees and Attendance” and “Director Nominations.”

Item 11. Executive Compensation

The information required by this item is incorporated by reference to our 2020 Proxy Statement in the sections titled 

“HR and Compensation Committee Report,” “Executive Compensation and Related Information” and “Director 
Compensation,” and in the section titled “Stock Ownership of Certain Beneficial Owners and Management” under the 
heading “Compensation Committee Interlocks and Insider Participation.” 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference to our 2020 Proxy Statement in the section titled 

“Stock Ownership of Certain Beneficial Owners and Management,” and in “Proposal 3” under the heading “Equity 
Compensation Plan Information.” 

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference to our 2020 Proxy Statement in the section titled 
“Certain Relationships and Related-Person Transactions,” and in the section titled “Corporate Governance” under the heading 
“Director Independence.” 

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated by reference to our 2020 Proxy Statement in “Proposal 2: 

Ratification of Selection of Independent Public Accountants.”

PART IV

Item 15. Exhibits and Financial Statement Schedules

The following documents are filed as part of this report:

(a) Financial Statements:

(1) Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at September 29, 2019 and September 30, 2018
Consolidated Statements of Operations for Fiscal 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income (Loss) for Fiscal 2019, 2018 and 2017
Consolidated Statements of Cash Flows for Fiscal 2019, 2018 and 2017
Consolidated Statements of Stockholders’ Equity for Fiscal 2019, 2018 and 2017
Notes to Consolidated Financial Statements

(2) Schedule II - Valuation and Qualifying Accounts for Fiscal 2019, 2018 and 2017

Page

Number
F-1
F-5
F-6
F-7
F-8
F-9
F-10
S-1

Financial statement schedules other than those listed above have been omitted because they are either not required, not 

applicable or the information is otherwise included in the notes to the consolidated financial statements.

(b) Exhibits

62

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 
Number
2.1

2.2

2.3

2.4

  Exhibit Description

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 
Group member, and, solely for purposes of Section 10.9 
thereof, QUALCOMM Incorporated. (1)

Amendment #1, dated December 20, 2016, 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 
Group member, and, solely for purposes of Section 10.9 
thereof, QUALCOMM Incorporated. (1)

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 
Group member, and, solely for purposes of Section 10.9 
thereof, QUALCOMM Incorporated. (1)

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 
Group member, and, solely for purposes of Section 10.9 
thereof, QUALCOMM Incorporated. (1)

3.1

  Amended and Restated Certificate of Incorporation.

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

  Amended and Restated Bylaws.

Indenture, dated May 20, 2015, between the Company and 
U.S. Bank National Association, as trustee. 

Officers’ Certificate, dated May 20, 2015, for the Floating 
Rate Notes due 2018, the Floating Rate Notes due 2020, 
the 1.400% Notes due 2018, the 2.250% Notes due 2020, 
the 3.000% Notes due 2022, the 3.450% Notes due 2025, 
the 4.650% Notes due 2035 and the 4.800% Notes due 
2045. 

Form of Floating Rate Notes due 2020. 

Form of 2.250% Notes due 2020. 

Form of 3.000% Notes due 2022. 

Form of 3.450% Notes due 2025. 

Form of 4.650% Notes due 2035. 

Form of 4.800% Notes due 2045. 

Officers’ Certificate, dated May 26, 2017, for the Floating 
Rate Notes due 2019, 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% Notes due 
2023, the 2.900% Notes due 2024, the 3.250% Notes due 
2027 and the 4.300% Notes due 2047. 

4.10

Form of Floating Rate Notes due 2023.

4.11

Form of 2.600% Notes due 2023.

4.12

Form of 2.900% Notes due 2024.

4.13

Form of 3.250% Notes due 2027.

63

Form

8-K

Date of
First Filing
1/13/2016

Exhibit
Number
2.1

Filed
Herewith

10-Q

1/25/2017

2.3

10-Q

1/25/2017

2.4

10-Q

4/19/2017

2.6

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

8-K

4/20/2018

7/17/2018

5/21/2015

5/21/2015

5/21/2015

5/21/2015

5/21/2015

5/21/2015

5/21/2015

3.1

3.1

4.1

4.2

4.4

4.6

4.7

4.8

4.9

5/21/2015

4.10

5/31/2017

4.2

5/31/2017

5/31/2017

5/31/2017

4.5

4.8

4.9

5/31/2017

4.10

Exhibit 
Number
4.14

  Exhibit Description

Form of 4.300% Notes due 2047.

4.15

Description of the Company’s securities.

10.1

10.2

10.3

10.4

10.5

Form of Indemnity Agreement between the Company and 
its directors and officers. (2)

Form of Grant Notice and Stock Option Agreement under 
the 2006 Long-Term Incentive Plan. (2)

Form of Grant Notices and Global Employee Restricted 
Stock Unit Agreement under the 2006 Long-Term 
Incentive Plan. (2)

2006 Long-Term Incentive Plan, as amended and restated. 
(2)

Form of Grant Notices and Non-Employee Director 
Deferred Stock Unit Agreements under the 2006 Long-
Term Incentive Plan for non-employee directors residing in 
the United States and Spain. (2)

10.6

Amendment to 2006 Long-Term Incentive Plan, as 
amended and restated. (2)

10.7

2016 Long-Term Incentive Plan. (2)

Form of Non-Employee Director Deferred Stock Unit 
Grant Notices and Non-Employee Director Deferred Stock 
Unit Agreements under the 2016 Long-Term Incentive 
Plan for non-employee directors residing in the United 
States. (2)

Form of Non-Employee Director Deferred Stock Unit 
Grant Notices and Non-Employee Director Deferred Stock 
Unit Agreements under the 2016 Long-Term Incentive 
Plan for non-employee directors residing in Spain. (2)

Form of Non-Employee Director Deferred Stock Unit 
Grant Notices and Non-Employee Director Deferred Stock 
Unit Agreements under the 2016 Long-Term Incentive 
Plan for non-employee directors residing in Singapore. (2)

Form of Executive Restricted Stock Unit Grant Notice and 
Executive Restricted Stock Unit Agreement under the 2016 
Long-Term Incentive Plan. (2)

Form of Executive Performance Stock Unit Award Grant 
Notice and Executive Performance Stock Unit Award 
Agreement under the 2016 Long-Term Incentive Plan. (2)

Amended and Restated Credit Agreement among 
QUALCOMM Incorporated, the lenders party thereto and 
Bank of America, N.A., as Administrative Agent, dated as 
of November 8, 2016.

Form of Executive Performance Stock Unit Award Grant 
Notice and Executive 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)

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

Form

8-K

10-K

10-K

10-K

10-Q

10-K

10-Q

DEF
14A
10-Q

Date of
First Filing
5/31/2017

Exhibit
Number
4.11

Filed
Herewith

X

11/4/2015

10.1

11/5/2009

10.84

11/7/2012

10.105

4/24/2013

10.112

11/6/2013

10.119

1/28/2015

10.126

1/21/2016

4/20/2016

Appendix
5
10.32

10-Q

4/20/2016

10.33

10-Q

4/20/2016

10.34

10-K

10-K

8-K

10-K

11/2/2016

10.36

11/2/2016

10.37

11/9/2016

10.2

11/1/2017

10.40

Amendment to the Qualcomm Incorporated 2006 and 2016 
Long-Term Incentive Plans, as amended and restated. (2)

8-K

Qualcomm Incorporated Non-Executive Officer Change in 
Control Severance Plan.

10-Q

12/22/2017

10.2

1/31/2018

10.42

64

Exhibit 
Number
10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

  Exhibit Description

Form of 2016 Long-Term Incentive Plan Non-Employee 
Director Deferred Stock Unit Grant Notice and Non-
Employee Director Deferred Stock Unit Agreement for 
Non-Employee Directors in Singapore. (2)

Form of 2016 Long-Term Incentive Plan Non-Employee 
Director Deferred Stock Unit Grant Notice and Non-
Employee Director Deferred Stock Unit Agreement for 
Non-Employee Directors in Spain. (2)

Form of 2016 Long-Term Incentive Plan Non-Employee 
Director Deferred Stock Unit Grant Notice and Non-
Employee Director Deferred Stock Unit Agreement. (2) 

Form

10-Q

10-Q

10-Q

Amended and Restated QUALCOMM Incorporated 2001 
Employee Stock Purchase Plan, as amended. (2)

10-Q

8-K

8-K

10-K

10-K

10-K

10-K

10-Q

10-Q

Qualcomm Incorporated Executive Officer Change in 
Control Severance Plan. (2)

Qualcomm Incorporated Executive Officer Severance 
Plan. (2)

Qualcomm Incorporated 2019 Director Compensation 
Plan. (2)
Qualcomm Incorporated 2016 Long-Term Incentive Plan 
CEO Performance Stock Option Grant Notice and CEO 
Performance Stock Option Agreement. (2)

Form of Qualcomm Incorporated 2016 Long-Term 
Incentive Plan Executive Performance Stock Unit Award 
Grant Notice and Executive Performance Stock Unit 
Award Agreement. (2)

Form of Qualcomm Incorporated 2016 Long-Term 
Incentive Plan Executive Restricted Stock Unit Grant 
Notice and Executive Restricted Stock Unit Agreement. (2)

Form of 2019 Annual Cash Incentive Plan Performance 
Unit Agreement. (2) 

QUALCOMM Incorporated Non-Qualified Deferred 
Compensation Plan, as amended and restated effective 
February 13, 2019. (2)

Form of Qualcomm Incorporated 2016 Long-Term 
Incentive Plan Executive Performance Stock Unit Award 
RTSR Shares Grant Notice and ROIC Shares Grant Notice, 
and Qualcomm Incorporated 2016 Long-Term Incentive 
Plan Executive Performance Stock Unit Award Agreement 
(September 30, 2019 - September 25, 2022 Performance 
Period).  (2)

10.30

Qualcomm Incorporated 2020 Director Compensation 
Plan. (2)

21

23.1

31.1

31.2

32.1

Subsidiaries of the Company.

Consent of Independent Registered Public Accounting 
Firm.

  Certification pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 for Steve Mollenkopf.

  Certification pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 for Akash Palkhiwala.

  Certification pursuant to 18 U.S.C. Section 1350, as 
adopted pursuant to Section 906 of the Sarbanes-Oxley Act 
of 2002, for Steve Mollenkopf.

65

Date of
First Filing
4/25/2018

Exhibit
Number
10.58

Filed
Herewith

4/25/2018

10.59

4/25/2018

10.60

4/25/2018

10.62

5/25/2018

10.1

9/21/2018

10.1

11/7/2018

10.58

11/7/2018

10.59

11/7/2018

10.60

11/7/2018

10.61

1/30/2019

10.62

5/1/2019

10.7

X

X

X

X

X

X

X

Exhibit 
Number
32.2

  Exhibit Description

Form

  Certification pursuant to 18 U.S.C. Section 1350, as 
adopted pursuant to Section 906 of the Sarbanes-Oxley Act 
of 2002, for Akash Palkhiwala.

Date of
First Filing

Exhibit
Number

Filed
Herewith
X

101.INS   Inline XBRL Instance Document.
101.SCH   Inline XBRL Taxonomy Extension Schema.
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase.
101.LAB   Inline XBRL Taxonomy Extension Labels Linkbase.
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase.
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase.

104

Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101).

X
X
X
X
X
X

(1)  We 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).

Item 16. Form 10-K Summary

None.

66

Pursuant 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 behalf by the undersigned, thereunto duly authorized.

November 6, 2019

SIGNATURES

QUALCOMM Incorporated

By

/s/ Steve Mollenkopf
Steve Mollenkopf
Chief Executive Officer

67

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following 

persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature

/s/ Steve Mollenkopf
Steve Mollenkopf

Title

Chief Executive Officer and Director
(Principal Executive Officer)

/s/ Akash Palkhiwala
Akash Palkhiwala

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

/s/ Erin Polek
Erin Polek

Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)

/s/ Barbara T. Alexander
Barbara T. Alexander

/s/ Mark Fields
Mark Fields

/s/ Jeffrey W. Henderson
Jeffrey W. Henderson

/s/ Ann M. Livermore
Ann M. Livermore

/s/ Harish Manwani
Harish Manwani

/s/ Mark D. McLaughlin
Mark D. McLaughlin

/s/ Clark T. Randt, Jr.
Clark T. Randt, Jr.

/s/ Francisco Ros
Francisco Ros

/s/ Irene B. Rosenfeld
Irene B. Rosenfeld

/s/ Neil Smit
Neil Smit

/s/ Anthony J. Vinciquerra
Anthony J. Vinciquerra

Date

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

Director

Director

Director

Director

Director

Chairman

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

November 6, 2019

Director

Director

Director

Director

Director

68

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Report of Independent Registered Public Accounting Firm 

To the Board of Directors and Stockholders of QUALCOMM Incorporated:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of QUALCOMM Incorporated and its subsidiaries as of 
September 29, 2019 and September 30, 2018, and the related consolidated statements of operations, comprehensive income 
(loss), stockholders’ equity and cash flows for each of the three years in the period ended September 29, 2019, including the 
related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the 
“consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of 
September 29, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the 
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial 
position of the Company as of September 29, 2019 and September 30, 2018 and the results of their operations and their cash 
flows for each of the three years in the period ended September 29, 2019 in conformity with accounting principles generally 
accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective 
internal control over financial reporting as of September 29, 2019, based on criteria established in Internal Control - 
Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for 
revenues from contracts with customers in fiscal 2019.

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for 
income tax effects of intra-entity transfers of assets other than inventory in fiscal 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal 
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, 
included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. 
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal 
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company 
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in 
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange 
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform 
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material 
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in 
all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material 
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond 
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the 
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant 
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our 
audit of internal control over financial reporting included obtaining an understanding of internal control over financial 
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness 
of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered 
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

F-1

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 
accepted accounting principles. A company’s internal control over financial reporting includes 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 the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to 
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
expenditures of the company are being made only in accordance with authorizations of management and directors of the 
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized 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 of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial 
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or 
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, 
or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated 
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate 
opinions on the critical audit matters or on the accounts or disclosures to which they relate. 

Income Taxes

As described in Notes 1 and 3 to the consolidated financial statements, the Company is subject to income taxes in the United 
States and numerous foreign jurisdictions, and the assessment of tax positions involves dealing with uncertainties in the 
application of complex tax laws and regulations which are subject to legal and factual interpretation, judgment and 
uncertainty. The Company recorded a provision for income taxes of $3.1 billion for the year ended September 29, 2019 and 
net deferred tax assets of $1.1 billion, including a valuation allowance of $1.7 billion, a noncurrent income taxes receivable 
of $1.4 billion, and unrecognized tax benefits of $1.7 billion as of September 29, 2019. Significant judgments and estimates 
are required when determining the provision for income taxes and other tax positions, which includes the application of 
complex tax laws and regulations (including new temporary regulations and evolution of court rulings), special deductions 
such as FDII (foreign-derived intangible income), tax incentives, intercompany research and development cost-sharing 
arrangements, transfer pricing, tax credits and the realizability of deferred tax assets.  

The principal considerations for our determination that performing procedures relating to income taxes is a critical audit 
matter are the matter involved significant judgment by management when assessing complex tax laws and regulations 
(including new temporary regulations and recent court rulings) and special deductions such as FDII, transfer pricing and tax 
credits as it relates to determining the provision for income taxes and other tax positions. This led to a high degree of auditor 
judgment and significant audit effort in performing our procedures over income taxes, including the use of professionals with 
specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall 
opinion on the consolidated financial statements. The procedures included testing the effectiveness of controls relating to the 
provision of income taxes and other tax positions. The procedures also included, among others, testing the provision for 
income taxes, including the effective tax rate reconciliation, permanent and temporary differences, inspecting correspondence 
with tax regulators and external tax advisors, and testing the underlying data and evaluating the significant assumptions used 
in establishing and measuring tax-related assets and liabilities, including the application of new temporary regulations and 
recent court rulings. Professionals with specialized skill and knowledge were used to assist in evaluating the application of 
relevant tax laws, the provision for income taxes and the reasonableness of management’s assessments of whether certain tax 
positions are more-likely-than-not of being sustained.

Legal and Regulatory Proceedings

As described in Notes 1 and 7 to the consolidated financial statements, the Company is currently involved in certain legal and 
regulatory proceedings. If there is at least a reasonable possibility that a material loss may have been incurred associated with 

F-2

a pending legal and regulatory proceeding, management discloses such fact, and if reasonably estimable, management 
provides an estimate of the possible loss or range of possible loss. Management records the best estimate of a loss related to 
pending legal and regulatory proceedings when the loss is considered probable and the amount can be reasonably estimated. 
Where a range of a loss can be reasonably estimated with no best estimate in the range, management records the minimum 
estimated liability. As additional information becomes available, management assesses the potential liability related to 
pending legal or regulatory proceedings, and revises the estimates and updates the disclosures accordingly. Significant 
judgment is required by management in both the determination of probability of loss and the determination as to whether a 
loss is reasonably estimable.

The principal considerations for our determination that performing procedures relating to legal and regulatory proceedings is 
a critical audit matter are the matter involved significant judgment by management when assessing the likelihood of a loss 
being incurred and when determining whether a reasonable estimate of the loss or range of loss can be made. This led to a 
high degree of auditor judgment, subjectivity and significant audit effort in evaluating management’s assessment of the loss 
contingencies associated with the legal and regulatory proceedings.   

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall 
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to 
management’s evaluation of legal and regulatory proceedings, including controls over determining whether a loss is probable 
and whether the amount of loss can be reasonably estimated, including related financial statement disclosures. These 
procedures also included, among others: obtaining and evaluating the letters of audit inquiry with external and internal legal 
counsel, reading certain correspondence the Company received from regulators, reading certain documents the Company has 
filed with the courts and related counterparty filings, evaluating the reasonableness of management’s process for identifying 
and assessing loss contingencies regarding whether an unfavorable outcome is probable and reasonably estimable, and 
evaluating the sufficiency of the Company’s legal and regulatory proceedings disclosures in the consolidated financial 
statements. 

Revenue Recognition - Estimation of Sales-based Royalty Revenues

As described in Note 1 to the consolidated financial statements, a vast majority of the $4.6 billion of the Qualcomm 
Technology Licensing (QTL) segment’s revenues for the year ended September 29, 2019 related to sales-based royalty 
arrangements and is recognized as revenues when a contract exists and to the extent it is probable that a significant reversal of 
cumulative revenues will not occur. As disclosed in the financial statements, the Company grants licenses or otherwise 
provides rights to use portions of its intellectual property portfolio, which, among other rights, includes certain patent rights 
essential to and/or useful in the manufacture, sale or use of certain wireless products. Licensees pay royalties based on their 
sales of products incorporating or using the licensed intellectual property, which are generally based upon a percentage of the 
licensee’s selling price of complete licensed products, net of certain permissible deductions (including transportation, 
insurance, packing costs and other items). If a contract is determined to exist, management estimates and recognizes sales-
based royalties on such licensed products in the period in which the associated sales by the licensee occur, subject to certain 
constraints on management’s ability to estimate such royalties. As certain licensees have disputed, underreported, underpaid, 
not reported and/or not paid royalties owed to the Company under their license agreements, management applied significant 
judgment to determine whether a contract exists and, if so, the extent to which those revenues are constrained. Management 
analyzes the risk of a significant revenue reversal considering both the likelihood and magnitude of the reversal and, if 
necessary, constrains the amount of estimated revenues recognized, which may result in recognizing revenues less than 
amounts contractually owed to the Company.

The principal considerations for our determination that performing procedures relating to the estimation of sales-based 
royalty revenues for revenue recognition is a critical audit matter are there was significant judgment by management when 
determining whether a contract exists and in developing the estimate of sales-based royalties. This in turn led to significant 
auditor judgment, subjectivity and significant audit effort in performing procedures to evaluate the estimate of sales-based 
royalties, including management’s assessment of the existence of a contract and significant assumptions related to the extent 
of any constraint. 

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall 
opinion on the consolidated financial statements. The procedures included testing the effectiveness of controls relating to the 
revenue recognition process, including the estimation of sales-based royalty revenues. The procedures also included, among 
others, testing management’s process for determining the existence of a contract and management’s estimate of sales-based 
royalties including evaluating the reasonableness of significant assumptions related to whether any further constraints are 

F-3

required and testing the underlying data used in management’s estimate for a sample of contracts. Evaluating management’s 
assumptions related to the constraints involved evaluating whether the constraints assumptions used by management were 
reasonable considering disputes with certain licensees and the impact of any existing litigation on the estimate of sales-based 
royalties. Evaluating the reasonableness of the estimate of sales-based royalties also involved assessing management’s ability 
to reasonably estimate those revenues by performing a comparison of the estimate for the prior reporting period to the actual 
royalties reported by licensees in the subsequent period for a sample of contracts.

/s/ PricewaterhouseCoopers LLP

San Diego, California
November 6, 2019

We have served as the Company’s auditor since 1985. 

F-4

QUALCOMM Incorporated
CONSOLIDATED BALANCE SHEETS 
(In millions, except per share data)

ASSETS

September 29,
2019

September 30,
2018

Current assets:

Cash and cash equivalents
Marketable securities
Accounts receivable, net
Inventories
Other current assets

Total current assets

Deferred tax assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Trade accounts payable
Payroll and other benefits related liabilities
Unearned revenues
Short-term debt
Other current liabilities

Total current liabilities

Unearned revenues
Income taxes payable
Long-term debt
Other liabilities

Total liabilities

Commitments and contingencies (Note 7)

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; 1,145 and 1,219
shares issued and outstanding, respectively
Retained earnings
Accumulated other comprehensive income

Total stockholders’ equity

Total liabilities and stockholders’ equity

See accompanying notes.

$

$

$

$

11,839
421
2,471
1,400
634
16,765
1,196
3,081
6,282
2,172
3,461
32,957

1,368
1,048
565
2,496
3,458
8,935
1,160
2,088
13,437
2,428
28,048

—

343
4,466
100
4,909
32,957

$

$

$

$

11,777
311
2,904
1,693
699
17,384
936
2,975
6,498
2,955
1,970
32,718

1,825
1,081
500
1,005
6,978
11,389
1,620
2,312
15,365
1,225
31,911

—

—
542
265
807
32,718

F-5

 
 
 
 
 
 
QUALCOMM Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS 
(In millions, except per share data)

Revenues:

Equipment and services

Licensing

Total revenues

Costs and expenses:

Cost of revenues

Research and development

Selling, general and administrative

Other

Total costs and expenses

Operating income

Interest expense

Investment and other income, net

Income before income taxes

Income tax expense

Net income (loss)

Net loss attributable to noncontrolling interests

Net income (loss) attributable to Qualcomm

Basic earnings (loss) per share attributable to Qualcomm

Diluted earnings (loss) per share attributable to Qualcomm

Shares used in per share calculations:

Basic

Diluted

See accompanying notes.

Year Ended

September 29,
2019

September 30,
2018

September 24,
2017

$

14,611

$

17,400

$

9,662

24,273

8,599

5,398

2,195

414

16,606

7,667

(627)

441

7,481

(3,095)

4,386

—

5,211

22,611

10,244

5,625

2,986

3,135

21,990

621

(768)

539

392

(5,356)

(4,964)

—

$

$

$

4,386

$

(4,964) $

3.63

3.59

$

$

(3.39) $

(3.39) $

1,210

1,220

1,463

1,463

16,647

5,611

22,258

9,792

5,485

2,658

1,742

19,677

2,581

(494)

900

2,987

(543)

2,444

1

2,445

1.66

1.64

1,477

1,490

F-6

 
QUALCOMM Incorporated
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) 
(In millions)

Net income (loss)

Other comprehensive loss, net of income taxes:

Foreign currency translation (losses) gains

Net unrealized (losses) gains on certain available-for-sale securities, net of tax
benefit (expense) of $0, ($8) and $59, respectively

Reclassification of net realized gains on available-for-sale securities included in net
income (loss), net of tax expense of $0, $3 and $156, respectively

Net unrealized gains (losses) on derivative instruments, net of tax (expense) benefit
of ($7), $6 and $0, respectively

Other (losses) gains, net of tax expense of $0, $0 and $3, respectively
Other reclassifications included in net income (loss), net of tax expense (benefit) of
$1, ($6) and ($42), respectively

     Total other comprehensive loss

Total comprehensive income (loss)

Comprehensive loss attributable to noncontrolling interests

Year Ended

September 29,
2019

September 30,
2018

September 24,
2017

$

4,386

$

(4,964) $

2,444

(110)

(136)

(6)

(1)

26

(19)

(4)

(114)

4,272

—

29

(9)

(17)

(3)

17

(119)

(5,083)

—

309

(102)

(286)

(49)

10

74

(44)

2,400

1

2,401

Comprehensive income (loss) attributable to Qualcomm

$

4,272

$

(5,083) $

See accompanying notes.

F-7

QUALCOMM Incorporated
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In millions)

Operating Activities:
Net income (loss)
$
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

4,386

$

(4,964) $

2,444

Year Ended

September 29,
2019

September 30,
2018

September 24,
2017

Depreciation and amortization expense
Income tax provision in excess of (less than) income tax payments
Non-cash portion of share-based compensation expense
Net gains on marketable securities and other investments
Indefinite and long-lived asset impairment charges
Impairment losses on marketable securities and other investments
Other items, net

Changes in assets and liabilities:

Accounts receivable, net
Inventories
Other assets
Trade accounts payable
Payroll, benefits and other liabilities
Unearned revenues

Net cash provided by operating activities

Investing Activities:
Capital expenditures
Purchases of debt and equity marketable securities
Proceeds from sales and maturities of debt and equity marketable securities
Purchases of other marketable securities
Proceeds from sales and maturities of other marketable securities
Acquisitions and other investments, net of cash acquired
Proceeds from other investments
Other items, net

Net cash (used) provided by investing activities

Financing Activities:

Proceeds from short-term debt
Repayment of short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of common stock
Repurchases and retirements of common stock
Dividends paid
Payments of tax withholdings related to vesting of share-based awards
Payment of purchase consideration related to RF360 Holdings
Other items, net

Net cash (used) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in total cash and cash equivalents

Total cash and cash equivalents at beginning of period

Total cash and cash equivalents at end of period

Reconciliation to the consolidated balance sheets
Cash and cash equivalents
Restricted cash and restricted cash equivalents included in other assets
Total cash and cash equivalents at end of period

See accompanying notes.

F-8

1,401
1,976
1,037
(356)
203
135
(272)

1,373
273
78
(443)
(2,376)
(129)
7,286

(887)
—
139
—
—
(252)
68
126
(806)

5,989
(6,492)
—
—
414
(1,793)
(2,968)
(266)
(1,163)
(107)
(6,386)
(32)
62
11,777
11,839

11,839
—
11,839

$

$

$

1,561
4,481
883
(124)
273
75
(49)

734
337
24
(94)
1,005
(234)
3,908

(784)
(5,936)
9,188
(49)
50
(326)
222
16
2,381

11,131
(11,127)
—
(5,513)
603
(22,580)
(3,466)
(280)
(157)
(111)
(31,500)
(41)
(25,252)
37,029
11,777

11,777
—
11,777

$

$

$

1,461
(412)
914
(530)
76
177
(26)

(1,104)
(200)
136
(45)
2,341
(231)
5,001

(690)
(19,062)
41,715
(2,010)
2,006
(1,544)
23
25
20,463

8,558
(9,309)
10,953
—
497
(1,342)
(3,252)
(268)
(115)
(151)
5,571
48
31,083
5,946
37,029

35,029
2,000
37,029

$

$

$

 
 
 
 
 
QUALCOMM Incorporated
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)

Total stockholders’ equity, beginning balance

Common stock and paid-in capital:

Balance at beginning of period

Common stock issued under employee benefit plans and the related tax benefits

Repurchases and retirements of common stock

Share-based compensation

Tax withholdings related to vesting of share-based payments

Other

Balance at end of period

Retained earnings:

Balance at beginning of period

Cumulative effect of accounting changes (Note 1)

Net income (loss) attributable to Qualcomm

Repurchases and retirements of common stock

Dividends

Balance at end of period

Accumulated other comprehensive income:

Balance at beginning of period

Cumulative effect of accounting changes (Note 1)

Other comprehensive loss

Balance at end of period

Year Ended

September 29,
2019

September 30,
2018

September 24,
2017

$

807

$

30,725

$

31,768

—

415

(910)

1,104

(266)

—

343

542

3,455

4,386

(883)

(3,034)

4,466

265

(51)

(114)

100

274

612

(1,536)

930

(280)

—

—

30,067

—

(4,964)

(21,044)

(3,517)

542

384

—

(119)

265

414

499

(1,342)

975

(268)

(4)

274

30,936

—

2,445

—

(3,314)

30,067

428

—

(44)

384

Total Qualcomm stockholders’ equity

4,909

807

30,725

Noncontrolling Interests

Balance at beginning of period

Other comprehensive loss

Other

Balance at end of period

—

—

—

—

—

—

—

—

(10)

(1)

11

—

Total stockholders’ equity, ending balance

Dividends per share announced

$

$

4,909

2.48

$

$

807

2.38

$

$

30,725

2.20

See accompanying notes.

F-9

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Significant Accounting Policies

We develop, design, manufacture, have manufactured on our behalf and market digital communications products, which 

principally consist of integrated circuits and system software based on CDMA (Code Division Multiple Access), OFDMA 
(Orthogonal Frequency Division Multiple Access) and other technologies for use in mobile devices, wireless networks, 
broadband gateway equipment, consumer electronic devices, devices used in IoT and automotive telematics and infotainment 
systems. We also grant licenses to use portions of our intellectual property portfolio, which includes certain patent rights 
essential to and/or useful in the manufacture and sale of certain wireless products, and receive ongoing royalties based on 
sales by licensees of wireless products incorporating our patented technologies and may also receive fixed license fees 
(payable in one or more installments). 

Principles of Consolidation. The consolidated financial statements include the assets, liabilities and operating results of 

Qualcomm and its subsidiaries, including our subsidiary RF360 Holdings Singapore Pte. Ltd (RF360 Holdings) since its 
formation in fiscal 2017 (Note 9). During the third quarter of fiscal 2018, we eliminated the one-month reporting lag 
previously used to consolidate RF360 Holdings to provide contemporaneous reporting within our consolidated financial 
statements. The effect of this change was not material to the consolidated financial statements, and therefore, the impact of 
eliminating the one-month reporting lag was included in our results of operations for fiscal 2018. Intercompany transactions 
and balances have been eliminated.

Financial Statement Preparation. The preparation of financial statements in conformity with accounting principles 

generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that 
affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the 
accompanying notes. Examples of our significant accounting estimates that may involve a higher degree of judgment and 
complexity than others include: the estimation of sales-based royalty revenues; the impairment of other investments; the 
valuation of inventories; the valuation 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 our income tax provision, including the recognition and measurement of uncertain tax positions. Actual results 
could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year 
presentation.

Revision of Prior Period Financial Statements. In connection with the preparation of our consolidated financial 
statements, we identified an immaterial error related to the recognition of certain royalty revenues of our QTL (Qualcomm 
Technology Licensing) segment in the quarterly and annual periods in fiscal 2018 and third and fourth quarters and annual 
period in fiscal 2017. In accordance with SAB No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior 
Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” we evaluated the error and 
determined that the related impact was not material to our financial statements for any prior annual or interim period, but that 
correcting the cumulative impact of the error would be significant to our results of operations for the three months ended 
December 30, 2018. Accordingly, we have revised previously reported financial information for such immaterial error, as 
previously disclosed in our Quarterly Report on Form 10-Q for the first, second and third quarters of fiscal 2019. A summary 
of revisions to certain previously reported financial information presented herein for comparative purposes is included in 
Note 12. 

Fiscal Year. We operate and report using a 52-53 week fiscal year ending on the last Sunday in September. The fiscal 
year ended September 29, 2019 and September 24, 2017 each included 52 weeks. The fiscal years ended September 30, 2018 
included 53 weeks.

Recently Adopted Accounting Pronouncements. 

Revenue Recognition: In May 2014, the Financial Accounting Standards Board (FASB) issued new accounting guidance 

related to revenue recognition (ASC 606), which outlines a comprehensive revenue recognition model and supersedes most 
current revenue recognition accounting guidance and requires increased disclosures. The new accounting guidance defines a 
five-step approach that requires a company to recognize revenue as control of goods or services transfers to a customer at an 
amount that reflects the expected consideration to be received in exchange for those goods or services. We adopted ASC 606 
in the first quarter of fiscal 2019 using the modified retrospective transition method only to those contracts that were not 
completed as of October 1, 2018. We recognized the cumulative effect of initially applying the new revenue accounting 
guidance as an adjustment to opening retained earnings. Prior period results have not been restated and continue to be 
reported in accordance with the accounting guidance in effect for those periods (ASC 605). We have implemented new 
accounting policies, systems, processes and internal controls necessary to support the requirements of ASC 606. 

F-10

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Adoption of this new accounting guidance most significantly impacts the timing of sales-based royalty revenues, which 

are the vast majority of our QTL segment’s revenues. Prior to adoption, we recognized sales-based royalties as revenues in 
the period in which such royalties were reported by licensees, which was after the conclusion of the quarter in which the 
licensees’ sales occurred and when all other revenue recognition criteria had been met. Under the new accounting guidance, 
we estimate and recognize sales-based royalties in the period in which the associated sales occur, subject to certain 
constraints on our ability to estimate such amounts, resulting in an acceleration of revenue recognition compared to the 
historical method under ASC 605. Since we do not invoice for sales-based royalties estimated and recognized in any given 
quarter until after the conclusion of that quarter (which is generally the following quarter when such royalties are reported by 
licensees), revenues recognized from sales-based royalties results in unbilled receivables (included in accounts receivable, net 
on the consolidated balance sheet). The adoption of ASC 606 did not otherwise have a material impact.

The new accounting guidance also impacts the timing of recognizing certain customer incentives, which are recorded as 

a reduction to revenues in the period that the related revenues are earned. Prior to adoption, we accounted for certain 
customer incentive arrangements, including volume-related and other pricing rebates or cost reimbursements for marketing 
and other activities involving certain of our products and technologies, in part based on the maximum potential liability. 
Under the new accounting guidance, we estimate the amount of all customer incentives. 

The following table summarizes the cumulative effects of adopting the new revenue accounting guidance (substantially 

all of which related to the impact to QTL’s sales-based royalties) on our consolidated balance sheet at October 1, 2018 (in 
millions): 

Assets

Accounts receivable, net

Other current assets

Deferred tax assets

Other assets

Liabilities

Unearned revenues, current

Other current liabilities

Unearned revenues

Stockholders’ equity

Retained earnings

Balance at
September 30,
2018

Adjustment

Opening Balance at
October 1,
2018

$

$

$

2,904

$

957

$

699

936

1,970

500

$

6,978

1,620

1

(98)

1

6

$

125

(110)

3,861

700

838

1,971

506

7,103

1,510

542

$

840

$

1,382

F-11

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarize the impacts of adopting the new revenue accounting guidance on our consolidated 

balance sheet and statement of operations (in millions):

Balance Sheet

Assets

Accounts receivable, net

Other current assets

Deferred tax assets

Other assets

Liabilities

Unearned revenues, current

Other current liabilities

Unearned revenues

Other liabilities

Stockholders’ equity

Retained earnings

Statement of Operations

Revenues

Equipment and services

Licensing

Income tax expense

Net income

Balance at September 29, 2019

As Reported
ASC 606

Adjustment

ASC 605

2,471

$

(1,171) $

634

1,196

3,461

(35)

140

(62)

565

$

55

$

3,458

1,160

2,428

(169)

182

(58)

1,300

599

1,336

3,399

620

3,289

1,342

2,370

4,466

$

(1,138) $

3,328

Year Ended September 29, 2019

As Reported 
ASC 606

Adjustment

ASC 605

14,611

$

(106) $

9,662

(3,095)

4,386

(270)

78

(298)

14,505

9,392

(3,017)

4,088

$

$

$

$

Adoption of the new accounting guidance had no impact to net cash provided (used) by operating, financing or investing 

activities on our consolidated statement of cash flows for fiscal 2019. 

Financial Assets: In January 2016, the FASB issued new accounting guidance on classifying and measuring financial 
instruments, which requires that all equity investments, other than equity-method investments, in unconsolidated entities 
generally be measured at fair value through earnings in the statement of operations. Additionally, it changes the disclosure 
requirements for financial instruments. We adopted the new accounting guidance in the first quarter of fiscal 2019 using the 
modified retrospective transition method for investments in marketable securities, which have readily determinable fair 
values, with the cumulative effect of applying the new accounting guidance recognized as an adjustment to opening retained 
earnings. Upon adoption, we reclassified $50 million of unrealized gains, net of the associated tax effects, related to our 
investments in marketable securities from accumulated other comprehensive income to opening retained earnings. We have 
applied the prospective transition method for investments in non-marketable securities, which are investments in privately 
held companies that do not have readily determinable fair values and will recognize, through earnings, any unrealized gains 
that have accumulated in the period in which there is an observable transaction, if any. 

Prior to the adoption of the new accounting guidance in the first quarter of fiscal 2019, investments in marketable equity 
securities were generally classified as available-for-sale equity investments, with net unrealized gains or losses recorded as a 
component of accumulated other comprehensive income, net of income taxes. Beginning in fiscal 2019, all gains and losses 
on investments in marketable equity securities, realized and unrealized, are recognized in investment and other income, net.

Prior to the adoption of the new accounting guidance in the first quarter of fiscal 2019, investments in non-marketable 
equity securities were recorded at cost less impairment, if any, with any losses resulting from an impairment recognized in 
investment and other income, net. Beginning in fiscal 2019, investments in non-marketable equity securities are recorded at 

F-12

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar securities. All 
gains and losses on investments in non-marketable equity securities, realized and unrealized, are recognized in investment 
and other income, net.

In addition, prior to adoption, we recorded impairment losses in earnings on investments in non-marketable equity 
securities when an impairment was considered other than temporary. Beginning in fiscal 2019, we record impairment losses 
in earnings when we believe an investment has experienced a decline in value.

Hedge Instruments: In August 2017, the FASB issued new accounting guidance that expands and refines hedge 

accounting for both financial and non-financial risks, aligns the recognition and presentation of the effects of hedging 
instruments and hedged items in the financial statements, and includes targeted improvements related to the assessment of 
hedge effectiveness. The new accounting guidance also modifies disclosure requirements for hedging activities. We adopted 
the new accounting guidance in the first quarter of 2019 using the modified retrospective transition method and recorded a 
negligible adjustment to opening retained earnings. The new accounting guidance did not have a material impact on our 
consolidated financial statements.

Statement of Cash Flows: In August 2016, the FASB issued new accounting guidance related to the classification of 
certain cash receipts and cash payments in the statement of cash flows. We adopted the new accounting guidance in the first 
quarter of fiscal 2019 using the retrospective transition method for each period presented, which did not have a material 
impact on our consolidated statements of cash flows.

In November 2016, the FASB issued new accounting guidance that requires companies to include restricted cash and 

cash equivalents as a component in total cash and cash equivalents on the statement of cash flows. As a result, the 
consolidated statement of cash flows no longer reflects transfers between cash and cash equivalents and restricted cash and 
cash equivalents. We adopted the new accounting guidance in the first quarter of fiscal 2019 using the retrospective transition 
method, which resulted in certain amounts in fiscal 2017 and 2018 being adjusted to conform to the new accounting 
guidance. In fiscal 2017, $2.0 billion was designated as collateral for outstanding letters of credit in connection with the then 
proposed acquisition of NXP Semiconductors N.V. (NXP). During fiscal 2017, $1.3 billion of the amount held as collateral 
was invested in time deposits that were not considered cash equivalents, which subsequently matured. This resulted in an 
adjustment to investing activities for fiscal 2017 to reflect the $1.3 billion purchase and subsequent maturity of time deposits 
and a $2.0 billion reduction in investing activities to reflect removal of the activity of restricted cash and cash equivalents. In 
fiscal 2018, such restricted cash and cash equivalents were released from restriction, which resulted in a decrease in investing 
activities by such amount. 

Income Taxes: In October 2016, the FASB issued new accounting guidance that changes the accounting for the income 

tax effects of intra-entity transfers of assets other than inventory. Under the new accounting guidance, the selling 
(transferring) entity is required to recognize a current tax expense or benefit upon transfer of the asset. Similarly, the 
purchasing (receiving) entity is required to recognize a deferred tax asset or deferred tax liability, as well as the related 
deferred tax benefit or expense, upon receipt of the asset. We adopted the new accounting guidance in the first quarter of 
fiscal 2019 using the modified retrospective transition method, with the cumulative effect of applying the new accounting 
guidance recognized as an adjustment to opening retained earnings of $2.6 billion, primarily as the result of establishing a 
deferred tax asset on the basis difference of certain intellectual property distributed from one of our foreign subsidiaries to a 
subsidiary in the United States in fiscal 2018. During fiscal 2019, the United States Treasury Department issued new 
temporary regulations that resulted in a change to the deductibility of dividend income received by a U.S. stockholder from a 
foreign corporation. As a result of this change, pursuant to an agreement with the Internal Revenue Service, we relinquished 
the federal tax basis step-up in such distributed intellectual property. Therefore, the related deferred tax asset was 
derecognized, resulting in a $2.5 billion charge to income tax expense in fiscal 2019 (Note 3). The ongoing impact of this 
accounting guidance will be dependent on the facts and circumstances of any transactions within its scope.

Cash Equivalents. We consider all highly liquid investments with original maturities of 90 days or less to be cash 
equivalents. Cash equivalents are comprised of money market funds, certificates of deposit, commercial paper, corporate 
bonds and notes, certain bank time and demand deposits and government agencies’ securities. The carrying amounts 
approximate fair value due to the short maturities of these instruments.

Marketable Securities. Marketable securities include marketable equity securities and available-for-sale debt securities 

for which classification is determined at the time of purchase and reevaluated at each balance sheet date. We classify 
marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current 
operations. Marketable securities are stated at fair value with all realized and unrealized gains and losses on investments in 
marketable equity securities and realized gains and losses on available-for-sale debt securities recognized in investment and 

F-13

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

other income, net. Net unrealized gains or losses on available-for-sale debt securities are recorded as a component of 
accumulated other comprehensive income, net of income taxes. The realized gains and losses on marketable securities are 
determined using the specific identification method.

At each balance sheet date, we assess available-for-sale debt securities in an unrealized loss position to determine 
whether the unrealized loss is other than temporary. We consider factors including: the significance of the decline in value as 
compared to the cost basis; underlying factors contributing to a 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 relative performance versus its peers, 
sector or asset class; the market and economy in general; views of external investment managers; news or financial 
information that has been released specific to the investee; and the outlook for the overall industry in which the investee 
operates.

If a debt security’s market value is below amortized cost and we either intend to sell the security or it is more likely than 
not that we will be required to sell the security before its anticipated recovery, we record an other-than-temporary impairment 
charge to investment and other income, net for the entire amount of the impairment. For the remaining debt securities, if an 
other-than-temporary impairment exists, we separate the other-than-temporary impairment into the portion of the loss related 
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 to credit factors, or the noncredit loss portion, which is recorded as a component of other 
accumulated comprehensive income, net of income taxes.

Equity Method and Non-marketable Equity Investments. Equity investments for which we have significant influence, 
but not control over the investee and are not the primary beneficiary of the investee’s activities, are accounted for under the 
equity method. Our share of gains and losses in equity method investments are recorded in investment and other income, net. 
Non-marketable equity investments (for which we do not have significant influence or control) are investments without 
readily determinable fair values that are recorded based on initial cost minus impairment, if any, plus or minus adjustments 
resulting from observable price changes in orderly transactions for identical or similar securities. All gains and losses on 
investments in non-marketable equity securities, realized and unrealized, are recognized in investment and other income, net. 
We monitor equity method investments and non-marketable equity securities for events or circumstances that could indicate 
the investments are impaired, such as a deterioration in the investee’s financial condition and business forecasts and lower 
valuations in recently completed or anticipated financings, and recognize a charge to investment and other income, net for the 
difference between the estimated fair value and the carrying value. For equity method investments, we record impairment 
losses in earnings only when impairments are considered other-than-temporary.

Derivatives. Our primary objectives for holding derivative instruments are to manage interest rate risk on our long-term 

debt and to manage foreign exchange risk for certain foreign currency revenues, operating expenses, receivables and 
payables. Derivative instruments are recorded at fair value and included in other current or noncurrent assets or other current 
or noncurrent liabilities based on their maturity dates. Counterparties to our derivative instruments are all major banking 
institutions.

Interest Rate Swaps: We manage our exposure to certain interest rate risks related to our long-term debt through the use 

of interest rate swaps. Such swaps allow us to effectively convert fixed-rate payments into floating-rate payments based on 
LIBOR. These transactions are designated as fair value hedges, 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 of the 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 or losses on the related fixed-rate debt attributable to the hedged risks, are recognized in earnings as interest expense in 
the current period. The interest settlement payments associated with the interest rate swap agreements are classified as cash 
flows from operating activities in the consolidated statements of cash flows.

At September 29, 2019 and September 30, 2018, the aggregate fair value of our interest rate swaps related to our long-
term debt issued in May 2015 was negligible and $50 million, respectively. The fair values of the swaps were recorded in 
other current liabilities and other noncurrent assets at September 29, 2019 and in other noncurrent liabilities at September 30, 
2018. At September 29, 2019 and September 30, 2018, the swaps had an aggregate notional amount of $1.8 billion, which 
effectively converted approximately 43% and 50% of the fixed-rate debt due in 2020 and 2022, respectively, into floating-
rate debt, with maturities matching our fixed-rate debt due in 2020 and 2022. 

Foreign Currency Hedges: We manage our exposure to foreign exchange market risks, when deemed appropriate, 

through the use of derivative instruments, including foreign currency forward and option contracts with financial 
counterparties, that may or may not be designated as hedging instruments. These derivative instruments have maturity dates 
of less than twelve months. Gains and losses arising from such contracts that are designated as cash flow hedging instruments 

F-14

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

are recorded as a component of accumulated other comprehensive income as gains and losses on derivative instruments, net 
of income taxes. The hedging gains and losses in accumulated other comprehensive income are subsequently reclassified to 
revenues or costs and expenses, as applicable, in the consolidated statements of operations in the same period in which the 
underlying transactions affect our earnings. The cash flows associated with derivative instruments designated as cash flow 
hedging instruments are classified as cash flows from operating activities in the consolidated statements of cash flows, which 
is the same category as the hedged transaction. The fair values of our foreign currency forward and option contracts used to 
hedge foreign currency risk designated as cash flow hedges recorded in total assets were negligible at September 29, 2019. 
The fair values of our foreign currency forward and option contracts used to hedge foreign currency risk designated as cash 
flow hedges recorded in total assets and in total liabilities were negligible and $19 million, respectively, at September 30, 
2018.

For foreign currency forward and option contracts not designated as hedging instruments, the changes in fair value are 

recorded in investment and other income, net in the period of change. The cash flows associated with derivative instruments 
not designated as hedging instruments are classified as cash flows from operating activities in the consolidated statements of 
cash flows, which is the same category as the hedged transaction. The fair values of our foreign currency forward and option 
contracts not designated as hedging instruments were negligible at September 29, 2019 and September 30, 2018.

Gross Notional Amounts: The gross notional amounts of our interest rate and foreign currency derivatives by instrument 

type were as follows (in millions):

Forwards

Options

Swaps

The gross notional amounts of our derivatives by currency were as follows (in millions):

Chinese renminbi

Euro

Indian rupee

Japanese yen

United States dollar

September 29,
2019

September 30,
2018

$

$

$

878

176

1,750

2,804

$

682

1,375

1,750

3,807

September 29,
2019

September 30,
2018

$

463

$

—

440

12

1,889

$

2,804

$

650

938

336

17

1,866

3,807

Other Hedging Activities. We have designated $1.4 billion of foreign currency-denominated liabilities related to the 
fines imposed by the European Commission (Note 7) as hedges of our net investment in certain foreign subsidiaries as of 
September 29, 2019. Gains and losses arising from the portion of these balances that are designated as net investment hedges 
are recorded in accumulated other comprehensive income as a component of the foreign currency translation adjustment. 

Fair 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 the principal or most advantageous market for the asset or liability in an orderly 
transaction between market participants as of the measurement date. Applicable accounting guidance provides an established 
hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of 
unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that 
market participants would use in valuing the asset or liability and are developed based on market data obtained from sources 
independent of us. Unobservable inputs are inputs that reflect our assumptions about the factors that market 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.

F-15

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

•  Level 3 includes financial instruments for which fair value is derived from valuation techniques in which one or 

more significant inputs are unobservable, including our own assumptions.

Assets and liabilities measured at fair value are classified based on the lowest level of input that is significant to the fair 

value measurement. We review the fair value hierarchy classification on a quarterly basis. Changes in the observability of 
valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. We recognize 
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 in circumstances that caused the transfer to occur. 

Cash Equivalents and Marketable Securities: With the exception of auction rate securities, we obtain pricing information 

from quoted market prices, pricing vendors or quotes from brokers/dealers. We conduct reviews of our primary pricing 
vendors to determine whether the inputs used in the vendor’s pricing processes are deemed to be observable. The fair value 
for interest-bearing securities includes accrued interest.

The fair value of corporate bonds and notes and common and preferred stock is generally determined using standard 
observable inputs, including reported trades, quoted market prices, matrix pricing, benchmark yields, broker/dealer quotes, 
issuer spreads, two-sided markets and/or benchmark securities.

The fair value of auction rate securities is estimated using a discounted cash flow model that incorporates transaction 
details, such as contractual terms, maturity and timing and amount of future cash flows, as well as assumptions related to 
liquidity, default likelihood and recovery, the future state of the auction rate market and credit valuation adjustments of 
market participants. Though most of the securities we hold are pools of student loans guaranteed by the United States 
government, prepayment speeds and illiquidity discounts are considered significant unobservable inputs. These additional 
inputs are generally 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. Derivative instruments that are not traded on an exchange are valued using conventional calculations/
models that are primarily based on observable inputs, such as foreign currency 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 our 

deferred compensation plan liabilities and related assets, which consist of mutual funds and are included in other assets. 
Other investments and other liabilities included in Level 3 are comprised of convertible debt instruments issued by private 
companies and contingent consideration related to business combinations, respectively. The fair value of convertible debt 
instruments is estimated based on the estimated timing and amount of future cash flows, as well as assumptions related to 
liquidity, default likelihood and recovery. The fair value of contingent consideration related to business combinations is 
primarily estimated using either a real options or discounted cash flow model, which includes inputs, such as projected 
financial information, market volatility, discount rates and timing of contractual payments. The inputs we use to estimate the 
fair values of the convertible debt instruments and contingent consideration are generally unobservable, and therefore, they 
are included in Level 3.

Allowances for Doubtful Accounts. We maintain allowances for doubtful accounts for estimated losses resulting from 
receivables that will not be collected. We determine the allowance based on customer credit-worthiness, historical payment 
experience, the age of outstanding receivables and collateral, to the extent applicable.

Inventories. Inventories are valued at the lower of cost and 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 from customers as well as purchase commitment projections provided by customers and 
our own forecast of customer demand, 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 their estimated useful lives. Upon the retirement or disposition of property, plant and 
equipment, the related cost and accumulated depreciation or amortization are removed, and a gain or loss is recorded, when 
appropriate. Buildings on owned land are depreciated over 30 years, and building improvements are depreciated over 15 
years. Leasehold improvements and buildings on leased land are amortized over the shorter of their estimated useful lives, 
not to exceed 15 years and 30 years, respectively, 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 certain capital 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 is 
recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. Maintenance, repairs 
and minor renewals or betterments are charged to expense as incurred. 

F-16

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Other Intangible Assets. Goodwill represents the excess of purchase price over the value assigned to the 

net tangible and identifiable intangible assets 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 intangible assets 
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 clearly evident) are used to establish their recorded values, unless the values of neither the assets 
received nor the assets transferred are determinable within reasonable limits, in which case the assets received are measured 
based on the carrying values of the assets transferred. Valuation techniques consistent with the market approach, 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 for impairment in the fourth fiscal quarter and in interim periods if events or changes in 
circumstances indicate that the assets may be impaired. If a qualitative assessment is used and we determine that the fair 
value of a reporting unit or indefinite-lived intangible asset is more likely than not (i.e., a likelihood of more than 50%) less 
than its carrying amount, a quantitative impairment test will be performed. If goodwill is quantitatively assessed for 
impairment and a reporting unit’s carrying value exceeds its fair value, the difference is recorded as an impairment. Other 
indefinite-lived intangible assets are quantitatively assessed for impairment, if necessary, by comparing their estimated fair 
values to their carrying values. If the carrying value exceeds the fair 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 evidence that 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 and used 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 or asset 
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 which the 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 reported at the lower of their carrying amounts or their 
estimated fair values less costs to sell and are not depreciated.

Revenue Recognition. As a result of the adoption of ASC 606, we revised our revenue recognition policy beginning in 

fiscal 2019 as follows.

We derive revenues principally from sales of integrated circuit products and licensing of our intellectual property. We 
also generate revenues from licensing system software and by performing development and other services and from other 
product sales. The timing of revenue recognition and the amount of revenue actually recognized in each case depends upon a 
variety of factors, including the specific terms of each arrangement and the nature of our performance obligations. 

Revenues from sales of our products are recognized upon transfer of control to the customer, which is generally at the 

time of shipment. Revenues from providing services are typically recognized over time as our performance obligation is 
satisfied. Revenues from providing services and licensing system software were each less than 5% of total revenues for all 
periods presented.

We grant licenses or otherwise provide rights to use portions of our intellectual property portfolio, which, among other 

rights, includes certain patent rights essential to and/or useful in the manufacture, sale or use of certain wireless products. 
Licensees pay royalties based on their sales of products incorporating or using our licensed intellectual property and may also 
pay a fixed license fee in one or more installments. Sales-based 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). We broadly provide per unit royalty caps that apply to certain 
categories of complete wireless devices, namely smartphones, tablets, laptops and smartwatches, and provide for a maximum 
royalty amount payable per device. We estimate and recognize sales-based royalties on such licensed products in the period 
in which the associated sales occur, subject to certain constraints on our ability to estimate such royalties. Our estimates of 
sales-based royalties are based largely on an assessment of the volume of devices supplied into the market that incorporate or 
use our licensed intellectual property. We estimate sales-based royalties taking into consideration the mix of such sales on a 
licensee-by-licensee basis, as well as the licensees’ average wholesale prices of such products, and consider all information 
(historical, current and forecasted, which may include certain estimates from licensees) that is reasonably available to us. We 
also consider in our estimates of sales-based royalties any changes in pricing we plan or expect to make. Our 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. As a result of recognizing revenues in the period in which the licensees’ sales occur using 

F-17

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information 
becomes available, primarily resulting from actual amounts reported by our licensees. 

License agreements that require payment of license fees contain a single performance obligation that represents ongoing 

access to a portfolio of intellectual property over the license term since such agreements provide the licensee the right to 
access a portfolio of intellectual property that exists at inception of the license agreement and to updates and new intellectual 
property that is added to the licensed portfolio during the term of the agreement that are highly interdependent or interrelated. 
Since we expect to expend efforts to develop and transfer updates to our licensed portfolio on an even basis, license fees are 
recognized as revenues on a straight-line basis over the estimated period of benefit of the license to the licensee.

We account for a contract with a customer/licensee when it is legally enforceable, the parties are committed to perform 

their respective obligations, the rights of the parties regarding the goods and/or services to be transferred are identified, 
payment terms are identified, the contract has commercial substance and collectability of substantially all of the consideration 
is probable. If all such conditions are not met, revenues and any associated receivables are generally not recognized until such 
time that the required conditions are met. Cash collected from customers prior to a contract existing is recorded to other 
customer-related liabilities in other current liabilities.

From time to time, regulatory authorities investigate our business practices, particularly with respect to our licensing 

business, and institute proceedings against us. Depending on the matter, various remedies that could result from an 
unfavorable resolution include, among others, the loss of our ability to enforce one or more of our patents; injunctions; 
monetary damages or fines or other orders to pay money; the issuance of orders to cease certain conduct or modify our 
business practices, such as requiring us to reduce our royalty rates, reduce the base on which our royalties are calculated, 
grant patent licenses to chipset manufacturers, sell chipsets to unlicensed original equipment manufacturers (OEMs) or 
modify or renegotiate some or all of our existing license agreements; and determinations that some or all of our license 
agreements are invalid or unenforceable. Additionally, from time to time, companies initiate various strategies in an attempt 
to negotiate, renegotiate, reduce and/or eliminate their need to pay royalties to us for the use of our intellectual property, 
which may include disputing, underreporting, underpaying, not reporting and/or not paying royalties owed to us under their 
license agreements with us, or reporting to us in a manner that is not in compliance with their contractual obligations. In such 
cases, we estimate and recognize licensing revenues only when we have a contract, as defined in the revenue recognition 
guidance, and to the extent it is probable that a significant reversal of cumulative revenues recognized will not occur, both of 
which may require significant judgment. We analyze the risk of a significant revenue reversal considering both the likelihood 
and magnitude of the reversal and, if necessary, constrain the amount of estimated revenues recognized in order to mitigate 
this risk, which may result in recognizing revenues less than amounts contractually owed to us. 

In May 2019, in United States Federal Trade Commission (FTC) v. QUALCOMM Incorporated, the court issued an 
Order ruling against us and imposing certain injunctive relief (Note 7). In August 2019, the U.S. Court of Appeals for the 
Ninth Circuit granted in its entirety Qualcomm’s request for a partial stay of the injunction. While we believe that our 
business practices do not violate either antitrust law or our FRAND (fair, reasonable and non-discriminatory) licensing 
commitments, significant evaluation and judgment were required in determining the impact of such ruling on the amount of 
licensing revenues estimated and recognized in fiscal 2019. This included, among other items: (i) evaluating whether our 
license agreements remain valid and enforceable, (ii) evaluating licensees’ conduct and whether they remain committed to 
perform their respective obligations and (iii) determining the expected impact, if any, to revenues of any license agreements 
that may be renegotiated and/or are newly entered into. Based on this evaluation, the impact of the ruling was not material to 
QTL licensing revenues in fiscal 2019 based on facts and factors currently known by us. As new information becomes 
available, we may be required to make adjustments to revenues in subsequent periods to reflect changes in estimates and/or 
this matter could have a material adverse effect on our ability to recognize future licensing revenues.  

We measure revenues (including our estimates of sales-based royalties) based on the amount of consideration we expect 

to receive in exchange for products or services. We record reductions to revenues for customer incentive arrangements, 
including volume-related and other pricing rebates and cost reimbursements for marketing and other activities involving 
certain of our products and technologies, in the period that the related revenues are earned. The charges for such 
arrangements are recorded as a reduction to accounts receivable, net or as other current liabilities based on whether we have 
the intent and contractual right of offset. Certain of these charges are considered variable consideration and are included in 
the transaction price primarily based on estimating the most likely amount expected to be provided to the customer/licensee. 

Revenues recognized from sales of our products and sales-based royalties are generally included in accounts receivable, 

net (including unbilled receivables) based on our unconditional right to payment for satisfied or partially satisfied 
performance obligations. 

F-18

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We disaggregate our revenues by segment (Note 8) and type of product and services (as presented on our consolidated 

statement of operations), as we believe this best depicts how the nature, amount, timing and uncertainty of our revenues and 
cash flows are affected by economic factors. Substantially all of QCT’s revenues consist of equipment revenues that are 
recognized at a point in time, and substantially all of QTL’s revenues represent licensing revenues that are recognized over 
time.

Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were $4.1 billion 

for fiscal 2019, and primarily related to licensing revenues of $4.7 billion recognized in the third quarter of fiscal 2019 (a 
portion of which was attributable to fiscal 2019) resulting from the settlement with Apple and its contract manufacturers, 
consisting of a payment from Apple and the release of certain of our obligations to pay Apple and the contract manufacturers 
customer-related liabilities. 

Unearned revenues (which are considered contract liabilities) consist primarily of license fees for intellectual property 

with continuing performance obligations. In fiscal 2019, we recognized revenues of $481 million that were recorded as 
unearned revenues at October 1, 2018.

Remaining performance obligations, substantially all of which are included in unearned revenues, represent the 

aggregate amount of the transaction price of certain customer contracts yet to be recognized as revenues as of the end of the 
reporting period and exclude revenues related to (a) contracts that have an original expected duration of one year or less and 
(b) sales-based royalties (i.e., future royalty revenues) pursuant to our license agreements. Our remaining performance 
obligations are primarily comprised of certain customer contracts for which QTL received license fees upfront. At 
September 29, 2019, we had $1.7 billion of remaining performance obligations, of which $544 million, $453 million, $440 
million, $196 million and $50 million is expected to be recognized as revenues for each of the subsequent five years from 
fiscal 2020 through 2024, respectively, and $27 million thereafter.

Concentrations. A significant portion of our revenues are concentrated with a small number of customers/licensees of 
our QCT and QTL segments. Revenues from three customers/licensees comprised 24%, 15% and 10% of total consolidated 
revenues in fiscal 2019 and 11%, 16% and 11% in fiscal 2018. Revenues from two customers/licensees comprised 18% and 
17% in fiscal 2017. Revenues in 2018 and 2017 were negatively impacted by our prior dispute with Apple Inc. and its 
contract manufacturers (Hon Hai Precision Industry Co., Ltd./Foxconn, its affiliates and other suppliers to Apple). Revenues 
in fiscal 2019 were positively impacted by our settlement of such dispute in the third quarter of fiscal 2019. 

We rely on sole- or limited-source suppliers for some products, particularly products in the QCT segment, subjecting us 

to possible shortages of raw materials or manufacturing capacity. While we have established alternate suppliers for certain 
technologies that we consider critical, the loss of a supplier or the inability of a supplier to meet performance or quality 
specifications or delivery schedules could harm our ability to meet our delivery obligations and/or negatively impact our 
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 and handling are reported as revenues.

Share-Based Compensation. Share-based compensation expense for equity-classified awards, principally related to 

restricted stock units (RSUs), is measured at 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 the employee’s requisite service period. 
The 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 do not have the right to participate in dividends, the fair values are discounted by the 
dividend yield. Share-based compensation expense is adjusted to exclude amounts related to share-based awards that are 
expected to be forfeited.

Legal and Regulatory Proceedings. We are currently involved in certain legal and regulatory proceedings. Litigation and 

investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely outcomes or ranges of 
possible loss in antitrust and trade regulation investigations in particular. Investigations by antitrust and trade regulation 
agencies are not conducted in a consistent manner across jurisdictions. Further, each country and agency has different sets of 
laws, rules and regulations, both substantive and procedural, as well as different legal principles, theories and potential 
remedies, and some agencies may seek to use the investigation to advance domestic policy goals. Depending on the 
jurisdiction, these investigations can involve non-transparent procedures under which we may not receive access to evidence 
relied upon by the enforcement agency or that may be exculpatory and may not be informed of the specific legal theories or 
evidence considered or relied upon by the agency. Unlike in civil litigation in the United States, in foreign proceedings, we 
may not be entitled to discovery or depositions, allowed to cross-examine witnesses or confront our accusers. As a result, we 

F-19

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

may not be aware of, and may not be entitled to know, all allegations against us, or the information or documents provided to, 
or discovered or prepared by, the agency. Accordingly, we may have little or no idea what an agency’s intent is with respect to 
liability, penalties or the timing of a decision. In many cases the agencies are given significant discretion, and any available 
precedent may have limited, if any, predictive value in their jurisdictions, much less in other jurisdictions. Accordingly, we 
cannot predict the outcome of these matters.

If there is at least a reasonable possibility that a material loss may have been incurred associated with pending legal and 

regulatory proceedings, we disclose such fact, and if reasonably estimable, we provide an estimate of the possible loss or 
range of possible loss. We record our best estimate of a loss related to pending legal and regulatory proceedings when the loss 
is considered probable and the amount can be reasonably estimated. Where a range of loss can be reasonably estimated with 
no best estimate in the range, we record the minimum estimated liability. As additional information becomes available, we 
assess the potential liability related to pending legal and regulatory proceedings and revise our estimates and update our 
disclosures accordingly. Our legal costs associated with defending ourself 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 recorded as a component of accumulated other comprehensive income. Transaction gains or losses related 
to balances denominated in a currency other than the functional currency 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 temporary differences 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 are enacted. We record a valuation allowance to 
reduce deferred tax assets to the amount that is more likely than not to be realized. We include interest and penalties related to 
income taxes, including unrecognized tax benefits, within income tax expense. We classify all deferred tax assets and 
liabilities as noncurrent in the consolidated balance sheets.

Our income tax returns are based on calculations and assumptions that are subject to examination by the Internal 

Revenue Service and other tax authorities. In addition, the calculation of our tax liabilities involves dealing with uncertainties 
in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on a two-step process. 
The first step is to evaluate the tax position for recognition by determining if 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 or litigation 
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 we believe we have appropriate support for the positions taken on our tax returns, we 
regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for 
income taxes. 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 that give rise to a revision become known.

We recognize excess tax benefits and shortfall tax detriments associated with share-based awards in the consolidated 

statements of operations, as a component of income tax expense, when realized. 

Earnings (Loss) Per Common Share. Basic earnings (loss) per common share is computed by dividing net income 
(loss) attributable to Qualcomm by the weighted-average number of common shares outstanding during the reporting period. 
Diluted earnings per common share is computed by dividing net income attributable to Qualcomm by the combination of 
dilutive common share equivalents, comprised of shares issuable under our share-based compensation plans and shares 
subject to accelerated share repurchase agreements, if any, and the weighted-average number of common shares outstanding 
during the reporting period. The accelerated share repurchase agreements were entered into in fiscal 2018 (Note 4) and, due 
to the net loss in fiscal 2018, all of the common share equivalents issuable under share-based compensation plans had an anti-
dilutive effect and were therefore excluded from the computation of diluted loss per share. The following table provides 
information about the diluted earnings per share calculation (in millions): 

Dilutive common share equivalents included in diluted shares

Shares of common stock equivalents not included because the effect would be anti-
dilutive or certain performance conditions were not satisfied at the end of the period

2019

2018

2017

10.4

7.5

—

51.2

13.0

3.0

F-20

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements Not Yet Adopted.

Leases: In February 2016, the FASB issued new accounting guidance related to leases that outlines a comprehensive 
lease accounting model and supersedes the current lease accounting guidance. The new accounting guidance requires lessees 
to recognize right-of-use assets and corresponding lease liabilities on the balance sheet for leases with a lease term of greater 
than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. We 
will adopt the new accounting guidance in the first quarter of fiscal 2020 using the modified retrospective approach and will 
not restate comparative periods. In addition, we will elect certain practical expedients. We do not expect finance leases to be 
material at the time of adoption. We currently expect to record lease assets and liabilities of approximately $400 million to 
$500 million on our consolidated balance sheet upon adoption. We do not expect the adoption of the new accounting 
guidance will have a material impact on our consolidated statements of operations or consolidated statements of cash flows.

Financial Assets: In June 2016, the FASB issued new accounting guidance that changes the accounting for recognizing 
impairments of financial assets. Under the new accounting guidance, credit losses for financial assets held at amortized cost 
will be estimated based on expected losses rather than the current incurred loss impairment model. The new accounting 
guidance also modifies the impairment model for available-for-sale debt securities. The new accounting guidance generally 
requires the modified retrospective transition method, with the cumulative effect of applying the new accounting guidance 
recognized as an adjustment to opening retained earnings in the year of adoption, except for certain financial assets where the 
prospective transition method is required, such as available-for-sale debt securities for which an other-than-temporary 
impairment has been recorded. We will adopt the new accounting guidance in the first quarter of fiscal 2021, and the impact 
of this new accounting guidance will largely depend on the composition and credit quality of our investment portfolio, as 
well as economic conditions at the time of adoption.

Note 2. Composition of Certain Financial Statement Items

Accounts Receivable (in millions)

Trade, net of allowances for doubtful accounts of $47 and $56, respectively

Unbilled receivables

Other

September 29,
2019

September 30,
2018

$

$

1,046

$

2,667

1,411

14

201

36

2,471

$

2,904

The increase in unbilled receivables was primarily due to the adoption of new revenue recognition guidance in fiscal 
2019 (Note 1). Accounts receivable, trade at September 30, 2018 included approximately $960 million related to the short 
payment in the second quarter of fiscal 2017 of royalties reported by and deemed collectible from Apple’s contract 
manufacturers. This same amount was recorded in customer-related liabilities (in other current liabilities) for Apple, since we 
did not have the contractual right to offset these amounts. In the third quarter of fiscal 2019, we entered into settlement 
agreements with Apple and its contract manufacturers to dismiss all outstanding litigation between the parties, and as a result, 
these amounts, as well as others, were settled. 

Inventories (in millions)

Raw materials

Work-in-process

Finished goods

September 29,
2019

September 30,
2018

$

$

77

$

667

656

72

715

906

1,400

$

1,693

F-21

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property, Plant and Equipment (in millions)

Land

Buildings and improvements

Computer equipment and software

Machinery and equipment

Furniture and office equipment

Leasehold improvements

Construction in progress

Less accumulated depreciation and amortization

September 29,
2019

September 30,
2018

$

170

$

1,546

1,356

4,007

86

301

182

7,648

(4,567)

$

3,081

$

186

1,575

1,419

3,792

85

325

79

7,461

(4,486)

2,975

Depreciation and amortization expense related to property, plant and equipment for fiscal 2019, 2018 and 2017 was $674 

million, $776 million and $684 million, respectively. 

Goodwill and Other Intangible Assets. We allocate goodwill to our reporting units for annual impairment testing 
purposes. The following table presents the goodwill allocated to our reportable and nonreportable segments, as described in 
Note 8, as well as the changes in the carrying amounts of goodwill during fiscal 2019 and 2018 (in millions):

QCT

QTL

Nonreportable
Segments

Total

Balance at September 24, 2017

$

5,581

$

741

$

301

$

Impairments (Note 10)

Other (1)

Balance at September 30, 2018 (2)

Acquisitions

Impairments (Note 10)

Other (1)

—

6

5,587

18

—

(40)

(22)

(1)

718

—

—

(1)

(107)

(1)

193

—

(146)

(47)

6,623

(129)

4

6,498

18

(146)

(88)

Balance at September 29, 2019 (2)

$

5,565

$

717

$

— $

6,282

(1)  Includes changes in goodwill amounts resulting from the sale of our mobile health nonreportable segment in fiscal 2019, foreign 

currency translation and purchase accounting adjustments.

(2)  Cumulative goodwill impairments were $812 million and $666 million at September 29, 2019 and September 30, 2018, respectively.

The components of other intangible assets, net were as follows (in millions):

September 29, 2019

September 30, 2018

Gross 
Carrying
Amount

Accumulated
Amortization

Weighted-
average 
amortization 
period
(years)

Gross 
Carrying
Amount

Accumulated
Amortization

Weighted-
average 
amortization 
period
(years)

Technology-based

Other

$

$

5,958

$

(3,851)

134

(69)

6,092

$

(3,920)

10

9

10

$

$

6,334

$

(3,461)

149

(67)

6,483

$

(3,528)

10

8

10

All of these intangible assets are subject to amortization and the amortization expense related to these intangible assets 
was $727 million, $785 million and $777 million for fiscal 2019, 2018 and 2017, respectively. Amortization expense related 
to these intangible assets is expected to be $610 million, $496 million, $399 million, $275 million and $121 million for each 
of the five years from fiscal 2020 through 2024, respectively, and $271 million thereafter. At September 29, 2019 and 
September 30, 2018, all acquired in-process research and development projects were completed and are being amortized over 

F-22

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

their useful lives. 

Equity Method and Non-marketable Equity Investments. The carrying values of our equity method and non-marketable 

equity investments are recorded in other noncurrent assets and were as follows (in millions):

Equity method investments

Non-marketable equity investments

September 29,
2019

September 30,
2018

$

$

343

787

1,130

$

$

402

650

1,052

Transactions with equity method investees are considered related party transactions. Revenues from certain services 
contracts were $152 million and $100 million with one of our equity method investees in fiscal 2019 and 2018, respectively, 
and revenues from certain license and services contracts were $165 million with two of our equity method investees in 
fiscal 2017. We eliminate unrealized profit or loss related to such transactions in relation to our ownership interest in the 
investee, which is recorded as a component of equity in net losses in investees in investment and other income, net. At 
September 29, 2019 and September 30, 2018, we had no accounts receivable from these equity method investees.

During fiscal 2019, non-marketable debt and equity securities (non-cash consideration) with an aggregate estimated fair 

value of $98 million were received related to a development contract with one of our equity method investees, which was 
recognized as revenues in fiscal 2019. In addition, during fiscal 2019, non-marketable equity securities (non-cash 
consideration) with an estimated fair value of $53 million were received in connection with the sale of certain assets as part 
of the Cost Plan (Note 10).

Other Current Liabilities (in millions)

September 29,
2019

September 30,
2018

Customer incentives and other customer-related liabilities

$

1,129

$

Accrual for EC fines (Note 7)

Income taxes payable

RF360 Holdings Put and Call Option (Note 9)

Other

1,379

480

—

470

$

3,458

$

3,500
1,167
453

1,137

721

6,978

F-23

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Income. Changes in the components of accumulated other comprehensive income, 

net of income taxes, in stockholders’ equity during fiscal 2019 were as follows (in millions):

Noncredit
Other-than-
Temporary
Impairment
Losses and
Subsequent
Changes in Fair
Value for
Certain
Available-for-
Sale Debt
Securities

Foreign
Currency
Translation
Adjustment

Net
Unrealized
Gains
(Losses) on
Other
Available-
for-Sale
Securities

Net
Unrealized
Gain (Loss)
on
Derivative
Instruments

Total
Accumulated
Other
Comprehensive
Income

Other
Gains
(Losses)

Balance at September 30, 2018

$

11

$

23

$

243

$

(13) $

1

$

265

Other comprehensive (loss)
income before
reclassifications

Reclassifications from
accumulated other
comprehensive income

Other comprehensive (loss)
income

Balance at September 29, 2019

$

(110)

—

(110)

(99) $

—

—

—

23

(6)

(51)

(57)

$

186

$

26

(5)

21

8

(19)

—

(19)

(18) $

$

(109)

(56)

(165)

100

Reclassifications from accumulated other comprehensive income included adjustments of $51 million to the opening 
retained earnings balance as a result of the adoption of new accounting guidance in the first quarter of fiscal 2019 related to 
financial instruments and hedge instruments (Note 1). Reclassifications from accumulated other comprehensive income 
(excluding adjustments to opening retained earnings) related to available-for-sale securities were negligible during fiscal 
2019 and 2018. Reclassifications from accumulated other comprehensive income related to available-for-sale securities were 
$201 million during fiscal 2017 and were recorded in investment and other income, net. Reclassifications from accumulated 
other comprehensive income related to foreign currency translation adjustments and derivative instruments were negligible 
for all periods presented. 

Share-based compensation expense. Total share-based compensation expense, related to all of our share-based awards, 

was comprised as follows (in millions):

Cost of revenues

Research and development

Selling, general and administrative

Share-based compensation expense before income taxes

Related income tax benefit

2019

2018

2017

35

$

38

$

725

277

1,037

(184)

853

$

594

251

883

(140)

743

$

38

588

288

914

(161)

753

$

$

Other Income, Costs and Expenses. Other expenses in fiscal 2019 consisted of a $275 million charge for the fine 
imposed by the European Commission (EC) related to the Icera complaint (2019 EC fine) (Note 7) and $213 million in net 
restructuring and restructuring-related charges related to our Cost Plan (Note 10), partially offset by a $43 million gain due to 
the partial recovery of a fine we previously paid to the Korea Fair Trade Commission (KFTC) and a $31 million gain related 
to a favorable legal settlement.

 Other expenses in fiscal 2018 consisted of a $2.0 billion charge related to a fee paid in connection with the termination 

of our purchase agreement to acquire NXP, a $1.2 billion charge for the fine imposed by the EC related to an investigation 
(2018 EC fine) (Note 7) and $629 million in restructuring and restructuring-related charges related to our Cost Plan, partially 
offset by a $676 million benefit related to the settlement of the Taiwan Fair Trade Commission (TFTC) investigation. 

Other expenses for fiscal 2017 consisted of a $927 million charge related to the a fine imposed by the KFTC (Note 7), 
including related foreign currency losses, a $778 million charge related to the TFTC fine and $37 million in restructuring and 
restructuring-related charges related to our Strategic Realignment Plan that was completed in fiscal 2017.

F-24

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investment and Other Income, Net (in millions)

Interest and dividend income

Net gains on marketable securities

Net gains on other investments

Impairment losses on marketable securities and other investments

Net (losses) gains on derivative instruments

Equity in net losses of investees

Net gains (losses) on foreign currency transactions

2019

2018

2017

$

316

288

68

(135)

(14)

(93)

11

$

625

$

41

83

(75)

(27)

(145)

37

$

441

$

539

$

619

456

74

(177)

32

(74)

(30)

900

Net gains on marketable securities included realized gains and losses of available-for-sale debt securities. During fiscal 

2019 and 2018, gross realized gains or losses on sales of available-for-sale debt securities were negligible. During fiscal 
2017, gross realized gains and losses on sales of available-for-sale debt securities were $361 million and $98 million, 
respectively.

Note 3. Income Taxes

The components of the income tax provision were as follows (in millions):

Current provision (benefit):

Federal

State

Foreign

Deferred provision (benefit):

Federal

State

Foreign

2019

2018

2017

$

1,563

$

2,559

$

2

(407)

1,158

2,037

17

(117)

1,937

(1)

777

3,335

1,846

1

174

2,021

$

3,095

$

5,356

$

72

3

1,256

1,331

(598)

4

(194)

(788)

543

The foreign component of the income tax provision (benefit) included foreign withholding taxes on royalty revenues 

included in U.S. earnings. 

The components of income before income taxes by U.S. and foreign jurisdictions were as follows (in millions):

United States

Foreign

2019

2018

2017

$

$

7,042

$

(1,834) $

439

2,226

7,481

$

392

$

(795)

3,782

2,987

F-25

 
 
 
 
 
 
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In fiscal 2018 and 2017, the foreign component of income before income taxes in foreign jurisdictions consisted 

primarily of income earned in Singapore.

The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax 

provision (in millions):

Expected income tax provision at federal statutory tax rate

$

1,571

$

97

$

1,045

2019

2018

2017

State income tax provision, net of federal benefit

Derecognition of deferred tax asset on distributed intellectual property

Benefits from establishing new U.S. net deferred tax assets

Benefits from foreign-derived intangible income (FDII) deduction

Benefits related to research and development tax credits

Benefits from foreign income taxed at other than U.S. rates

Nondeductible charges (reversals) related to the EC, KFTC and TFTC investigations

Impact of changes in tax reserves and audit settlements for prior year tax positions

Taxes on undistributed foreign earnings

Toll Charge from U.S. tax reform

Valuation allowance on deferred tax assets related to NXP termination fee
Remeasurement of deferred taxes due to changes in statutory rate due to U.S. tax
reform

Other

10

2,472

(570)

(419)

(110)

(54)

51

20

8

—

—

—

116

2

—

—

—

(136)

(834)

(119)

—

87

5,236

494

443

86

8

—

—

—

(81)

(963)

363

111

—

—

—

—

60

$

3,095

$

5,356

$

543

The 2017 Tax Cuts and Jobs Act (the Tax Legislation), which was enacted during the first quarter of fiscal 2018, 

significantly revised the United States corporate income tax by, among other things, lowering the corporate income tax rate to 
21% and imposing a one-time repatriation tax on deemed repatriated earnings and profits of U.S.-owned foreign subsidiaries 
(the Toll Charge). The Tax Legislation fundamentally changed the taxation of multinational entities, including a shift from a 
system of worldwide taxation with deferral to a hybrid territorial system, featuring a participation exemption regime with 
current taxation of certain foreign income, a minimum tax on low-taxed foreign earnings and new measures to deter base 
erosion and promote U.S. production. As a fiscal-year taxpayer, certain provisions of the Tax Legislation became effective 
starting at the beginning of fiscal 2019, including GILTI (global intangible low-taxed income), a new tax on income of 
foreign corporations, BEAT (base-erosion and anti-abuse tax) and FDII (foreign-derived intangible income). In response to 
the Tax Legislation and to better align our profits with our activities, we implemented certain tax restructuring in fiscal 2018 
and 2019. As a result, beginning in fiscal 2019, substantially all of our income is in the U.S., of which a significant portion 
qualifies for preferential treatment as FDII at a 13% effective tax rate. The impact of GILTI and BEAT is negligible. 
Accordingly, our annual effective tax rate for fiscal 2019 reflected the effects of these provisions of the Tax Legislation. Our 
annual effective tax rate for fiscal 2018 reflected a blended federal statutory rate of approximately 25%.

As a result of the Tax Legislation, in fiscal 2019, several of our foreign subsidiaries made tax elections to be treated as 
U.S. branches for federal income tax purposes (commonly referred to as “check-the-box” elections) effective beginning in 
fiscal 2018 and 2019. Although beginning in fiscal 2019 the income of these entities will be included in our consolidated U.S. 
tax return, we believe that by treating these foreign subsidiaries as U.S. branches for federal income taxes, rather than 
controlled foreign corporations, we will significantly reduce the risk of being subject to GILTI and BEAT taxes. As a result of 
making these check-the-box elections, we recorded a tax benefit of $570 million in the first quarter of fiscal 2019 due to 
establishing new U.S. net deferred tax assets resulting from the difference between the GAAP basis and the U.S. federal tax 
carryover basis of the existing assets and liabilities of those foreign subsidiaries, primarily related to customer incentive 
liabilities that have not been deducted for tax purposes. Additionally, during fiscal 2018, one of our foreign subsidiaries 
distributed certain intellectual property to a U.S. subsidiary resulting in a difference between the GAAP basis and the U.S. 
federal tax basis of the distributed intellectual property. Upon adoption of new accounting guidance in the first quarter of 
fiscal 2019, we recorded a deferred tax asset of approximately $2.6 billion primarily related to the distributed intellectual 
property, with an adjustment to opening retained earnings (Note 1). During the third quarter of fiscal 2019, the United States 
Treasury Department issued new temporary regulations that resulted in a change to the deductibility of dividend income 

F-26

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

received by a U.S. stockholder from a foreign corporation. As a result of this change, pursuant to an agreement with the 
Internal Revenue Service, we relinquished the federal tax basis step-up of intellectual property that was distributed in fiscal 
2018 by one of our foreign subsidiaries to a U.S. subsidiary. Therefore, the related deferred tax asset was derecognized, 
resulting in a $2.5 billion charge to income tax expense in fiscal 2019.

In the fourth quarter of fiscal 2019, as a result of recent court rulings in Korea, among other factors, we decided to apply 

for a partial refund claim for taxes previously withheld from licensees in Korea on payments due under their license 
agreements to which we have claimed a foreign tax credit in the United States. As a result, we established a noncurrent 
income taxes receivable of $1.4 billion (recorded in other assets and included as foreign current benefit in the components of 
the income tax provision) and a noncurrent liability for uncertain tax benefits of $1.4 billion (recorded in other liabilities and 
included as federal current provision in the components of the income tax provision). 

Income tax expense for fiscal 2019 also reflected benefits from our FDII deduction (including the impact of the Apple 
settlement) and research and development credits, as well as the impact of the 2019 EC fine, which is not deductible for tax 
purposes. 

In fiscal 2018, as a result of the Tax Legislation, we recorded a charge of $5.7 billion to income tax expense, comprised 
of $5.2 billion related to the estimated Toll Charge and $438 million resulting from the remeasurement of U.S. deferred tax 
assets and liabilities that existed at the end of fiscal 2017 at a lower enacted corporate income tax rate, which included a $135 
million tax benefit recorded in fiscal 2018 related to the remeasurement of a U.S. deferred tax liability that was established as 
a result of a change in one of our tax positions due to Tax Legislation. After application of certain tax credits, the total cash 
payment is expected to be $2.5 billion. The first payment was made on January 15, 2019. At September 29, 2019, we 
estimated remaining future payments of $2.3 billion for the Toll Charge, after application of certain tax credits (including 
excess tax credits generated in fiscal 2019), which is payable in installments over the next seven years. At September 29, 
2019, $209 million was included in other current liabilities, reflecting the next installment due in January 2020.

Income tax expense for fiscal 2018 was also impacted by the charge recorded in the fourth quarter of fiscal 2018 related 

to the termination fee paid to NXP, which did not result in a tax benefit after the consideration of realizability of such loss. 
Fiscal 2018 and 2017 income tax expense was impacted by the EC, KFTC and TFTC fines, and settlement with the TFTC, 
which were not deductible for tax purposes (or taxable in the case of the settlement) and portions of which were attributable 
to foreign jurisdictions and to the United States. These impacts were partially offset in fiscal 2018 and 2017 by lower U.S. 
revenues primarily related to decreased royalty revenues from Apple’s contract manufacturers and, for fiscal 2017, a payment 
to BlackBerry in connection with an arbitration decision.

Income tax expense for fiscal 2017 reflected an increase in our Singapore tax rate as a result of the expiration of certain 

of our tax incentives in March 2017, which was substantially offset by tax benefits resulting from the increase in our 
Singapore tax rate in effect when certain deferred tax assets reversed. During the third quarter of fiscal 2018, we entered into 
a new tax incentive agreement in Singapore that results in a reduced tax rate from March 2017 through March 2022, provided 
that we meet specified employment and investment criteria in Singapore. Our Singapore tax rate will increase in March 2022 
as a result of expiration of these incentives and again in March 2027 upon the expiration of tax incentives under a prior 
agreement. During fiscal 2018, one of our Singapore subsidiaries distributed certain intellectual property to a U.S. subsidiary 
reducing the benefit of these tax incentives almost entirely going forward. Without these tax incentives, our income tax 
expense would have been higher and impacted earnings (loss) per share attributable to Qualcomm as follows (in millions, 
except per share amounts):

Additional income tax expense

Reduction to diluted earnings (loss) per share

2019

2018

2017

$

— $

—

652

$

0.45

493

0.33

We continue to assert that substantially all of our foreign earnings are not indefinitely reinvested. We recorded a charge 

of $8 million and $87 million to income tax expense in fiscal 2019 and 2018, respectively, related to outside basis differences 
that are not permanently reinvested. Income tax expense in fiscal 2018 reflected a one-time charge resulting from a change in 
our assertion as a result of the Tax Legislation, which eliminated certain material tax effects on the repatriation of cash to the 
United States. At September 29, 2019, we had not recorded a deferred tax liability of approximately $25 million related to 
foreign withholding taxes on approximately $225 million of undistributed earnings of certain subsidiaries that we continue to 
consider to be indefinitely reinvested outside the United States. Should we decide to no longer indefinitely reinvest such 

F-27

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

earnings outside the United States, we would have to adjust the income tax provision in the period we make such 
determination.

We had deferred tax assets and deferred tax liabilities as follows (in millions):

Unused tax credits

Accrued liabilities and reserves

Unused net operating losses

Unearned revenues

Unrealized losses on other investments and marketable securities

Share-based compensation

Other

Total gross deferred tax assets

Valuation allowance

Total net deferred tax assets

Intangible assets

Property, plant and equipment

Unrealized gains on other investments and marketable securities

Accrued withholding taxes

Accrued revenues

Other

Total deferred tax liabilities

Net deferred tax assets

Reported as:

Non-current deferred tax assets

Non-current deferred tax liabilities (1)

September 29,
2019

September 30,
2018

$

1,137

$

1,044

648

619

376

164

115

144

3,203

(1,672)

1,531

(216)

(102)

(99)

(19)

—

(2)

(438)

1,093

$

1,196

$

(103)

1,093

$

$

$

$

396

696

478

126

97

26

2,863

(1,529)

1,334

(322)

(49)

(26)

(90)

(202)

—

(689)

645

936

(291)

645

(1)  Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.

At September 29, 2019, we had unused federal net operating loss carryforwards of $188 million expiring from 2021 

through 2035, unused state net operating loss carryforwards of $740 million expiring from 2020 through 2039 and unused 
foreign net operating loss carryforwards of $2.1 billion, of which $1.8 billion expire in 2027. At September 29, 2019, we had 
unused state tax credits of $1.0 billion, of which substantially all may be carried forward indefinitely, unused federal tax 
credits of $169 million expiring from 2026 through 2030 and unused tax credits of $34 million in foreign jurisdictions 
expiring from 2033 through 2039. We do not expect our federal net operating loss carryforwards to expire unused.

 At September 29, 2019, we have provided a valuation allowance on certain state tax credits, foreign deferred tax assets, 
federal capital losses, state net operating losses and federal foreign tax credits of $1.0 billion, $536 million, $83 million, $26 
million and $20 million, respectively. The valuation allowances reflect the uncertainties surrounding our ability to generate 
sufficient future taxable income in certain foreign and state tax jurisdictions to utilize our net operating losses and our ability 
to generate sufficient capital gains to utilize all capital losses. We believe, more likely than not, that we will have sufficient 
taxable income after deductions related to share-based awards to utilize our remaining deferred tax assets.

F-28

 
 
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the changes in the amount of unrecognized tax benefits for fiscal 2019, 2018 and 2017 follows (in 

millions):

Beginning balance of unrecognized tax benefits

Additions based on prior year tax positions

Reductions for prior year tax positions and lapse in statute of limitations

Additions for current year tax positions

Settlements with taxing authorities

2019

2018

2017

$

217

$

372

$

1,238

(3)

253

—

7

(11)

18

(169)

Ending balance of unrecognized tax benefits

$

1,705

$

217

$

271

92

(11)

23

(3)

372

Of the $1.7 billion of unrecognized tax benefits, $1.6 billion has been recorded to other noncurrent liabilities. We believe 

that it is reasonably possible that certain unrecognized tax benefits recorded at September 29, 2019 may result in a cash 
payment in fiscal 2020. Unrecognized tax benefits at September 29, 2019 included $125 million for tax positions that, if 
recognized, would impact the effective tax rate. The unrecognized tax benefits differ from the amount that would affect our 
effective tax rate primarily because the unrecognized tax benefits were included on a gross basis and did not reflect related 
receivables or secondary impacts such as the federal deduction for state taxes, adjustments to deferred tax assets and the 
valuation allowance that might be required if our tax positions are sustained. The increase in unrecognized tax benefits in 
fiscal 2019 was primarily due to our plan to apply for a refund of Korean withholding tax (which had an insignificant impact 
to our income tax provision). If successful, the refund will result in a corresponding reduction in U.S. foreign tax credits. The 
decrease in unrecognized tax benefits in fiscal 2018 was primarily due to an agreement reached with the Internal Revenue 
Service (IRS) related to tax positions on the classification of income in our fiscal 2016 federal income tax return. The 
increase in unrecognized tax benefits in fiscal 2017 was primarily due to tax positions related to transfer pricing. We believe 
that it is likely that the total amount of unrecognized tax benefits at September 29, 2019 will increase in fiscal 2020 as 
licensees in Korea continue to withhold taxes on future payments due under their licensing agreements at a rate higher than 
we believe is owed; such increase is not expected to have a significant impact on our income tax provision. 

We file income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. We are 
currently a participant in the IRS Compliance Assurance Process, whereby we and the IRS endeavor to agree on the treatment 
of all tax issues prior to the tax return being filed. We are no longer subject to U.S. federal income tax examinations for years 
prior to fiscal 2015. We are subject to examination by the California Franchise Tax Board for fiscal years after 2014. We are 
also subject to examination in other taxing jurisdictions in the United States and numerous foreign jurisdictions. These 
examinations are at various stages with respect to assessments, claims, deficiencies and refunds, many of which are open for 
periods after fiscal 2000. 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. At 
September 29, 2019, we believe that adequate amounts have been reserved for based on facts known. However, the final 
determination of tax audits and any related legal proceedings could materially differ from amounts reflected in our income 
tax provision and the related accruals. 

Cash amounts paid for income taxes, net of refunds received, were $1.1 billion, $877 million and $1.0 billion for fiscal 

2019, 2018 and 2017, respectively.

Note 4. Capital Stock

Stock Repurchase Program. On July 26, 2018, we announced a stock repurchase program authorizing us to repurchase 
up to $30 billion of our common stock. The stock repurchase program has no expiration date. In August 2018, we completed 
a “modified Dutch auction” tender offer and paid an aggregate of $5.1 billion, excluding fees and related expenses, to 
repurchase 76.2 million shares of our common stock, which were retired, at a price of $67.50 per share.

In September 2018, we entered into three accelerated share repurchase agreements (ASR Agreements) with three 

financial institutions under which we paid an aggregate of $16.0 billion upfront to the financial institutions and received from 
them an initial delivery of 178.4 million shares of our common stock, which were retired and recorded as a $12.8 billion 
reduction to stockholders’ equity. The remaining $3.2 billion was recorded as a reduction to stockholders’ equity as an 
unsettled forward contract indexed to our own stock. During September 2019, the ASR Agreements were completed, and an 
additional 68.7 million shares were delivered to us, which were retired, and the forward contract was settled with no 

F-29

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

adjustment to stockholders’ equity. In total, we purchased 247.1 million shares based on the volume-weighted average stock 
price of our common stock during the terms of the transactions, less a discount. 

During fiscal 2019, 2018 and 2017, we repurchased and retired an additional 27.1 million, 24.2 million and 22.8 million 

shares of common stock, respectively, for $1.8 billion, $1.4 billion and $1.3 billion, respectively, before commissions. To 
reflect share repurchases in the consolidated balance sheet, we (i) reduce common stock for the par value of the shares, (ii) 
reduce paid-in capital for the amount in excess of par to zero during the quarter in which the shares are repurchased and (iii) 
record the residual amount to retained earnings, if any. At September 29, 2019, $7.1 billion remained authorized for 
repurchase under our stock repurchase program. Since September 29, 2019, we repurchased and retired 3.9 million shares of 
common stock for $300 million.

Shares Outstanding. Shares of common stock outstanding at September 29, 2019 were as follows (in millions):

Balance at beginning of period

Issued

Repurchased

Balance at end of period

2019

1,219

22

(96)

1,145

Dividends. On October 15, 2019, we announced a cash dividend of $0.62 per share on our common stock, payable 

on December 19, 2019 to stockholders of record as of the close of business on December 5, 2019.

Note 5. Employee Benefit Plans

Employee Savings and Retirement Plan. We have a 401(k) plan that allows eligible employees to contribute up to 85% 

of their eligible compensation, subject to annual limits. We match a portion of the employee contributions and may, at our 
discretion, make additional contributions based upon earnings. Our contribution expense was $64 million, $78 million and 
$76 million in fiscal 2019, 2018 and 2017, respectively.

Equity Compensation Plans. On March 8, 2016, our stockholders approved the Qualcomm Incorporated 2016 Long-
Term Incentive Plan (the 2016 Plan), which replaced the Qualcomm Incorporated 2006 Long-Term Incentive Plan (the Prior 
Plan). Effective on and after that date, no new awards will be granted 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 stock units, performance units, performance shares, deferred compensation awards and other stock-based awards. 
The share reserve under the 2016 Plan is equal to 90.0 million shares, plus approximately 20.1 million shares that were 
available for future grant under the Prior Plan on March 8, 2016, for a total of approximately 110.1 million shares initially 
available for grant under the 2016 Plan. This share reserve is automatically increased as provided in the 2016 Plan by the 
number of shares subject to stock options that were 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 that were granted under the Prior Plan and outstanding as of March 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, 
are otherwise reacquired without having become vested, or are paid in cash, exchanged by a participant or withheld by us to 
satisfy any tax withholding or tax payment obligations related to such award. The Board of Directors may amend or terminate 
the 2016 Plan at any time. Certain amendments, including an increase in the share reserve, require stockholder approval. At 
September 29, 2019, approximately 50.4 million shares were available for future grant under the 2016 Plan.

F-30

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RSUs are share awards that entitle the holder to receive shares of our 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 that contain only service requirements to vest for all equity compensation plans follows:

RSUs outstanding at September 30, 2018

RSUs granted

RSUs canceled/forfeited

RSUs vested

Weighted-
Average
Grant Date 
Fair
Value

Aggregate 
Intrinsic
Value

(In billions)

Number of
Shares

(In thousands)

23,097

$

20,879

(2,812)

(14,475)

62.12

63.10

62.45

62.64

RSUs outstanding at September 29, 2019

26,689

$

62.57

$

2.0

The weighted-average estimated fair values of employee RSUs that contain only service requirements to vest granted 
during fiscal 2018 and 2017 were $62.61 and $66.54 per share, respectively. Upon vesting, we issue new shares of common 
stock. 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 be paid by us on behalf of the employees. As a result, the actual number of shares issued will 
be fewer than the number of RSUs outstanding. The annual pre-vest forfeiture rate for RSUs was estimated to be 
approximately 7%, 6% and 5% in fiscal 2019, 2018 and 2017, respectively.

At September 29, 2019, total unrecognized compensation expense related to such non-vested RSUs granted prior to that 
date was $1.1 billion, which is expected to be recognized over a weighted-average period of 1.9 years. The total vest-date fair 
value of such RSUs that vested during fiscal 2019, 2018 and 2017 was $977 million, $940 million and $820 million, 
respectively. The total shares withheld to satisfy statutory tax withholding requirements related to all share-based awards 
were approximately 4.2 million, 4.4 million and 4.2 million in fiscal 2019, 2018 and 2017, respectively, and were based on 
the value of the awards on their vesting dates as determined by our closing stock price. 

The Board of Directors may grant stock options to employees, directors and consultants to purchase shares of our 

common stock at 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 exercisable for up to ten years from the grant date. Total outstanding stock option 
shares at September 29, 2019 and September 30, 2018, were 1.1 million and 5.1 million, respectively. The decrease in the 
number of stock option shares outstanding during fiscal 2019 related primarily to stock options exercised.

The total tax benefits realized, including the excess tax benefits, related to share-based awards during fiscal 2019, 2018 

and 2017 were $237 million, $254 million and $301 million, respectively.

Employee Stock Purchase Plan. We have an employee stock purchase plan for eligible employees to purchase shares of 

common stock at 85% of the 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 us to withhold 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. On March 23, 2018, our 
stockholders approved an amendment to the Amended and Restated QUALCOMM Incorporated 2001 Employee Stock 
Purchase Plan to increase the share reserve by 30.0 million shares. The shares authorized under the plan were approximately 
101.7 million at September 29, 2019. The shares reserved for future issuance were approximately 32.8 million at 
September 29, 2019. During fiscal 2019, 2018 and 2017, approximately 6.1 million, 5.8 million and 5.7 million shares, 
respectively, were issued under the plan at an average price of $42.13, $49.41 and $45.29 per share, respectively. At 
September 29, 2019, total unrecognized compensation expense related to non-vested purchase rights granted prior to that date 
was $27 million. We recorded cash received from the exercise of purchase rights of $257 million, $286 million and $260 
million during fiscal 2019, 2018 and 2017, respectively.

Note 6. Debt

Long-term Debt. In May 2015, we issued an aggregate principal amount of $10.0 billion of unsecured floating- and 
fixed-rate notes (May 2015 Notes) with varying maturities, of which $8.5 billion remained outstanding at September 29, 
2019. The proceeds from the May 2015 Notes of $9.9 billion, net of underwriting discounts and offering expenses, were used 
to fund stock repurchases and other general corporate purposes. In May 2017, we issued an aggregate principal amount of 

F-31

 
 
 
 
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$11.0 billion of unsecured floating- and fixed-rate notes (May 2017 Notes) with varying maturities, of which $7.0 billion 
remained outstanding at September 29, 2019. The proceeds from the May 2017 Notes of $10.95 billion, net of underwriting 
discounts and offering expenses, were intended to be used to finance, in part, a then proposed acquisition and other related 
transactions and for general corporate purposes. 

The following table provides a summary of our long-term debt and current portion of long-term debt (in millions, except 

percentages):

May 2015 Notes

September 29, 2019

September 30, 2018

Amount

Effective
Rate

Amount

Effective
Rate

Floating-rate three-month LIBOR plus 0.55% notes due May 20, 2020

$

Fixed-rate 2.25% notes due May 20, 2020

Fixed-rate 3.00% notes due May 20, 2022

Fixed-rate 3.45% notes due May 20, 2025

Fixed-rate 4.65% notes due May 20, 2035

Fixed-rate 4.80% notes due May 20, 2045

May 2017 Notes

Floating-rate three-month LIBOR plus 0.73% notes due January 30, 2023

Fixed-rate 2.60% notes due January 30, 2023

Fixed-rate 2.90% notes due May 20, 2024

Fixed-rate 3.25% notes due May 20, 2027

Fixed-rate 4.30% notes due May 20, 2047

Total principal

Unamortized discount, including debt issuance costs

Hedge accounting fair value adjustments

2.74%

2.64%

2.89%

3.46%

4.73%

4.72%

3.06%

2.70%

3.01%

3.45%

4.47%

250

1,750

2,000

2,000

1,000

1,500

500

1,500

1,500

2,000

1,500

15,500

(75)

9

$

250

1,750

2,000

2,000

1,000

1,500

500

1,500

1,500

2,000

1,500

15,500

(85)

(50)

2.93%

3.13%

3.73%

3.46%

4.73%

4.72%

3.14%

2.70%

3.01%

3.46%

4.47%

Total long-term debt

Reported as:

Short-term debt

Long-term debt

Total

$ 15,434

$ 15,365

$

1,997

13,437

$ 15,434

$

—

15,365

$ 15,365

At September 29, 2019, future principal payments were $2.0 billion in fiscal 2020, $2.0 billion in fiscal 2022, $2.0 

billion in fiscal 2023, $1.5 billion in fiscal 2024 and $8.0 billion after fiscal 2024; no principal payments are due in fiscal 
2021. At September 29, 2019 and September 30, 2018, the aggregate fair value of the notes, based on Level 2 inputs, was 
approximately $16.5 billion and $15.1 billion, respectively.

We may redeem the outstanding fixed-rate notes at any time in whole, or from time to time in part, at specified make-
whole premiums as defined in the applicable form of note. We may not redeem the outstanding floating-rate notes prior to 
maturity. The obligations under the notes rank equally in right of payment with all of our other senior unsecured indebtedness 
and will effectively rank junior to all liabilities of our subsidiaries. 

At September 29, 2019, we had outstanding interest rate swaps with an aggregate notional amount of $1.8 billion, related 

to the May 2015 Notes, which effectively converted approximately 43% and 50% of the fixed-rate notes due in 2020 and 
2022, respectively, into floating-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 the hedged risks, are recorded as interest expense in the current period. 
We did not enter into interest rate swaps in connection with issuance 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 paid related to our commercial paper program and long-
term debt, net of cash received from the related interest rate swaps, was $563 million, $662 million and $313 million during 
fiscal 2019, 2018 and 2017, respectively.

F-32

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commercial Paper Program. 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 program are used for general corporate purposes. Maturities of 
commercial paper can range from 1 day to up to 397 days. At September 29, 2019 and September 30, 2018, we had $499 
million and $1.0 billion, respectively, of outstanding commercial paper recorded as short-term debt with a weighted-average 
interest rate of 2.17% and 2.35%, respectively, which included fees paid to the commercial paper dealers, and weighted-
average remaining days to maturity of 41 days and 16 days, respectively. The carrying value of the outstanding commercial 
paper approximated its estimated fair value at September 29, 2019 and September 30, 2018.

Revolving Credit Facility. We have an Amended and Restated Revolving Credit Facility (Revolving Credit Facility) that 

provides for unsecured revolving facility loans, swing line loans and letters of credit in an aggregate amount of up to $5.0 
billion, of which $530 million and $4.47 billion will expire in February 2020 and November 2021, respectively. Proceeds 
from the Revolving Credit Facility, if drawn, are expected to be used for general corporate purposes. Loans under the 
Revolving Credit Facility will bear interest, at our option, at either the reserve-adjusted Eurocurrency Rate or the Base Rate 
(both of which are determined in accordance with the Revolving Credit Facility), in each case plus an applicable margin 
based on our long-term unsecured senior, non-credit enhanced debt ratings. The margins over the reserve-adjusted 
Eurocurrency Rate and the Base Rate will be 0.805% and 0.00%, respectively. The Revolving Credit Facility has a facility 
fee, which accrues at a rate of 0.07% per annum. At September 29, 2019 and September 30, 2018, we had not borrowed any 
funds under the Revolving Credit Facility.

Debt Covenants. The Revolving Credit Facility requires that we comply with certain covenants, including one financial 

covenant to maintain a ratio of consolidated earnings before interest, taxes, depreciation and amortization to consolidated 
interest expense, as defined in each of the respective agreements, of not less than three to one at the end of each fiscal quarter. 
We are not subject to any financial covenants under the notes nor any covenants that would prohibit us from incurring 
additional indebtedness ranking equal to the notes, paying dividends, issuing securities or repurchasing securities issued by us 
or our subsidiaries. At September 29, 2019 and September 30, 2018, we were in compliance with the applicable covenants 
under the Revolving Credit Facility.

Note 7. Commitments and Contingencies

Legal and Regulatory Proceedings.

3226701 Canada, Inc. v. QUALCOMM Incorporated et al: On November 30, 2015, a securities class action complaint 
was filed by purported stockholders of us in the United States District Court for the Southern District of California against us 
and certain of our current and former officers. On April 29, 2016, the plaintiffs filed an amended complaint. On January 27, 
2017, the court dismissed the amended complaint in its entirety, granting leave to amend. On March 17, 2017, the plaintiffs 
filed a second amended complaint, alleging that we and certain of our current and former officers violated Sections 10(b) and 
20(a) of the Securities Exchange Act of 1934, as amended, by making false and misleading statements regarding our business 
outlook and product development between November 19, 2014 and July 22, 2015. The second amended complaint sought 
unspecified damages, interest, attorneys’ fees and other costs. On May 8, 2017, we filed a motion to dismiss the second 
amended complaint. On October 20, 2017, the court entered an order granting in part our motion to dismiss, and on 
November 29, 2017, the court entered an order granting the remaining portions of our motion to dismiss. On December 28, 
2017, the plaintiffs filed an appeal to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit). A hearing was 
held on July 11, 2019, and on July 23, 2019, the Ninth Circuit affirmed the District Court’s dismissal of the second amended 
complaint in its entirety. On August 29, 2019, the Ninth Circuit denied the plaintiffs’ request for en banc review. The 
plaintiffs have until November 27, 2019 to file a petition for certiorari to request that the United States Supreme Court hear 
the matter or the dismissal becomes final. We believe the plaintiffs’ claims are without merit.

Consolidated Securities Class Action Lawsuit: On January 23, 2017 and January 26, 2017, securities class action 
complaints were filed by purported stockholders of us in the United States District Court for the Southern District of 
California against us and certain of our current and former officers and directors. The complaints alleged, among other things, 
that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, by making 
false and misleading statements and omissions of material fact in connection with certain allegations that we are or were 
engaged in anticompetitive conduct. The complaints sought unspecified damages, interest, fees and costs. On May 4, 2017, 
the court consolidated the two actions and appointed lead plaintiffs. On July 3, 2017, the lead plaintiffs filed a consolidated 
amended complaint asserting the same basic theories of liability and requesting the same basic relief. On September 1, 2017, 
we filed a motion to dismiss the consolidated amended complaint. On March 18, 2019, the court denied our motion to 
dismiss the complaint. Discovery has commenced and is scheduled to be completed by March 3, 2020. We believe the 
plaintiffs’ claims are without merit.

F-33

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In re Qualcomm/Broadcom Merger Securities Litigation (formerly Camp v. Qualcomm Incorporated et al): On June 8, 

2018 and June 26, 2018, securities class action complaints were filed by purported stockholders of us in the United States 
District Court for the Southern District of California against us and two of our current officers. The complaints alleged, 
among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 
thereunder, by failing to disclose that we had submitted a notice to the Committee on Foreign Investment in the United States 
(CFIUS) in January 2018. The complaints sought unspecified damages, interest, fees and costs. On January 22, 2019, the 
Court appointed the lead plaintiff in the action and designated that the case be captioned “In re Qualcomm/Broadcom Merger 
Securities Litigation.” On March 18, 2019, the plaintiffs filed a consolidated complaint asserting the same basic theories of 
liability and requesting the same basic relief. On May 10, 2019, we filed a motion to dismiss the consolidated complaint. The 
court has not yet ruled on our motion. We believe 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 us in the United States District Courts for the Southern and Northern Districts of California, each on behalf of a 
putative class of purchasers of cellular phones and other cellular devices. At September 29, 2019, twenty-two such cases 
remain outstanding. In April 2017, the Judicial Panel on Multidistrict Litigation transferred the cases that had been filed in 
the Southern District of California to the Northern District of California. On May 15, 2017, the court entered an order 
appointing the plaintiffs’ co-lead counsel. On July 11, 2017, the plaintiffs filed a consolidated amended complaint alleging 
that we violated California and federal antitrust and unfair competition laws by, among other things, refusing to license 
standard-essential patents to our competitors, conditioning the supply of certain of our baseband chipsets on the purchaser 
first agreeing to license our entire patent portfolio, entering into exclusive deals with companies, including Apple Inc., and 
charging unreasonably high royalties that do not comply with our commitments to standard setting organizations. The 
complaint seeks unspecified damages and disgorgement and/or restitution, as well as an order that we be enjoined from 
further unlawful conduct. On August 11, 2017, we filed a motion to dismiss the consolidated amended complaint. On 
November 10, 2017, the court denied our motion, except to the extent that certain claims seek damages under the Sherman 
Antitrust Act. On July 5, 2018, the plaintiffs filed a motion for class certification, and the court granted that motion on 
September 27, 2018. On January 23, 2019, the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) granted us 
permission to appeal the court’s class certification order. On January 24, 2019, the court stayed the case pending our appeal. 
A hearing on our appeal of the class certification order is scheduled for December 2, 2019 before the Ninth Circuit. We 
believe the plaintiffs’ claims are without merit. 

Canadian Consumer Class Action Lawsuits: Since November 9, 2017, eight consumer class action complaints have been 

filed against us in Canada (in the Ontario Superior Court of Justice, the Supreme Court of British Columbia and the Quebec 
Superior Court), each on behalf of a putative class of purchasers of cellular phones and other cellular devices, alleging 
various violations of Canadian competition and consumer protection laws. The claims are similar to those in the U.S. 
consumer class action complaint. The complaints seek unspecified damages. One of the complaints in the Supreme Court of 
British Columbia has since been discontinued by the plaintiffs. We have not yet answered the complaints. We expect the 
Ontario and British Columbia complaints will be consolidated into one proceeding in British Columbia with a class 
certification hearing no earlier than late 2020. Once the certification hearing is scheduled, we expect the court to set a 
timetable for the exchange of evidence and briefing. As to the complaint filed in Quebec, on April 15, 2019, the Quebec 
Superior Court held a class certification hearing, and on April 30, 2019, the court issued an order certifying a class. Before 
the end of calendar 2019, we expect the court to set a timetable for pre-trial steps, including discovery as well as the 
exchange of expert evidence. We do not expect the trial to occur before 2022. We believe the plaintiffs’ claims are without 
merit.

Korea Fair Trade Commission (KFTC) Investigation: On March 17, 2015, the KFTC notified us that it was conducting 

an investigation of us relating to the Korean Monopoly Regulation and Fair Trade Act (MRFTA). On December 27, 2016, the 
KFTC announced that it had reached a decision in the investigation, finding that we violated provisions of the MRFTA. On 
January 22, 2017, we received the KFTC’s formal written decision, which found that the following conducts violate the 
MRFTA: (i) refusing to license, or imposing restrictions on licenses for, cellular communications standard-essential patents 
with competing modem chipset makers; (ii) conditioning the supply of modem chipsets to handset suppliers on their 
execution and performance of license agreements with us; and (iii) coercing agreement terms including portfolio license 
terms, royalty terms and free cross-grant terms in executing patent license agreements with handset makers. The KFTC’s 
decision orders us 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 an independent 
third party; (ii) not demand that handset companies execute and perform under patent license agreements as a precondition 
for purchasing modem chipsets; (iii) not demand unjustifiable conditions in our license agreements with handset companies, 
and upon request renegotiate existing patent license agreements; and (iv) notify modem chipset companies and handset 

F-34

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

companies of the decision and order imposed on us and report to the KFTC new or amended agreements. According to the 
KFTC’s decision, the foregoing will apply to transactions between us and the following enterprises: (i) handset manufacturers 
headquartered in Korea and their affiliate companies; (ii) enterprises that sell handsets in or to Korea and their affiliate 
companies; (iii) enterprises that supply handsets to companies referred to in (ii) above and the affiliate companies of such 
enterprises; (iv) modem chipset manufacturers headquartered in Korea and their affiliate companies; and (v) enterprises that 
supply modem chipsets to companies referred to in (i), (ii) or (iii) above and the affiliate companies of such enterprises. The 
KFTC’s decision also imposed a fine of 1.03 trillion Korean won (approximately $927 million), which we paid on March 30, 
2017. 

We believe that our business practices do not violate the MRFTA, and on February 21, 2017, we filed an action in the 
Seoul High Court to cancel the KFTC’s decision. On the same day, we filed an application with the Seoul High Court to stay 
the decision’s remedial order pending the Seoul High Court’s final judgment on our action to cancel the KFTC’s decision. On 
September 4, 2017, the Seoul High Court denied our application to stay the remedial order, and on November 27, 2017, the 
Korea Supreme Court dismissed our appeal of the Seoul High Court’s decision on the application to stay. Hearings on our 
action to cancel the KFTC’s decision were held before the Seoul High Court on August 12 and 14, 2019. Under the current 
procedural plan of the Seoul High Court, we believe these will be the final hearings before that court issues its decision.

Icera Complaint to the European Commission (EC): On June 7, 2010, the EC notified and provided us with a redacted 

copy of a complaint filed with the EC by Icera, Inc. (subsequently acquired by Nvidia Corporation) alleging that we were 
engaged in anticompetitive activity. On July 16, 2015, the EC announced that it had initiated formal proceedings in this 
matter. On July 18, 2019, the EC issued a decision confirming their preliminary view that between 2009 and 2011, we 
engaged in predatory pricing by selling certain baseband chipsets to two customers at prices below cost with the intention of 
hindering competition and imposed a fine of approximately 242 million euros. On October 1, 2019, we filed an appeal of the 
EC’s decision with the General Court of the European Union. The court has not yet ruled on our appeal. We believe that our 
business practices do not violate the EU competition rules.

In the third quarter of fiscal 2019, we recorded a charge of $275 million to other expenses related to such EC fine. We 
provided a financial guarantee in the first quarter of fiscal 2020 to satisfy the obligation in lieu of cash payment while we 
appeal the EC’s decision. The fine is accruing interest at a rate of 1.50% per annum while it is outstanding. In the fourth 
quarter of fiscal 2019, we designated the liability as a hedge of our net investment in certain foreign subsidiaries, with gains 
and losses recorded in accumulated other comprehensive income as a component of the foreign currency translation 
adjustment. At September 29, 2019, the liability, including related foreign currency gains and accrued interest (which, to the 
extent they were not related to the net investment hedge, were recorded in investment and other income, net), was $265 
million and included in other current liabilities. 

European Commission (EC) Investigation: On October 15, 2014, the EC notified us that it was conducting an 

investigation of us relating to Articles 101 and/or 102 of the Treaty on the Functioning of the European Union (TFEU). On 
July 16, 2015, the EC announced that it had initiated formal proceedings in this matter. On January 24, 2018, the EC issued a 
decision finding that pursuant to an agreement with Apple Inc. we paid significant amounts to Apple on the condition that it 
exclusively use our baseband chipsets in its smartphones and tablets, reducing Apple’s incentives to source baseband chipsets 
from our competitors and harming competition and innovation for certain baseband chipsets, and imposed a fine of 997 
million euros. On April 6, 2018, we filed an appeal of the EC’s decision with the General Court of the European Union. The 
court has not yet ruled on our appeal. We believe that our business practices do not violate the EU competition rules.

In the first quarter of fiscal 2018, we recorded a charge of $1.2 billion to other expenses related to such EC fine. We 
provided financial guarantees in the third quarter of fiscal 2018 to satisfy the obligation in lieu of cash payment while we 
appeal the EC’s decision. The fine is accruing interest at a rate of 1.50% per annum while it is outstanding. In the first quarter 
of fiscal 2019, we designated the liability as a hedge of our net investment in certain foreign subsidiaries, with gains and 
losses recorded in accumulated other comprehensive income as a component of the foreign currency translation adjustment. 
At September 29, 2019, the liability, including related foreign currency gains and accrued interest (which, to the extent they 
were not related to the net investment hedge, were recorded in investment and other income, net), was $1.11 billion and 
included in other current liabilities. 

United States Federal Trade Commission (FTC) v. QUALCOMM Incorporated: On September 17, 2014, the FTC 
notified us that it was conducting an investigation of us relating to Section 5 of the Federal Trade Commission Act (FTCA). 
On January 17, 2017, the FTC filed a complaint against us in the United States District Court for the Northern District of 
California alleging that we were engaged in anticompetitive conduct and unfair methods of competition in violation of 
Section 5 of the FTCA by conditioning the supply of cellular modem chipsets on the purchaser first agreeing to a license to 

F-35

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

our cellular standard-essential patents, paying incentives to purchasers of cellular modem chipsets to induce them to accept 
certain license terms, refusing to license our cellular standard-essential patents to our competitors, and entering into alleged 
exclusive dealing arrangements with Apple Inc. The complaint sought a permanent injunction against our alleged violations 
of the FTCA and other unspecified ancillary equitable relief. On August 30, 2018, the FTC moved for partial summary 
judgment that our commitments to license our cellular standard-essential patents to the Alliance for Telecommunications 
Industry Solutions (ATIS) and the Telecommunications Industry Association (TIA) require us to make licenses available to 
rival sellers of cellular modem chipsets. On November 6, 2018, the court granted the FTC’s partial summary judgment 
motion. Trial was held January 4-29, 2019. 

On May 21, 2019, the court issued an Order setting forth its Findings of Fact and Conclusions of Law. The court 
concluded that we had monopoly power in the CDMA and premium-tier LTE (Long Term Evolution) cellular modem chip 
markets, and that we had used that power in these two markets to engage in anticompetitive acts, including (1) using threats 
of lack of access to cellular modem chip supply to coerce OEMs (original equipment manufacturers) to accept license terms 
that include unreasonably high royalty rates; (2) refusing to license our cellular standard-essential patents to competitors 
selling cellular modem chips; and (3) entering into exclusive dealing arrangements with OEMs that foreclosed our rivals. The 
court further found that the royalties we charge OEMs are unreasonably high and reflect the use of our monopoly power over 
CDMA and premium-tier LTE cellular modem chips rather than just the value of our patents. The court concluded that our 
unreasonably high royalties constitute an anticompetitive surcharge on cellular modem chips sold by our competitors, which 
increases the effective price of our competitors’ cellular modem chips, reduces their margins and results in exclusivity. The 
court also found that our practice of not licensing competitors’ cellular modem chips violated our commitments to certain 
standard-development organizations and a duty under the antitrust laws to license competing cellular modem chip makers and 
helped us maintain our royalties at unreasonably high levels. Finally, the court found that incentive funds entered into with 
certain OEMs further harmed competing cellular modem chip makers’ ability to undermine our monopoly position, prevented 
rivals from entering the market and restricted the sales of those competitors that do enter. The court concluded that the 
combined effect of our conduct, together with our monopoly power, harmed the competitive process. 

The court imposed the following injunctive relief: (1) we must not condition the supply of cellular modem chips on a 

customer’s patent license status, and we must negotiate or renegotiate license terms with customers in good faith under 
conditions free from the threat of lack of access to or discriminatory provision of cellular modem chip supply or associated 
technical support or access to software; (2) we must make exhaustive cellular standard-essential patent licenses available to 
cellular modem chip suppliers on fair, reasonable and non-discriminatory (FRAND) terms and submit, as necessary, to 
arbitral or judicial dispute resolution to determine such terms; (3) we may not enter into express or de facto exclusive dealing 
agreements for the supply of cellular modem chips; and (4) we may not interfere with the ability of any customer to 
communicate with a government agency about a potential law enforcement or regulatory matter. The court also ordered us to 
submit to compliance and monitoring procedures for a period of seven years and to report to the FTC on an annual basis 
regarding our compliance with the above remedies. 

We disagree with the court’s conclusions, interpretation of the facts and application of the law. Accordingly, on May 28, 
2019, we filed a Motion to Stay Pending Appeal in the court, which the court denied on July 3, 2019. On May 31, 2019, we 
filed with the court a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit). On July 8, 
2019, we filed a Motion for Partial Stay of Injunction Pending Appeal and a Consent Motion to Expedite Appeal in the Ninth 
Circuit. On August 23, 2019, the Ninth Circuit granted our Motion. Thus, pending the resolution of the appeal in the Ninth 
Circuit or until further order of the Ninth Circuit, the portions of the court’s injunction requiring that we must (i) make 
exhaustive cellular standard-essential patent licenses available to cellular modem chip suppliers and (ii) not condition the 
supply of cellular modem chips on a customer’s patent license status and must negotiate or renegotiate license terms with 
customers are stayed. On July 10, 2019, the Ninth Circuit granted our Motion to Expedite Appeal, and we expect briefing to 
be completed before the end of the calendar year. We currently expect the Ninth Circuit to schedule oral argument for 
February 2020. 

Contingent losses and other considerations: We will continue to vigorously defend ourself in the foregoing matters. 
However, litigation and investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely 
outcomes or ranges of possible loss in antitrust and trade regulation investigations in particular. Other than with respect to the 
EC fines, we have not recorded any accrual at September 29, 2019 for contingent losses associated with these matters based 
on our belief that losses, while possible, are not probable. Further, any possible 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 effect on our business, 
results of operations, financial condition or cash flows. We are engaged in numerous other legal actions not described above 
arising in the ordinary course of our business and, while there can be no assurance, believe that the ultimate outcome of these 

F-36

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash 
flows.

Indemnifications. We generally do not indemnify our customers and licensees for losses sustained from infringement of 
third-party intellectual property rights. However, we are 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 us, or by intellectual property provided by us to chipset foundries 
and semiconductor assembly and test service providers. Our obligations under these agreements may be limited in terms of 
time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us.

Through September 29, 2019, we have received a number of claims from our direct and indirect customers and other 

third parties for indemnification under such agreements with respect to alleged infringement of third-party intellectual 
property rights by our products. Reimbursements under indemnification arrangements have not been material to our 
consolidated financial statements. We have not recorded any accrual for contingent liabilities at September 29, 2019 
associated with these indemnification arrangements based on our belief that additional liabilities, while possible, are not 
probable. Further, any possible range of loss cannot be reasonably estimated at this time.

Purchase Obligations and Operating Leases. We have agreements with suppliers and other parties to purchase 

inventory, other goods and services and long-lived assets. Integrated circuit product inventory 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 purchase commitments is generally allowed but requires payment of costs incurred 
through the date of cancelation, and in some cases, incremental fees related to capacity underutilization. We lease certain of 
our land, facilities and equipment under noncancelable operating leases, with terms ranging from less than one year to 20 
years and with provisions in certain leases for cost-of-living increases. Rental expense for fiscal 2019, 2018 and 2017 was 
$146 million, $160 million and $129 million, respectively. 

Obligations under our purchase agreements, which primarily relate to integrated circuit product inventory obligations, 

and future minimum lease payments under our operating leases at September 29, 2019 were as follows (in millions):

2020

2021

2022

2023

2024

Thereafter

Total

Purchase
Obligations

Operating
Leases

$

2,926

$

138

286

108

53

16

1

97

66

31

18

35

$

3,390

$

385

Other Commitments. At September 29, 2019, we have committed to fund certain strategic investments up to $154 

million, most of which 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 Information

We are organized on the basis of products and services and have three reportable segments. We conduct business 

primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology 
Licensing) licensing business. QCT develops and supplies integrated circuits and system software based on CDMA, OFDMA 
and other technologies for use in mobile devices, wireless networks, devices used in the Internet of Things (IoT), broadband 
gateway equipment, consumer electronic devices and automotive telematics and infotainment systems. QTL grants licenses to 
use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the 
manufacture, sale or use of certain wireless products. Our QSI (Qualcomm Strategic Initiatives) reportable segment makes 
strategic investments and includes revenues and related costs associated with development contracts with an equity method 

F-37

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

investee. We also have nonreportable segments, including Qualcomm Government Technologies or QGOV (formerly 
Qualcomm Cyber Security Solutions) and other wireless technology and service initiatives.

We evaluate the performance of our segments based on earnings (loss) before income taxes (EBT). Segment EBT 

includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related 
to unallocated corporate assets. Certain income and charges are not allocated to segments in our management reports because 
they are not considered in evaluating the segments’ operating performance. Unallocated income and charges include certain 
interest expense; certain net investment income; certain share-based compensation; and certain research and development 
expenses, 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 of the step-up of inventories 
and property, plant and equipment to fair value, amortization of certain intangible assets and certain other acquisition-related 
charges, third-party acquisition and integration services costs and certain other items, which may include major restructuring 
and restructuring-related costs, goodwill and long-lived asset impairment charges and litigation settlements and/or damages. 

In fiscal 2018, all of the costs ($474 million) related to pre-commercial research and development of 5G (fifth 

generation) technologies were included in unallocated corporate research and development expenses, whereas similar costs 
related to the research and development of other technologies, including 3G (third generation) and 4G (fourth generation) 
technologies, were recorded in the QCT and QTL segments. Beginning in fiscal 2019, all research and development costs 
associated with 5G technologies were included in segment results. Additionally, beginning in fiscal 2019, certain research and 
development costs associated with early research and development that were historically included in our QCT segment were 
allocated to our QTL segment. The net effect of these changes negatively impacted QTL’s EBT by $489 million in fiscal 2019 
and positively impacted QCT’s EBT by $160 million in fiscal 2019.

Beginning in fiscal 2019, we combined our Small Cells business, which sells products designed for the implementation 

of small cells to address the challenge of meeting the increased demand for mobile data, into our QCT segment. Revenues 
and operating results related to the Small Cells business were included in nonreportable segments through the end of fiscal 
2018. Prior period segment information has not been adjusted to conform to the new segment presentation as such 
adjustments are insignificant.  

The table below presents revenues, EBT and total assets for reportable segments (in millions):

Revenues

QCT

QTL

QSI

Reconciling items

Total

EBT

QCT

QTL

QSI

Reconciling items

Total

Assets

QCT

QTL

QSI

Reconciling items

Total

2019

2018

2017

$

14,639

$

17,282

$

4,591

152

4,891

5,042

100

187

16,479

6,412

113

(746)

24,273

$

22,611

$

22,258

$

$

$

$

2,143

$

2,966

$

2,954

344

2,040

3,404

24

(6,002)

7,481

$

392

$

2,307

$

3,041

$

1,541

1,708

27,401

1,472

1,279

26,926

$

32,957

$

32,718

$

2,747

5,142

65

(4,967)

2,987

3,830

1,735

1,037

58,896

65,498

Segment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI. QSI 

segment assets include certain non-marketable equity instruments, accounts receivable and other investments. QSI assets at 
F-38

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 29, 2019, September 30, 2018 and September 24, 2017 included $230 million, $283 million and $254 million, 
respectively, related to investments in equity method investees. Total segment assets differ from total assets on a consolidated 
basis as a result of unallocated corporate assets primarily comprised of certain cash, cash equivalents, marketable and non-
marketable securities, property, plant and equipment, deferred tax assets, goodwill, intangible assets, noncurrent income taxes 
receivable and assets of nonreportable segments. The net book value of long-lived tangible assets located outside of the 
United States was $1.4 billion at September 29, 2019, September 30, 2018 and September 24, 2017. The net book values of 
long-lived tangible assets located in the United States were $1.7 billion, $1.6 billion and $1.8 billion at September 29, 2019, 
September 30, 2018 and September 24, 2017, respectively.

We report revenues from external customers by country based on the location to which our products or services are 
delivered, which for QCT is generally the country in which our customers manufacture their products, and for licensing 
revenues, the invoiced addresses of our licensees. As a result, the revenues by country presented herein are not necessarily 
indicative of either the country in which the devices containing 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 for a company that is headquartered in South Korea but that 
manufactures devices in China, which devices are then sold to consumers in Europe and/or the United States. Revenues by 
country were as follows (in millions):

China (including Hong Kong)

Ireland

United States

South Korea

Other foreign

2019

2018

2017

$

11,610

$

15,149

$

14,579

2,957

2,774

2,400

4,532

1

603

3,175

3,683

—

513

3,538

3,628

$

24,273

$

22,611

$

22,258

Reconciling items for revenues and EBT in a previous table were as follows (in millions):

Revenues

Nonreportable segments

Reduction to revenues related to BlackBerry arbitration decision

Other unallocated revenues

EBT

Reduction to revenues related to BlackBerry arbitration decision

Other unallocated revenues

Unallocated cost of revenues

Unallocated research and development expenses

Unallocated selling, general and administrative expenses

Unallocated other expenses (Note 2)

Unallocated interest expense

Unallocated investment and other income, net

Nonreportable segments

2019

2018

2017

$

$

$

168

$

287

$

—

4,723

—

(100)

4,891

$

187

$

— $

— $

4,723

(430)

(989)

(413)

(414)

(619)

243

(61)

(100)

(486)

(1,154)

(576)

(3,135)

(761)

566

(356)

311

(962)

(95)

(746)

(962)

(95)

(517)

(1,056)

(647)

(1,742)

(488)

913

(373)

$

2,040

$

(6,002) $

(4,967)

Certain revenues (and reduction to revenues) were not allocated to our segments in our management reports because they 

were not considered in evaluating segment results. Other unallocated revenues in fiscal 2019 were comprised of licensing 
revenues resulting from the settlement with Apple and its contract manufacturers. Other unallocated revenues in fiscal 2018 
and 2017 were comprised of reductions to licensing revenues related to the portions of business arrangements that resolved 
legal disputes and were not allocated to our QTL segment. In fiscal 2017, we recognized a reduction to revenues related to an 
arbitration decision and resulting Joint Stipulation Regarding Final Award Agreement entered into with BlackBerry Limited, 
the substantial impact of which was not allocated to QTL.

F-39

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9. Acquisitions 

On February 3, 2017 (the Closing Date), we completed the formation of a joint venture with TDK Corporation (TDK), 
under the name RF360 Holdings to enable delivery of radio frequency front-end (RFFE) modules and radio frequency (RF) 
filters into fully integrated products for mobile devices and Internet of Things (IoT) applications, among others. Upon 
formation, the joint venture was 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-owned 
subsidiary of TDK. We had the option to acquire (and EPCOS had an option to sell) EPCOS’s interest in the joint venture 
for $1.15 billion (Settlement Amount), beginning on August 4, 2019, for a period of 60 days (the Put and Call Option). The 
Put and Call Option was recorded as a liability at fair value as part of the total purchase price of $3.1 billion on the Closing 
Date. The liability was accreted to the Settlement Amount (with the offset recorded as interest expense) and was included in 
other current liabilities at September 30, 2018 (Note 2). On September 16, 2019, the Put and Call Option was exercised, and 
we acquired EPCOS’s remaining minority ownership interest in RF360 Holdings for $1.15 billion. 

At the Closing Date, we determined that RF360 Holdings was a variable interest entity, and its results of operations and 

statement of financial position have been included in our consolidated financial statements since its formation as the 
governance structure of RF360 Holdings provided us with the power to direct the activities of the joint venture that most 
significantly impacted its economic performance. Since the Put and Call Option was considered a financing of our purchase 
of EPCOS’s interest in RF360 Holdings, noncontrolling interest was not recorded in our consolidated financial statements.

At the Closing Date, intangible assets acquired subject to amortization totaled $833 million, which primarily comprised 

of $738 million of technology-based intangible assets that are being amortized on a straight-line basis over the weighted-
average useful lives of seven years. 

The following table presents the unaudited pro forma results for fiscal 2017. The unaudited pro forma financial 

information combines the results of operations of Qualcomm and RF360 Holdings as though the companies had been 
combined as of the beginning of fiscal 2016. The pro forma information is presented for informational purposes only and is 
not indicative of the results of operations that would have been 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 to fair 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):

Pro forma revenues

Pro forma net income attributable to Qualcomm

Note 10. Cost Plan

 (Unaudited)

2017

$

$

22,806

2,614

In the second quarter of fiscal 2018, we announced a Cost Plan designed to align our cost structure to our long-term 
margin targets. As part of this plan, we initiated a series of targeted actions across our businesses with the objective to reduce 
annual costs by $1 billion, excluding incremental costs resulting from any future acquisition of a business. Actions taken 
under this plan have been completed and resulted in us achieving substantially all of this target in fiscal 2019 based on our 
run rate exiting the second quarter of fiscal 2019, excluding litigation costs that were in excess of the baseline spend.

Total restructuring and restructuring-related charges related to the Cost Plan were as follows (in millions):

Restructuring-related charges (2)

Restructuring charges (3)

2019

2018 (1)

Total

$

$

151

$

62

213

$

334

353

687

$

$

485

415

900

(1)  During fiscal 2018, we recorded restructuring and restructuring-related charges of $629 million in other expenses and charges of $58 

million in investment and other income, net.

(2)  Restructuring-related charges primarily related to asset impairment charges in fiscal 2019 and 2018 and also included a $52 million 
net gain in fiscal 2019 from the sale of certain assets related to wireless electric vehicle charging applications and the sale of our 
mobile health nonreportable segment, as well as a $41 million gain in fiscal 2018 resulting from fair value adjustments of certain 
F-40

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

contingent consideration related to a business combination.

(3)  Restructuring charges primarily consisted of severance and consulting costs in fiscal 2019 and 2018, which were payable in cash.

The restructuring accrual, a portion of which was included in payroll and other benefits related liabilities with the 

remainder included in other current liabilities, is expected to be substantially paid within the next 12 months. At 
September 29, 2019 and September 30, 2018, the restructuring accrual was $17 million and $83 million, respectively.

Note 11. Fair Value Measurements

The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis 

at September 29, 2019 (in millions):

Assets

Cash equivalents

Marketable securities:

Corporate bonds and notes

Auction rate securities

Equity and preferred securities

Total marketable securities

Derivative instruments

Other investments

Total assets measured at fair value

Liabilities

Derivative instruments

Other liabilities

Total liabilities measured at fair value

Level 1

Level 2

Level 3

Total

$

6,493

$

4,084

$

— $

10,577

—

—

418

418

—

416

4

—

—

4

25

—

—

35

—

35

—

73

4

35

418

457

25

489

$

$

$

7,327

$

4,113

— $

416

416

$

1

—

1

$

$

$

108

$

11,548

— $

35

35

$

1

451

452

Activity within Level 3 of the Fair Value Hierarchy. Other investments and other liabilities included in Level 3 

at September 29, 2019 and September 30, 2018 were comprised of convertible debt instruments issued by private companies 
and contingent consideration related to business combinations, respectively. Activity for marketable securities, other 
investments and other liabilities classified within Level 3 of the valuation hierarchy was insignificant during fiscal 2019, 
which was primarily related to issuances of convertible debt instruments by private companies and settlements of contingent 
consideration, and fiscal 2018, which was primarily related to settlements of convertible debt.

Nonrecurring Fair Value Measurements. We measure certain assets and liabilities at fair value on a nonrecurring basis. 

These assets and liabilities include equity method and non-marketable equity investments, assets acquired, and liabilities 
assumed in an acquisition 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 or determined to be impaired. During fiscal 2019 and 2018, certain 
property, plant and equipment, non-marketable equity securities, intangible assets and goodwill were written down to their 
estimated fair values (Note 10). We also measured certain non-marketable equity securities received as non-cash 
consideration at fair value on a nonrecurring basis (Note 2). We determined the fair values using cost, market and income 
approaches. The estimation of fair value used in the fair value measurements required the use of significant unobservable 
inputs, and as a result, the fair value measurements were classified as Level 3. We did not have any other significant assets or 
liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition for all periods 
presented.

F-41

 
 
 
 
 
 
 
 
 
 
 
 
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12. Revision of Prior Period Financial Statements

We revised certain prior period financial statements for an immaterial error related to the recognition of certain royalty 

revenues of our QTL segment (Note 1). A summary of revisions to our previously reported financial statements presented 
herein for comparative purposes is included below (in millions, except per share data).

Revised Consolidated Balance Sheets.   

As of September 30, 2018

As reported

Adjustment

As revised

Deferred tax assets (noncurrent)

$

904

$

Total assets

Other current liabilities

Total current liabilities

Total liabilities

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revised Consolidated Statements of Operations. 

32,686

6,825

11,236

31,758

663

928

32,686

$

32

32

153

153

153

(121)

(121)

32

936

32,718

6,978

11,389

31,911

542

807

32,718

Licensing revenues

Total revenues

Operating income

Income before income taxes

Income tax expense

Net (loss) income

Net (loss) income attributable to Qualcomm

Basic (loss) earnings per share

Diluted (loss) earnings per share

September 30, 2018

September 24, 2017

As reported Adjustment

As revised

As reported Adjustment

As revised

Year Ended

$

5,332

$

(121) $

5,211

$

5,644

$

(33) $

22,732

742

513

(5,377)

(4,864)

(4,864)

(3.32)

(3.32)

(121)

(121)

(121)

21

(100)

(100)

(0.07)

(0.07)

22,611

22,291

621

392

(5,356)

(4,964)

(4,964)

(3.39)

(3.39)

2,614

3,020

(555)

2,465

2,466

1.67

1.65

(33)

(33)

(33)

12

(21)

(21)

(0.01)

(0.01)

5,611

22,258

2,581

2,987

(543)

2,444

2,445

1.66

1.64

Revised Consolidated Statements of Comprehensive Income (Loss).

September 30, 2018

September 24, 2017

As reported Adjustment

As revised

As reported Adjustment

As revised

Year Ended

Net (loss) income

$

(4,864) $

(100) $

(4,964) $

2,465

$

(21) $

Total comprehensive (loss) income

Comprehensive (loss) income attributable
to Qualcomm

(4,983)

(4,983)

(100)

(100)

(5,083)

(5,083)

2,421

2,422

(21)

(21)

2,444

2,400

2,401

F-42

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revised Consolidated Statements of Cash Flows.

We revised our consolidated statements of cash flows for the years ended September 30, 2018 and September 24, 2017 

for this correction, which had no impact to net cash provided by operating activities in each such period. 

Operating Activities:

Net loss

Income tax provision in excess of (less than) income tax payments

Other items, net

Other assets

Payroll, benefits and other liabilities

Net cash provided by operating activities

Operating Activities:

Net income

Income tax provision in excess of (less than) income tax payments

Other items, net

Other assets

Payroll, benefits and other liabilities

Net cash provided by operating activities

Year Ended September 30, 2018

As reported

Reclassification
adjustment (1)

Revision
adjustment

As revised

$

(4,864) $

— $

(100) $

(4,964)

4,502

129

30

687

3,895

—

(178)

(6)

197

13

(21)

—

—

121

—

4,481

(49)

24

1,005

3,908

Year Ended September 24, 2017

As reported

Reclassification
adjustment (1)

Revision
adjustment

As revised

$

2,465

$

— $

(21) $

2,444

(400)

146

169

2,103

5,001

—

(172)

(33)

205

—

(12)

—

—

33

—

(412)

(26)

136

2,341

5,001

(1)     Certain previously reported amounts have been reclassified to conform to the current year presentation.

Revised Segment Information. 

QTL segment results were revised for this correction (Note 8), which resulted in a decrease in QTL revenues and EBT 

(earnings before income taxes) of $121 million and $33 million for fiscal 2018 and 2017, respectively. 

F-43

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 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 the results of the interim periods.

The table below presents quarterly data for fiscal 2019 and 2018 (in millions, except per share data):

2019 (1)

Revenues (2)

Operating income (2)

Net income (2)

Basic earnings per share (3):

Diluted earnings per share (3):

2018 (1) (4)

Revenues

Operating (loss) income (5)

Net (loss) income (5)

Basic (loss) earnings per share (3):

Diluted (loss) earnings per share (3):

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

4,842

$

4,982

$

9,635

$

4,814

710

1,068

940

663

5,317

2,149

0.88

$

0.87

0.55

$

0.55

1.77

$

1.75

6,035

$

5,220

$

5,577

$

(4)

(5,983)

400

330

903

1,202

(4.05) $

(4.05)

0.22

$

0.22

0.81

$

0.81

701

506

0.42

0.42

5,778

(679)

(513)

(0.36)

(0.36)

$

$

$

$

(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)  Revenues, operating income and net income in the third quarter of fiscal 2019 included licensing revenues recognized of $4.7 billion 

resulting from the settlement with Apple and its contract manufacturers. Operating income and net income in the third quarter of fiscal 
2019 were impacted by a $275 million charge related to the 2019 EC Fine. Net income in the first quarter of fiscal 2019 was impacted 
by an income tax benefit of $570 million due to establishing new U.S. net deferred tax assets from making certain check-the-box 
elections. Net income in the third quarter of fiscal 2019 was impacted by a $2.5 billion charge to income tax expense resulting from 
the derecognition of a deferred tax asset related to the distributed intellectual property. 

(3)  Earnings (loss) per share and 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 (loss) earnings per share amounts may not 
equal the annual amounts reported.

(4)  As previously disclosed in our Quarterly Reports on Form 10-Q for the quarters ended December 30, 2018, March 31, 2019 and June 
30, 2019, we revised certain prior period financial information for an immaterial error related to the recognition of certain royalty 
revenues of our QTL segment (Note 1). 

(5)  Operating loss and net loss in the fourth quarter of fiscal 2018 were impacted by a $2.0 billion charge related to the NXP termination 
fee. Net loss in the first quarter of fiscal 2018 was impacted by a $5.9 billion provisional charge to income tax expense due to the 
effects of the Tax Legislation. Additionally, operating income and net loss in the first quarter of fiscal 2018 were impacted by a $1.2 
billion charge related to the 2018 EC fine.

F-44

SCHEDULE II
QUALCOMM Incorporated
VALUATION AND QUALIFYING ACCOUNTS
(In millions)

Year ended September 29, 2019

Allowance on trade receivables

Valuation allowance on deferred tax assets

Year ended September 30, 2018

Allowance on trade receivables

Valuation allowance on deferred tax assets

Year ended September 24, 2017

Allowance on trade receivables

Valuation allowance on deferred tax assets

Balance at
Beginning of
Period

Charged
(Credited) to
Costs and
Expenses

Deductions

Balance at
End of
Period

$

$

$

$

$

$

56

1,529

1,585

11

863

874

1

754

755

$

$

$

$

$

$

3

143

146

45

666

711

10

109

119

$

$

$

$

$

$

(12)

—

(12)

$

$

— $

—

— $

— $

—

— $

47

1,672

1,719

56

1,529

1,585

11

863

874

S-1

EXHIBIT 21

SUBSIDIARIES OF REGISTRANT

Subsidiaries of Qualcomm Incorporated

State or Other Jurisdiction of Incorporation

QUALCOMM CDMA Technologies Asia-Pacific Pte. Ltd.

Qualcomm Global Trading Pte. Ltd.

Qualcomm Technologies International, Ltd.

Qualcomm Technologies, Inc.
RF360 Europe GmbH
RF360 Singapore Pte. Ltd.
SnapTrack, Inc.

Singapore

Singapore

United Kingdom

Delaware
Germany
Singapore
California

The names of other subsidiaries are omitted. Such subsidiaries would not, if considered in the aggregate as a single 

subsidiary, constitute a significant subsidiary within the meaning of Item 601(b)(21)(ii) of Regulation S-K.

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-225063) and 
Form S-8 (No. 333-137692, No. 333-150423, No. 333-166246, No. 333-173184, No. 333-174649, No. 333-188104, No. 
333-197445, No. 333-203575, No. 333-210048 and No. 333-226336) of QUALCOMM Incorporated of our report dated 
November 6, 2019 relating to the financial statements, the financial statement schedule and the effectiveness of internal 
control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Diego, California
November 6, 2019

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

EXHIBIT 31.1

I, 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 the statements 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 the financial 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 Exchange Act 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 the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be 
designed under our supervision, to ensure that 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 in accordance 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 effectiveness of the disclosure controls and procedures, as of the end of the period covered 
by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 
the registrant’s most recent fiscal quarter (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; and 

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control 
over financial reporting, to the registrant’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 likely to adversely affect the registrant’s ability to record, process, summarize and 
report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in 

the registrant’s internal control over financial reporting.

Dated:  November 6, 2019 

/s/ Steve Mollenkopf
Steve Mollenkopf
Chief Executive Officer

 
 
 
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

EXHIBIT 31.2 

I, Akash Palkhiwala, 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 the statements 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 the financial 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 Exchange Act 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 the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be 
designed under our supervision, to ensure that 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 in accordance 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 effectiveness of the disclosure controls and procedures, as of the end of the period covered 
by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during 
the registrant’s most recent fiscal quarter (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; and 

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control 
over financial reporting, to the registrant’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 likely to adversely affect the registrant’s ability to record, process, summarize and 
report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in 

the registrant’s internal control over financial reporting.

Dated: November 6, 2019 

/s/ Akash Palkhiwala
Akash Palkhiwala
Executive Vice President and 
Chief Financial Officer 

 
 
 
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

EXHIBIT 32.1 

      In connection with the accompanying Annual Report of QUALCOMM Incorporated (the “Company”) on Form 10-K for 
the fiscal year ended September 29, 2019 (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 the Sarbanes-Oxley Act of 2002, that:

1.  The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of 

operations of the Company.

Dated: November 6, 2019 

/s/ Steve Mollenkopf
Steve Mollenkopf
Chief Executive Officer

 
 
 
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350) 

EXHIBIT 32.2 

      In connection with the accompanying Annual Report of QUALCOMM Incorporated (the “Company”) on Form 10-K for 
the fiscal year ended September 29, 2019 (the “Report”), I, Akash Palkhiwala, Chief Financial Officer of the Company, certify, 
pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1.  The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2.  The information contained in the Report fairly presents, in all material respects, the financial condition and results of 

operations of the Company.

Dated: November 6, 2019 

/s/ Akash Palkhiwala
Akash Palkhiwala
Executive Vice President and 
Chief Financial Officer