QCT segment revenues from Automotive increased by $173 million (21.3%) to $984 million for the three months ended June 29, 2025, and IoT revenues grew by $322 million (23.7%) to $1,681 million. This indicates successful execution of the strategy to expand beyond mobile handsets into new product areas.

The pending acquisition of Alphawave IP Group plc for approximately $2.4 billion aims to accelerate and provide key assets for expansion into data centers. This strategic move aligns with Qualcomm's diversification efforts into high-growth computing technologies beyond traditional mobile markets.

Handset revenues within the QCT segment increased by $429 million (7.3%) to $6,328 million for the quarter, primarily driven by higher average selling prices and a favorable mix toward premium-tier Snapdragon platforms. This demonstrates a continued focus on high-value segments within the core mobile business.

Research and development expenses decreased by $33 million (1.5%) to $2,226 million for the three months ended June 29, 2025, compared to the prior year, primarily due to $189 million in higher non-recurring engineering cost reimbursements. This indicates effective cost management while continuing to invest in wireless and integrated circuit technologies.

During the second quarter of fiscal 2025, Qualcomm executed final long-term license agreements with two key Chinese OEMs and Transsion, dismissing all outstanding litigation. This demonstrates management's ability to resolve complex legal challenges and secure future licensing revenues.

Selling, general and administrative expenses increased by $107 million (16.1%) to $771 million for the three months ended June 29, 2025, primarily due to higher sales and marketing expenses. This reflects management's decision to invest in market penetration and support its growth initiatives.

The filing highlights that Apple is increasingly using its own modem products, which will have a 'significant negative impact' on QCT revenues. Additionally, other large customers like Samsung and Chinese OEMs are developing their own integrated circuit products, posing a material adverse impact on Qualcomm's business, revenues, and cash flows.

U.S./China trade relations and national security policies, including tariffs and export controls (e.g., revocation of Huawei license), continue to be a major risk. These factors can limit Qualcomm's ability to transact business with Chinese customers/suppliers and impact revenue concentration in China, which remains a significant portion of the business.

The company is involved in significant legal proceedings, including the ongoing Arm Ltd. and ParkerVision cases, which could result in 'material adverse effect' on business, results of operations, financial condition, or cash flows. The uncertainty of outcomes and potential for substantial uninsured costs are highlighted.

The company faces significant competitive threats from its largest customers, such as Apple and Samsung, who are developing and increasingly utilizing their own integrated circuit products. This vertical integration directly impacts Qualcomm's QCT revenues and market share in key device segments.

Qualcomm emphasizes its belief that 5G, high-performance computing, and on-device AI will drive adoption beyond mobile handsets, stating it is 'important that we remain a leader in 5G technology development, standardization, intellectual property creation and licensing' to sustain long-term growth. This indicates a strategy to leverage technological leadership for competitive advantage.

The concentration of device share among a few companies and their purchasing power may result in lower prices for Qualcomm's products, negatively affecting revenues and margins. This suggests ongoing pricing pressure in the competitive handset market, despite the company's focus on premium-tier platforms.

Cost of revenues increased by $432 million (10.3%) to $4,606 million for the three months ended June 29, 2025, aligning with the 10% revenue growth. For the nine months, cost of revenues increased by $2,111 million (16.8%) while total revenues increased by 15%, indicating some pressure on gross margin percentage over the longer term.

Gross margin percentage remained approximately flat at 56% for the three months ended June 29, 2025, compared to the prior year quarter. This was 'primarily driven by higher product costs, partially offset by higher average selling prices,' indicating a balance of cost and pricing factors.

Qualcomm operates a fabless production model, relying on a limited number of third-party suppliers, primarily in Asia, for manufacturing, assembly, and testing. Risks include supplier inability to meet demand, procure raw materials, or maintain capacity, which could lead to increased costs, production delays, or lost sales opportunities.

While R&D expenses decreased slightly by $33 million for the quarter, the company continues to invest significant resources in 'advancements of foundational technologies, including wireless connectivity, high-performance and low-power computing and on-device artificial intelligence (AI)'. This long-term investment is critical for future growth beyond mobile handsets.

During the first nine months of fiscal 2025, Qualcomm acquired seven businesses for $668 million, primarily to execute its diversification strategy in QCT industrial IoT and automotive. These acquisitions added $120 million in intangible assets and $532 million in goodwill, indicating a focus on acquiring new technologies and talent.

The company states that its future success depends significantly on its 'ability to develop and patent 5G and next-generation wireless technologies' and to 'remain a leader in 5G technology development, standardization, intellectual property creation and licensing'. This underscores the importance of its intellectual property position and ongoing innovation.

Qualcomm repurchased $6.3 billion of common stock during the first nine months of fiscal 2025, significantly higher than $2.8 billion in the prior year period. The company utilized its remaining $10.0 billion authorization and initiated a new $15.0 billion program, signaling strong management confidence in its valuation and commitment to shareholder returns.

Dividends paid amounted to $2,848 million for the nine months ended June 29, 2025, consistent with $2,739 million in the prior year period. Dividends per share announced increased to $0.89 for the quarter from $0.85, demonstrating a stable and growing return of capital to stockholders.

During the third quarter of fiscal 2025, Qualcomm repaid $1.4 billion of maturing unsecured fixed-rate notes while issuing $1.5 billion of new unsecured fixed-rate notes with maturities extending to 2030, 2032, and 2035. This indicates active debt management to optimize capital structure and fund general corporate purposes.

The filing notes that 'certain customers have adopted, and other customers may adopt, policies that require us to achieve certain sustainability, climate or other environmental, social and governance (ESG)-related targets'. Failure to meet these targets could result in customers not purchasing products, highlighting an external driver for ESG compliance.

The company acknowledges that it is subject to 'complex environmental, health and safety laws, regulations and rules' and that the 'regulatory landscape in these areas continues to evolve'. New or changing laws, particularly related to climate change and GHG emissions, could lead to 'new or additional investments in production processes and could increase environmental compliance expenditures'.

While the filing mentions external ESG pressures from customers and regulatory changes, it provides no specific quantitative data or detailed progress reports on Qualcomm's internal ESG initiatives or performance metrics within this quarterly report. Information is primarily focused on potential risks rather than proactive measures.

The company reiterates that it 'operates in the highly cyclical semiconductor industry, which is subject to significant downturns' and that its 'stock price and financial results are subject to substantial quarterly and annual fluctuations'. This inherent volatility is a key characteristic of its operating environment.

Qualcomm continues to monitor 'recent changes in global trade policy, including tariffs and related trade actions announced by the U.S., China and other countries'. These tensions have already led to the revocation of export licenses to Huawei and could further limit business with Chinese customers/suppliers, negatively impacting revenues and growth prospects.

The recently enacted 'One Big Beautiful Bill Act' (OBBB) in the U.S. will permanently reinstate deducting domestic R&D expenditures as incurred from fiscal 2026, which is expected to have a 'favorable effect on our cash flows from operations due to significantly lower cash tax payments'. However, it will 'adversely affect our total provision for income taxes and results of operations'.