Qualcomm (QCOM) FY2025 10-K Risk Factors: 2 New, 0 Dropped

What the changes say

Apple’s expected shift to its own modems could significantly reduce QCT revenue, results of operations and cash flows.
Chinese semiconductor self-sufficiency policies and customer insourcing remain important threats to Qualcomm’s China business.
Qualcomm newly highlights licensing-program renewal, royalty disputes and changing licensing practices as business risks.
Expanded AI use creates potential copyright and intellectual-property misappropriation claims.

What changed since the prior 10-K

New

NewRISKS RELATED TO HUMAN CAPITAL MANAGEMENT
RISKS SPECIFIC TO OUR LICENSING BUSINESS
Licensing success depends on renewing agreements and evolving patents, while royalty disputes and regulatory changes could damage the business.
NewRISKS RELATED TO NEW INITIATIVES
ESG-related standards) of a particular industry or application, we may be unable to successfully expand our business in that industry or application, and our growth could be limited
Failure to meet an industry’s ESG-related standards could prevent Qualcomm from expanding in that industry or application.

Reworded

65% rewrittenRISKS RELATED TO OUR OPERATING BUSINESSES
Our business, particularly our semiconductor business, may suffer as a result of our customers vertically integrating (i.e., developing their own integrated circuit products)
The risk now specifically highlights Apple’s increasing use of its own modems and the expected significant impact on QCT revenue, results and cash flows.
41% rewrittenRISKS RELATED TO OUR OPERATING BUSINESSES
We derive a significant portion of our revenues from Chinese OEMs, and from non-Chinese OEMs that utilize our products in devices they sell into China, which has the largest number of smartphone users in the world. We also source certain critical integrated circuit products from Chinese suppliers
The wording now emphasizes China’s semiconductor self-sufficiency priority and changes the potential harm from financial position to financial condition.
Was: We derive a significant portion of our revenues from Chinese OEMs, and from non-Chinese OEMs that utilize our integrated circuit products in devices they sell into China, which has the largest number of smartphone users in the world. We also source certain critical integrated circuit products from suppliers in China
36% rewrittenGENERAL RISK FACTORS
Tax liabilities could adversely affect our results of operations
No substantive change; the risk still covers uncertain tax audits and resulting income-tax, earnings and cash-flow effects.
23% rewrittenRISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATION
Our business and operations could suffer in the event of security breaches of our IT systems, or other misappropriation of our technology, intellectual property or other proprietary or confidential information
No substantive change; the risk still covers sophisticated cyberattacks, malware, system vulnerabilities and theft of proprietary information.
22% rewrittenRISKS RELATED TO INTELLECTUAL PROPERTY
Claims by third parties that we infringe their intellectual property could adversely affect our business
The risk now adds potential copyright or other intellectual-property misappropriation claims from Qualcomm’s increasing use of AI in products, services and productivity.
Was: Claims by other companies that we infringe their intellectual property could adversely affect our business

All 21 risk factors

Headings as the filing states them, in filing order.

RISKS RELATED TO HUMAN CAPITAL MANAGEMENT

01RISKS SPECIFIC TO OUR LICENSING BUSINESSNew
10We may not be able to attract or retain qualified employees
11The continued and future success of our licensing programs requires us to continue to evolve our patent portfolio and to renew or renegotiate license agreements that are expiring
12Changes in our patent licensing practices, whether due to governmental investigations, legal challenges or otherwise, could adversely impact our business and results of operations

RISKS RELATED TO OUR OPERATING BUSINESSES

02Further, while we derive a portion of our revenues from areas outside of mobile handsets, e.g., from industries such as automotive and IoT, certain product categories within those industries may in themselves be subject to high levels of customer concentration
03Our business, particularly our semiconductor business, may suffer as a result of our customers vertically integrating (i.e., developing their own integrated circuit products)65% rewritten
04In addition, periodic supply/capacity constraints within the semiconductor industry may further incentivize our customers to vertically integrate in an effort to secure additional control over their supply chains
05We derive a significant portion of our revenues from Chinese OEMs, and from non-Chinese OEMs that utilize our products in devices they sell into China, which has the largest number of smartphone users in the world. We also source certain critical integrated circuit products from Chinese suppliers41% rewritten

RISKS RELATED TO NEW INITIATIVES

06ESG-related standards) of a particular industry or application, we may be unable to successfully expand our business in that industry or application, and our growth could be limitedNew
07In addition, in order to successfully extend our technologies and products into new and expanded product areas, and industries and applications beyond mobile handsets, we may need to transition to new business models or transform aspects of our organization, and we may not be successful in doing so
08We may engage in acquisitions and other strategic 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

RISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATION

09Our business and operations could suffer in the event of security breaches of our IT systems, or other misappropriation of our technology, intellectual property or other proprietary or confidential information23% rewritten

RISKS RELATED TO REGULATORY AND LEGAL CHALLENGES

13Our business may suffer as a result of adverse rulings in governmental investigations or proceedings or other legal proceedings

RISKS RELATED TO INDUSTRY DYNAMICS AND COMPETITION

14Our revenues depend on our customers’ and licensees’ sales of products and services based on cellular and other communications technologies, including 5G, and customer demand for our products based on these technologies

RISKS RELATED TO PRODUCT DEFECTS OR SECURITY VULNERABILITIES

15Failures in our products, or in the products of our customers or licensees, including those resulting from security vulnerabilities, defects or errors, could harm our business

RISKS RELATED TO INTELLECTUAL PROPERTY

16Claims by third parties that we infringe their intellectual property could adversely affect our business22% rewritten
17Our use of open source software may harm our business

GENERAL RISK FACTORS

18Geopolitical conflicts, natural disasters, pandemics and other health crises, and other factors outside of our control, could significantly disrupt our business
19Our business may suffer due to the impact of, or our failure to comply with, the various existing, new or amended laws, regulations, policies or standards to which we are subject
20There are risks associated with our debt
21Tax liabilities could adversely affect our results of operations36% rewritten

Other Qualcomm 10-Ks

FY2024 10-K risk factors
21 risks
Mobile handset exposure remains central, including Apple share gains, premium-smartphone maturity, customer demand and vertical integration.
Filed Nov 06, 2024

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.