Built by Claude FableBusiness Model
Qualcomm sells chips and licenses patents. QCT (Qualcomm CDMA Technologies) designs Snapdragon processors, modems and RF for phones, cars, PCs, XR glasses and industrial devices, and is moving into data center inference silicon. QTL (Qualcomm Technology Licensing) collects royalties on the cellular standard-essential patent portfolio from nearly every handset maker. Fabless: manufacturing is outsourced to foundries such as TSMC and Samsung. Prepared 2026-10-08.
How the money is made (FQ3'26, quarter ended June 2026)
| Line | FQ3'26 rev ($M) | y/y | % of total | Economics |
|---|---|---|---|---|
| QCT Handsets | 5,086 | -19.6% | 51% | Snapdragon SoC plus modem/RF per phone. Revenue is units times price per chipset; FY25 growth was price-led (+$2.5B from revenue per chipset) |
| QCT Automotive | 1,588 | +61.4% | 16% | Snapdragon Digital Chassis (cockpit, ADAS, connectivity). Multi-year design wins lock in 3 to 5 year platforms |
| QCT IoT | 1,830 | +8.9% | 18% | AI PC (Snapdragon X), XR and smart glasses, industrial networking and robotics, consumer devices |
| QTL Licensing | 1,278 | -3.0% | 13% | Royalties on cellular SEPs, tied to handset ASP and capped per device. 69% EBT margin |
| Data center (inside QCT) | 88 | new | ~0.9% | Mostly acquired Alphawave connectivity today. Custom ASICs for 2 hyperscalers start in the December quarter; AI200/AI250 and HBC accelerators to follow |
| Total revenue | 9,947 | -4.0% | 100% | QCT EBT margin 26% vs a ~30% long-term bar |
The mix is shifting fast. Non-handset (auto plus IoT) reached 40% of QCT in FQ3'26, up from 30% a year earlier, and roughly half of that shift comes from handsets shrinking rather than non-handset growing.
End markets and position
| Segment | % of Revenue | Market Share | TAM | Theme Growth |
|---|---|---|---|---|
| Premium Android handset SoC | ~40% (est., most of the handset line) | Leader. ~70% of Samsung Galaxy flagships (FQ3'26 call); 28% of all premium chipsets incl. Apple (Counterpoint, 2026) | Premium tier is ~half of Android SoC revenue (Counterpoint 2024) | Negative near term: QCT Android revenue down ~20% in FY26 (CFO); OEMs moving to prior-gen chips |
| Total smartphone AP | 51% (handsets) | #2: 23% in CQ2'26 vs MediaTek 31%, Apple 19%, Exynos 9% (Counterpoint); down from 27% | Handset units down low teens in FY26 (CFO) | Declining |
| Cellular modem (incl. Apple) | Apple product rev ~$7.5B FY26 (est.) | Apple share "materially lower" than 20% in fall 2026 iPhones, then ~0 | Baseband revenue +22% y/y in CQ1'25 on 5G mix (TechInsights) | Negative: Apple C1/C1X replaces Qualcomm |
| Automotive (Digital Chassis, ADAS) | 16% | Leader in digital cockpit; ADAS challenger (BMW lead compute win in FQ3'26) | Design-win pipeline ~$65B; $10B FY29 target | +61% y/y FQ3'26; ~+60% guided for FQ4 |
| IoT / edge AI / industrial | ~13% (ex-PC/XR, est.) | Fragmented (NXP, MediaTek, Nvidia Jetson, Intel) | Industrial $8B FY29 target; IoT $14B FY29 | ~+9% y/y, flat guided for FQ4 |
| AI PC (Snapdragon X) | Low single digits (est.) | ~9% of US retail Windows laptops above $600 (CQ1/CQ2'25) | ~$4B FY29 PC revenue target (FQ2'25 call) | Design wins only; revenue not disclosed |
| XR / smart glasses | Small (inside IoT) | Near-monopoly platform (Meta Ray-Ban/Oakley, Samsung/Google glasses) | ~600M eyewear units/yr opportunity (mgmt) | Strong but small in dollars |
| Data center | ~0.9% | ~0% vs Nvidia, Broadcom, Marvell, AMD | Targets $5B FY27 and $15B FY29 | POs placed, wafers started; revenue begins December quarter |
| QTL licensing | 12.8% | Dominant cellular SEP licensor | Tied to handset ASP | Flat to slightly down; Apple renewal (from 2027-04) and Huawei 5G cross-license signed |
See Thematics for the full market share and AI reacceleration analysis.
Long-term targets (Investor Day, June 2026)
- FY29 QCT non-handset revenue of $40B, nearly double the prior $22B target. Auto plus IoT portion raised to $24B, with auto alone at $10B.
- Data center revenue of $5B in FY27 and $15B in FY29.
- Non-handset above 50% of QCT in FY27 and about two-thirds later. FY27 non-handset growth guided above 60% y/y, which management says replaces all FY26 Apple product revenue.
- Android handsets to grow at a 5% CAGR once memory normalizes.
Customer and geographic concentration
- The FY24 drop in China share is mostly a change in revenue attribution (US jumped from 3.5% to 24.9% of revenue in one year), not real de-risking.
- Three unnamed customers were 21%, 20% and 13% of FY25 revenue, 54% combined. Our inference is Apple, Samsung and a Chinese Android OEM.
Capital allocation
- Returned $12.60B in FY25, about 98% of FCF, hitting the 100% FCF return promise.
- FQ3'26 buybacks of $1,364M were half of FQ2'26, as cash went to Alphawave, Ventana and Modular. FY26 YTD acquisition spend is $1.57B.
- Diluted shares 1,069M, down 2.7% y/y.
Data sourced from Daloopa (QCOM company_id 157). Market share from Counterpoint, TechInsights and company disclosures (see Thematics). Transcripts FQ4'24 to FQ3'26 from FMP. Scoring workspace: tickers/QCOM/data/review_workspaces/2026-10-08/final_score.md.