UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 10-Q

_____________________

(Mark one)


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

For the quarterly period ended March ~~29, 2020~~28, 2021


☐			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

95-3685934

(State or Other Jurisdiction of
Incorporation or Organization)

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

5775 Morehouse Dr., San Diego, California

92121-1714

(Address of Principal Executive Offices)

(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	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	QCOM	Nasdaq Stock Market

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, a 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 number of shares outstanding of the registrant’s common stock was ~~1,124,927,980~~1,128 million at April ~~27, 2020.~~26, 2021.

QUALCOMM Incorporated

Form 10-Q

For the Quarter Ended March ~~29, 2020~~28, 2021


		Page
	Risk Factors Summary	4

PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	36
	Condensed Consolidated Statements of Operations	47
	Condensed Consolidated Statements of Comprehensive Income	58
	Condensed Consolidated Statements of Cash Flows	69
	Condensed Consolidated Statements of Stockholders’ Equity	710
	Notes to Condensed Consolidated Financial Statements	811
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2023
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5352
Item 4.	Controls and Procedures	5352

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	5352
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5453
Item 3.	Defaults Upon Senior Securities	5453
Item 4.	Mine Safety Disclosures	5453
Item 5.	Other Information	5453
Item 6.	Exhibits	5554

SIGNATURES		5756

Risk Factors Summary:

Our business is subject to numerous risks and uncertainties, including those described in the section labeled “Risk Factors” in “Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report. These risks include, but are not limited to, the following:

RISKS RELATED TO THE CORONAVIRUS (COVID-19) PANDEMIC

•The coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and may continue to impact us in the future.

RISKS RELATED TO INDUSTRY DYNAMICS AND COMPETITION

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

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

RISKS RELATED TO OUR OPERATING BUSINESSES

•We derive a significant portion of our revenues from a small number of customers and licensees, and particularly from their sale of premium tier devices. 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 business, particularly our semiconductor business, may suffer as a result of our customers vertically integrating (i.e., developing their own integrated circuit products).

•A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.

RISKS SPECIFIC TO OUR LICENSING BUSINESS

•Efforts by some OEMs 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.

•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.

•The 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 or to cover additional future patents.

RISKS RELATED TO REGULATORY AND LEGAL CHALLENGES

•Our business may suffer as a result of adverse rulings in government investigations or proceedings.

RISKS RELATED TO SUPPLY AND MANUFACTURING

•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 supply assurance, technology leadership and reasonable margins, 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.

•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, impacts related to climate change, exposure to natural disasters, timely supply of equipment and materials, and various manufacturing issues.

RISKS RELATED TO NEW AND ADJACENT INITIATIVES

•Our growth depends in part on our ability to extend our technologies and products into new and expanded product areas, and adjacent industry segments and applications beyond mobile. Our research, development and other investments in these new and expanded product areas, industry segments and applications, and related technologies and products, as well as in our existing technologies and products, and new technologies, may not generate operating income or contribute to future results of operations that meet our expectations.

•We may engage in strategic acquisitions and other 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

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

RISKS RELATED TO INTELLECTUAL PROPERTY

•The enforcement and protection of our intellectual property may be expensive, could fail to prevent misappropriation or unauthorized use of our intellectual property, 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 and by ineffective enforcement of laws in such jurisdictions.

•Claims by other companies that we infringe their intellectual property could adversely affect our business.

•Our use of open source software may harm our business.

RISKS RELATED TO HUMAN CAPITAL MANAGEMENT

•We may not be able to attract and retain qualified employees.

RISKS RELATED TO PRODUCT DEFECTS OR SECURITY VULNERABILITIES

•Failures 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.

GENERAL RISK FACTORS

•We operate in the highly cyclical semiconductor industry, which is subject to significant downturns. We are also susceptible to declines in global, regional and local economic conditions generally. Our stock price and financial results are subject to substantial quarterly and annual fluctuations due to these dynamics, among others.

•Our 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.

•There are risks associated with our debt.

•Tax liabilities could adversely affect our results of operations.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

QUALCOMM Incorporated

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value amounts)

(Unaudited)


		March 29, 2020		September 29, 2019			March 28, 2021		September 27, 2020
ASSETS	ASSETS									ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	8,403	$	11,839	Cash and cash equivalents	$	6,000	$	6,707
Marketable securities	Marketable securities	1,543		421		Marketable securities	5,526		4,507
Accounts receivable, net	Accounts receivable, net	3,081		2,471		Accounts receivable, net	3,346		4,003
Inventories	Inventories	1,700		1,400		Inventories	2,668		2,598

Other current assets	Other current assets	586		634		Other current assets	759		704
Total current assets	Total current assets	15,313		16,765		Total current assets	18,299		18,519

Deferred tax assets	Deferred tax assets	1,249		1,196		Deferred tax assets	1,325		1,351
Property, plant and equipment, net	Property, plant and equipment, net	3,358		3,081		Property, plant and equipment, net	4,186		3,711
Goodwill	Goodwill	6,294		6,282		Goodwill	7,220		6,323
Other intangible assets, net	Other intangible assets, net	1,889		2,172		Other intangible assets, net	1,662		1,653
Other assets	Other assets	3,835		3,461		Other assets	4,476		4,037
Total assets	Total assets	$	31,938	$	32,957	Total assets	$	37,168	$	35,594

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY									LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	2,061	$	1,368	Trade accounts payable	$	2,548	$	2,248
Payroll and other benefits related liabilities	Payroll and other benefits related liabilities	699		1,048		Payroll and other benefits related liabilities	994		1,053
Unearned revenues	Unearned revenues	529		565		Unearned revenues	586		568
Short-term debt	Short-term debt	2,499		2,496		Short-term debt	500		500

Other current liabilities	Other current liabilities	3,986		3,458		Other current liabilities	4,442		4,303
Total current liabilities	Total current liabilities	9,774		8,935		Total current liabilities	9,070		8,672
Unearned revenues	Unearned revenues	968		1,160		Unearned revenues	563		761
Income taxes payable	Income taxes payable	1,879		2,088		Income taxes payable	1,715		1,872
Long-term debt	Long-term debt	13,449		13,437		Long-term debt	15,235		15,226

Other liabilities	Other liabilities	2,823		2,428		Other liabilities	3,161		2,986
Total liabilities	Total liabilities	28,893		28,048		Total liabilities	29,744		29,517

Commitments and contingencies (Note 5)	Commitments and contingencies (Note 5)					Commitments and contingencies (Note 5)	0		0

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:

Preferred stock, $0.0001 par value; 8 shares authorized; 0ne outstanding	Preferred stock, $0.0001 par value; 8 shares authorized; 0ne outstanding	—		—		Preferred stock, $0.0001 par value; 8 shares authorized; 0ne outstanding	0		0
Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,127 and 1,145 shares issued and outstanding, respectively		—		343
Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,129 and 1,131 shares issued and outstanding, respectively						Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,129 and 1,131 shares issued and outstanding, respectively	0		586
Retained earnings	Retained earnings	2,990		4,466		Retained earnings	7,143		5,284
Accumulated other comprehensive income	Accumulated other comprehensive income	55		100		Accumulated other comprehensive income	281		207

Total stockholders’ equity	Total stockholders’ equity	3,045		4,909		Total stockholders’ equity	7,424		6,077
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	31,938	$	32,957	Total liabilities and stockholders’ equity	$	37,168	$	35,594

See accompanying notes.

QUALCOMM Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019			March 28, 2021		March 29, 2020		March 28, 2021		March 29, 2020
Revenues:	Revenues:									Revenues:
Equipment and services	Equipment and services	$	4,050	$	3,753	$	7,583	$	7,506	Equipment and services	$	6,239	$	4,050	$	12,681	$	7,583
Licensing	Licensing	1,166		1,229		2,709		2,318		Licensing	1,696		1,166		3,489		2,709
Total revenues	Total revenues	5,216		4,982		10,292		9,824		Total revenues	7,935		5,216		16,170		10,292

Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenues	Cost of revenues	2,297		2,179		4,410		4,367		Cost of revenues	3,432		2,297		6,921		4,410
Research and development	Research and development	1,468		1,308		2,873		2,577		Research and development	1,780		1,468		3,433		2,873
Selling, general and administrative	Selling, general and administrative	483		573		1,011		1,100		Selling, general and administrative	557		483		1,124		1,011
Other	Other	(23)		(18)		(23)		130		Other	0		(23)		0		(23)
Total costs and expenses	Total costs and expenses	4,225		4,042		8,271		8,174		Total costs and expenses	5,769		4,225		11,478		8,271

Operating income	Operating income	991		940		2,021		1,650		Operating income	2,166		991		4,692		2,021
Interest expense	Interest expense	(146)		(162)		(294)		(317)		Interest expense	(141)		(146)		(283)		(294)
Investment and other (expense) income, net		(247)		28		(182)		33
Investment and other income (expense), net										Investment and other income (expense), net	104		(247)		323		(182)
Income before income taxes	Income before income taxes	598		806		1,545		1,366		Income before income taxes	2,129		598		4,732		1,545
Income tax (expense) benefit		(130)		(143)		(152)		365
Income tax expense										Income tax expense	(367)		(130)		(515)		(152)

Net income	Net income	$	468	$	663	$	1,393	$	1,731	Net income	$	1,762	$	468	$	4,217	$	1,393

Basic earnings per share	Basic earnings per share	$	0.41	$	0.55	$	1.22	$	1.43	Basic earnings per share	$	1.55	$	0.41	$	3.72	$	1.22

Diluted earnings per share	Diluted earnings per share	$	0.41	$	0.55	$	1.21	$	1.42	Diluted earnings per share	$	1.53	$	0.41	$	3.66	$	1.21

Shares used in per share calculations:	Shares used in per share calculations:									Shares used in per share calculations:
Basic	Basic	1,139		1,213		1,142		1,213		Basic	1,133		1,139		1,134		1,142
Diluted	Diluted	1,151		1,217		1,155		1,220		Diluted	1,151		1,151		1,154		1,155

See accompanying notes.

QUALCOMM Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019			March 28, 2021		March 29, 2020		March 28, 2021		March 29, 2020
Net income	Net income	$	468	$	663	$	1,393	$	1,731	Net income	$	1,762	$	468	$	4,217	$	1,393
Other comprehensive loss, net of income taxes:
Foreign currency translation losses		(44)		(17)		(13)		(41)
Other comprehensive (loss) income, net of income taxes:										Other comprehensive (loss) income, net of income taxes:
Foreign currency translation (losses) gains										Foreign currency translation (losses) gains	(33)		(44)		54		(13)
Net unrealized losses on available-for-sale securities	Net unrealized losses on available-for-sale securities	(5)		(1)		(5)		(6)		Net unrealized losses on available-for-sale securities	(9)		(5)		(6)		(5)
Net unrealized (losses) gains on derivative instruments		(31)		—		(28)		16
Net unrealized gains (losses) on derivative instruments										Net unrealized gains (losses) on derivative instruments	36		(31)		46		(28)
Other (losses) gains	Other (losses) gains	(1)		(8)		7		(8)		Other (losses) gains	0		(1)		(3)		7
Certain reclassifications included in net income	Certain reclassifications included in net income	(1)		(3)		(6)		(2)		Certain reclassifications included in net income	(6)		(1)		(17)		(6)
Total other comprehensive loss		(82)		(29)		(45)		(41)
Total other comprehensive (loss) income										Total other comprehensive (loss) income	(12)		(82)		74		(45)
Comprehensive income	Comprehensive income	$	386	$	634	$	1,348	$	1,690	Comprehensive income	$	1,750	$	386	$	4,291	$	1,348

See accompanying notes.

QUALCOMM Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


		Six Months Ended							Six Months Ended
		March 29, 2020		March 31, 2019			March 28, 2021		March 29, 2020
Operating Activities:	Operating Activities:					Operating Activities:
Net income	Net income	$	1,393	$	1,731	Net income	$	4,217	$	1,393
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	691		698		Depreciation and amortization expense	751		691

Income tax provision less than income tax payments	Income tax provision less than income tax payments	(350)		(958)		Income tax provision less than income tax payments	(235)		(350)

Non-cash portion of share-based compensation expense		603		452
Share-based compensation expense						Share-based compensation expense	814		603
Net gains on marketable securities and other investments	Net gains on marketable securities and other investments	(49)		(9)		Net gains on marketable securities and other investments	(301)		(49)
Indefinite and long-lived asset impairment charges		—		203

Impairment losses on other investments	Impairment losses on other investments	337		69		Impairment losses on other investments	16		337

Other items, net	Other items, net	(75)		(190)		Other items, net	(48)		(75)
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable, net	Accounts receivable, net	(607)		200		Accounts receivable, net	658		(607)
Inventories	Inventories	(297)		(49)		Inventories	(60)		(297)
Other assets	Other assets	(71)		25		Other assets	(60)		(71)
Trade accounts payable	Trade accounts payable	755		(173)		Trade accounts payable	291		755
Payroll, benefits and other liabilities	Payroll, benefits and other liabilities	24		(727)		Payroll, benefits and other liabilities	148		24
Unearned revenues	Unearned revenues	(153)		(122)		Unearned revenues	(105)		(153)
Net cash provided by operating activities	Net cash provided by operating activities	2,201		1,150		Net cash provided by operating activities	6,086		2,201
Investing Activities:	Investing Activities:					Investing Activities:
Capital expenditures	Capital expenditures	(641)		(322)		Capital expenditures	(952)		(641)
Purchases of debt and equity marketable securities	Purchases of debt and equity marketable securities	(1,312)		—		Purchases of debt and equity marketable securities	(4,192)		(1,312)
Proceeds from sales and maturities of debt and equity marketable securities	Proceeds from sales and maturities of debt and equity marketable securities	256		96		Proceeds from sales and maturities of debt and equity marketable securities	3,147		256

Acquisitions and other investments, net of cash acquired	Acquisitions and other investments, net of cash acquired	(128)		(118)		Acquisitions and other investments, net of cash acquired	(1,236)		(128)

Proceeds from other investments						Proceeds from other investments	167		33
Other items, net	Other items, net	56		83		Other items, net	32		23
Net cash used by investing activities	Net cash used by investing activities	(1,769)		(261)		Net cash used by investing activities	(3,034)		(1,769)
Financing Activities:	Financing Activities:					Financing Activities:
Proceeds from short-term debt	Proceeds from short-term debt	1,116		3,297		Proceeds from short-term debt	1,579		1,116
Repayment of short-term debt	Repayment of short-term debt	(1,116)		(3,303)		Repayment of short-term debt	(1,579)		(1,116)

Proceeds from issuance of common stock	Proceeds from issuance of common stock	174		177		Proceeds from issuance of common stock	174		174
Repurchases and retirements of common stock	Repurchases and retirements of common stock	(2,340)		(1,019)		Repurchases and retirements of common stock	(1,965)		(2,340)
Dividends paid	Dividends paid	(1,415)		(1,502)		Dividends paid	(1,473)		(1,415)
Payments of tax withholdings related to vesting of share-based awards	Payments of tax withholdings related to vesting of share-based awards	(232)		(143)		Payments of tax withholdings related to vesting of share-based awards	(501)		(235)

Other items, net	Other items, net	(55)		(38)		Other items, net	(23)		(52)
Net cash used by financing activities	Net cash used by financing activities	(3,868)		(2,531)		Net cash used by financing activities	(3,788)		(3,868)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	—		—		Effect of exchange rate changes on cash and cash equivalents	29		0
Net decrease in total cash and cash equivalents	Net decrease in total cash and cash equivalents	(3,436)		(1,642)		Net decrease in total cash and cash equivalents	(707)		(3,436)
Total cash and cash equivalents at beginning of period	Total cash and cash equivalents at beginning of period	11,839		11,777		Total cash and cash equivalents at beginning of period	6,707		11,839
Total cash and cash equivalents at end of period	Total cash and cash equivalents at end of period	$	8,403	$	10,135	Total cash and cash equivalents at end of period	$	6,000	$	8,403

See accompanying notes.

QUALCOMM Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per share data)

(Unaudited)


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019			March 28, 2021		March 29, 2020		March 28, 2021		March 29, 2020
Total stockholders’ equity, beginning balance	Total stockholders’ equity, beginning balance	$	4,513	$	3,617	$	4,909	$	807	Total stockholders’ equity, beginning balance	$	7,380	$	4,513	$	6,077	$	4,909

Common stock and paid-in capital:	Common stock and paid-in capital:									Common stock and paid-in capital:
Balance at beginning of period	Balance at beginning of period	$	—	$	—	$	343	$	—	Balance at beginning of period	$	113	$	0	$	586	$	343
Common stock issued under employee benefit plans and the related tax benefits		151		150		171		177
Common stock issued under employee benefit plans										Common stock issued under employee benefit plans	173		151		174		174
Repurchases and retirements of common stock	Repurchases and retirements of common stock	(451)		—		(932)		(136)		Repurchases and retirements of common stock	(685)		(451)		(1,129)		(932)
Share-based compensation	Share-based compensation	331		237		650		486		Share-based compensation	441		331		860		650
Tax withholdings related to vesting of share-based payments	Tax withholdings related to vesting of share-based payments	(31)		(3)		(232)		(143)		Tax withholdings related to vesting of share-based payments	(52)		(31)		(501)		(235)

Stock awards assumed in acquisition										Stock awards assumed in acquisition	10		0		10		0
Balance at end of period	Balance at end of period	—		384		—		384		Balance at end of period	0		0		0		0

Retained earnings:	Retained earnings:									Retained earnings:
Balance at beginning of period	Balance at beginning of period	4,376		3,415		4,466		542		Balance at beginning of period	6,974		4,376		5,284		4,466
Cumulative effect of accounting changes		—		—		—		3,455

Net income	Net income	468		663		1,393		1,731		Net income	1,762		468		4,217		1,393
Repurchases and retirements of common stock	Repurchases and retirements of common stock	(1,127)		—		(1,408)		(883)		Repurchases and retirements of common stock	(836)		(1,127)		(836)		(1,408)
Dividends	Dividends	(727)		(769)		(1,461)		(1,536)		Dividends	(757)		(727)		(1,522)		(1,461)
Balance at end of period	Balance at end of period	2,990		3,309		2,990		3,309		Balance at end of period	7,143		2,990		7,143		2,990

Accumulated other comprehensive income:	Accumulated other comprehensive income:									Accumulated other comprehensive income:
Balance at beginning of period	Balance at beginning of period	137		202		100		265		Balance at beginning of period	293		137		207		100
Cumulative effect of accounting changes		—		—		—		(51)
Other comprehensive loss		(82)		(29)		(45)		(41)

Other comprehensive (loss) income										Other comprehensive (loss) income	(12)		(82)		74		(45)
Balance at end of period	Balance at end of period	55		173		55		173		Balance at end of period	281		55		281		55

Total stockholders’ equity, ending balance	Total stockholders’ equity, ending balance	$	3,045	$	3,866	$	3,045	$	3,866	Total stockholders’ equity, ending balance	$	7,424	$	3,045	$	7,424	$	3,045

Dividends per share announced	Dividends per share announced	$	0.62	$	0.62	$	1.24	$	1.24	Dividends per share announced	$	0.65	$	0.62	$	1.30	$	1.24

See accompanying notes.

710

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation and Significant Accounting Policies Update

Financial Statement Preparation. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These condensed consolidated financial statements are unaudited and should be read in conjunction with our Annual Report on Form 10-K for our fiscal year ended September ~~29, 2019.~~27, 2020. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. We operate and report using a 52-53 week fiscal year ending on the last Sunday in September. Each of the three and six months ended March ~~29, 2020~~28, 2021 and March ~~31, 2019~~29, 2020 included 13 weeks and 26 weeks, respectively.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Adopted Accounting Guidance.

~~Leases:~~ In February 2016, the FASB issued new accounting guidance related to leases (ASC 842) that outlines a new comprehensive lease accounting model and requires expanded disclosures. Under the new accounting guidance, we are required to recognize right-of-use assets and corresponding lease liabilities on the consolidated balance sheet. We adopted ASC 842 in the first quarter of fiscal 2020 using the modified retrospective approach, with the cumulative effect of initial adoption recorded as an adjustment to our opening condensed consolidated balance sheet at September 30, 2019. We elected to not record leases with a term of 12 months or less on our consolidated balance sheet. In addition, we applied the package of practical expedients permitted under the transition guidance, which among other things, does not require reassessment of lease classification upon adoption. Prior period results have not been restated and continue to be reported in accordance with the accounting guidance in effect for those periods (ASC 840).

Upon adoption, we recorded $449 million of operating lease assets in other assets and $500 million of corresponding lease liabilities ($127 million recorded in other current liabilities and $373 million recorded in other liabilities). The difference between the operating lease assets and liabilities of $51 million primarily related to deferred rent liabilities that existed as of the date of adoption. Finance leases were not material for all periods presented. Adoption of the new accounting guidance did not have a material impact on our condensed consolidated statements of operations or cash flows.

~~Accounting Policy Update.~~

~~Leases:~~ ~~As a result of the adoption of ASC 842, we revised our lease accounting policy beginning in fiscal 2020 as follows.~~

Operating lease assets and liabilities are recognized for leases with lease terms greater than 12 months based on the present value of the future lease payments over the lease term at the commencement date. Operating leases are included in other assets, other current liabilities and other liabilities on our consolidated balance sheet. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such option. We account for substantially all lease and related non-lease components together as a single lease component. Operating lease expense is recognized on a straight-line basis over the lease term.

~~Recent Accounting Guidance Not Yet Adopted.~~

Financial Assets: In June 2016, the ~~FASB~~Financial Accounting Standards Board (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 (such as accounts receivable) ~~will be~~are estimated based on expected losses rather than the ~~current~~previous incurred loss impairment model. The new accounting guidance also ~~modifies~~eliminated the concept of other-than-temporary impairment ~~model for available-for-sale debt securities. These changes will result in earlier recognition of~~with credit losses ~~if any. 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~~related 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 recorded through an allowance for ~~which an other-than-temporary impairment has been recorded.~~credit losses rather than as a reduction in the amortized cost basis of the securities. We ~~will adopt~~adopted the new accounting guidance in the first quarter of fiscal 2021 under the modified retrospective transition method, except for certain available-for-sale debt securities where the prospective transition method was required, and as a result, prior period results have not been restated. The impact upon adoption was not material to our condensed consolidated financial statements. The future impact of such accounting guidance will largely depend on the future composition and credit quality of our investment portfolio and accounts receivable, as well as future economic conditions.

Accounting Policy Update.

Marketable Securities: As a result of the adoption of the new accounting guidance described above, we revised our accounting policy beginning in fiscal 2021 as follows.

Marketable securities include marketable equity securities, available-for-sale debt securities and, from time-to-time, certain time deposits. 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 other income (expense), net. Debt securities are classified as available for sale or held to maturity at the time of purchase and reevaluated at each balance sheet date. The realized and unrealized gains and losses on marketable securities are determined using the specific identification method.

If a debt security has an unrealized loss 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 impairment charge to investment and other income (expense), net for the entire amount of the unrealized loss and adjust the amortized cost basis of the security. For the remaining debt securities, if an unrealized loss exists, we separate the impairment into the portion of the loss related to credit factors and the ~~impact~~portion of ~~this new~~the loss that is not related to credit factors. Unrealized gains or unrealized losses that are not related to credit factors on available-for-sale debt securities are recorded as a component of accumulated other comprehensive income, net of income taxes. Unrealized losses that are related to credit loss factors on available-for-sale debt securities and subsequent adjustments to the credit loss are recorded as an allowance for credit losses, which is included in investment and other income, net. In evaluating whether a credit loss exists, we consider a variety of 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; 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.

811

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~accounting guidance will largely depend on the composition and credit quality of our investment portfolio~~ ~~and accounts receivable,~~ ~~as well as economic conditions, at the time of adoption.~~ ~~Based on facts and factors currently known by us, we do not expect the impact of adoption to be material to our consolidated financial statements.~~

Note 2. Composition of Certain Financial Statement Items

Inventories (in millions)
March 29,
2020 September 29,
2019
Raw materials $ 101 $ 77
Work-in-process 802 667
Finished goods 797 656
$ 1,700 $ 1,400

~~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):~~

March 29,
2020 September 29,
2019
Equity method investments $ 210 $ 343
Non-marketable equity investments 726 787
$ 936 $ 1,130

The rapid, global spread of the recent coronavirus (COVID-19) pandemic and associated containment and mitigation measures have negatively impacted the condition of economies and financial markets globally, which has negatively impacted certain companies in which we hold non-marketable equity investments, including those accounted for under the equity method, and to a lesser extent, non-marketable debt securities. Significant evaluation and judgments were required in determining if the negative effects of COVID-19 indicate that such investments were impaired, and if so, the extent of such impairment, in the second quarter of fiscal 2020. This included, among other items: (i) assessing the business impacts that COVID-19 had, and we currently expect to have in the future, on our investees, including taking into consideration the investee’s industry and geographic location and the impact to its customers, suppliers and employees, as applicable, (ii) evaluating the investees’ ability to respond to the impacts of COVID-19, including any significant deterioration in the investee’s financial condition and cash flows, as well as assessing liquidity and/or going concern risks and (iii) considering any appreciation in fair value that has not been recognized in the carrying values of such investments. Based on this evaluation, certain of our investments were impaired and written down to their estimated fair values in the second quarter of fiscal 2020 based on information currently known by us (a significant portion of which related to the full impairment of our investment in OneWeb (an equity method investee) who filed for bankruptcy in the second quarter of fiscal 2020) (Note 7). Although we believe that our judgments supporting our impairment assessments are reasonable (which relies on information reasonably available to us), the COVID-19 pandemic makes it challenging for us and our investees to estimate the future performance of our investees’ businesses. As circumstances change and/or new information becomes available, we may be required to record additional impairments in subsequent periods.

Short-term Debt (in millions)
March 29,
2020 September 29,
2019
Commercial paper $ 499 $ 499
Current portion of long-term debt 2,000 1,997
$ 2,499 $ 2,496

~~Subsequent to March 29, 2020, we reduced the total amount available for issuance under our unsecured commercial paper program from $5.0 billion to $4.5 billion.~~


Inventories (in millions)
	March 28, 2021		September 27, 2020
Raw materials	$	167	$	94
Work-in-process	1,207		1,155
Finished goods	1,294		1,349
	$	2,668	$	2,598

Revolving Credit Facility. ~~We have an~~On December 8, 2020, we entered into a Revolving Credit Facility replacing our prior Amended and Restated Revolving Credit Facility. There were 0 outstanding borrowings under the Amended and Restated Revolving Credit Facility ~~(Revolving~~at the time of termination. The Revolving Credit ~~Facility) that~~Facility provides for unsecured revolving facility loans, swing line loans and letters of credit in an aggregate amount of up to $4.5

~~QUALCOMM Incorporated~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

billion, which expires on ~~November~~December 8, ~~2021.~~2025. At March ~~29, 2020,~~28, 2021, 0 amounts were outstanding under the Revolving Credit Facility.

~~Long-term Debt.~~ The Revolving Credit Facility requires that we comply with certain financial covenants, including that we maintain an interest coverage ratio, as defined in the agreement. At March ~~29, 2020~~28, 2021, we were in compliance with the applicable covenants under the Revolving Credit Facility.

Interest Rate Swaps. Beginning in the second quarter of 2021, we entered into forward-starting interest rate swaps to hedge the variability of forecasted interest payments on anticipated debt issuances through 2025. At March 28, 2021, the notional amount of the forward-starting interest rate swaps outstanding, which are denominated in U.S. dollars, was $1.2 billion. The fair values of the forward-starting interest rate swaps recorded in other noncurrent assets and ~~September 29, 2019,~~other noncurrent liabilities were $23 million and negligible, respectively, at March 28, 2021. Since March 28, 2021, we ~~had outstanding~~entered into additional forward-starting interest rate swaps with an aggregate notional amount of ~~$750 million~~ ~~and $1.8 billion, respectively, related to our May 2015 Notes.~~ During the second quarter of fiscal 2020, we terminated interest rate swaps related to our fixed-rate 3.0% notes due May 20, 2022 resulting in a deferred gain of $19 million, which is being amortized to interest expense over the remaining term of the fixed-rate 3.0% notes due May 20, 2022. At March 29, 2020 and September 29, 2019, the aggregate fair value of our remaining outstanding principal floating- and fixed-rate notes, including the current portion of long-term debt, based on Level 2 inputs, was approximately $16.7 billion and $16.5 billion, respectively.$1.1 billion.

Revenues. We disaggregate our revenues by segment (Note 6) and type of products and services (as presented on our condensed consolidated statement of operations), ~~as we believe this best depicts how~~and for our QCT (Qualcomm CDMA Technologies) segment by revenue stream, which is based on industry segment and application in which our products are sold (as presented below). In certain cases, the ~~nature, amount, timing~~determination of QCT revenues by industry segment and ~~uncertainty~~application requires the use of ~~our revenues and cash flows are affected by economic factors.~~certain assumptions. Substantially all of QCT’s ~~(Qualcomm CDMA Technologies)~~ revenues consist of equipment revenues that are recognized at a point in time, and substantially all of QTL’s (Qualcomm Technology Licensing) revenues represent licensing revenues that are recognized over ~~time.~~time and are principally from royalties generated through our licensees’ sales of mobile handsets. QCT revenue streams were as follows (in millions):


			Three Months Ended				Six Months Ended
	March 28, 2021	March 29, 2020	March 28, 2021		March 29, 2020


Handsets (1)			$	4,065	$	2,652	$	8,281	$	5,004

RFFE (2)			903		650		1,964		1,063
Automotive (3)			240		171		452		318
IoT (Internet of Things) (4)			1,073		627		2,117		1,334
Total QCT revenues			$	6,281	$	4,100	$	12,814	$	7,719

(1) Includes revenues from products sold for use in mobile handsets, excluding RFFE (radio frequency front-end) components.

(2) Includes all revenues from sales of 4G, 5G sub-6 and 5G millimeter wave RFFE products (a substantial portion of which are sold for use in handsets).

(3) Includes revenues from products sold for use in automobiles, including telematics, connectivity and digital cockpit.

(4) Primarily includes products sold for use in cellular and non-cellular connected devices within the following industry segments and applications: consumer, computing, industrial, fixed wireless broadband, voice and music and wireless networking.

Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were ~~$150~~$122 million and ~~$398~~$150 million for the three months ended March 28, 2021 and March 29, 2020, ~~and March 31, 2019,~~ respectively, and ~~$178~~$176 million and ~~$394~~$178 million for the six months ended March ~~29, 2020~~28, 2021 and March ~~31, 2019,~~29, 2020, respectively, and primarily related to QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, in part based on actual reporting of royalties by our licensees) and certain QCT customer ~~incentives and revenues related to a development contract with one of our equity method investees.~~incentives.

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unearned revenues (which are considered contract liabilities) consist primarily of license fees for intellectual property with continuing performance obligations. In the six months ended March ~~29, 2020~~28, 2021 and March ~~31, 2019,~~29, 2020, we recognized revenues of ~~$307~~$314 million and ~~$258~~$307 million, respectively, that were recorded as unearned revenues at September 27, 2020 and September 29, 2019, ~~and October 1, 2018,~~ respectively.

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 March ~~29, 2020,~~28, 2021, we had ~~$1.5~~$1.2 billion of remaining performance obligations, of which ~~$284~~$272 million, ~~$511~~$535 million, ~~$463~~$258 million, ~~$202~~$75 million and ~~$50~~$26 million was expected to be recognized as revenues for the remainder of fiscal ~~2020~~2021 and each of the subsequent four years from fiscal ~~2021~~2022 through ~~2024,~~2025, respectively, and ~~$26~~0 amounts thereafter.

Concentrations. A significant portion of our revenues are concentrated with a small number of customers/licensees of our QCT and QTL segments. The comparability of customer/licensee concentrations for the interim periods presented are impacted by the timing of customer/licensees device launches and/or innovation cycles and other seasonal trends, among other fluctuations in demand. Revenues from each customer/licensee that were 10% or greater of total revenues were as follows:


	Three Months Ended				Six Months Ended
	March 28, 2021		March 29, 2020		March 28, 2021		March 29, 2020


Customer/licensee (w)	16	%	*		25	%	10	%

Customer/licensee (x)	16		25	%	14		21
Customer/licensee (y)	15		19		13		16
Customer/licensee (z)	13		*		11		*

* Less than 10%

Accounts receivable at March 28, 2021 and September 27, 2020 included approximately $700 million ~~thereafter.~~and $1.3 billion, respectively, excluding the impact of foreign withholding taxes, from Huawei related to the remaining amounts due under the previously disclosed settlement agreement to be paid in installments by the end of June 2021 and estimated royalties for sales made in the March 2021 and September 2020 quarters, respectively, under the global patent license agreement with Huawei. Subsequent to March 28, 2021, Huawei paid the third installment of $300 million (excluding the impact of foreign withholding taxes) under the settlement agreement in accordance with the agreed upon payment schedule.

Other Income, Costs and Expenses.Other income in the three and six months ended March 29, 2020 consisted of a $23 million gain related to a favorable legal settlement.

Other income in the three months ended March 31, 2019 included a $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), partially offset by $25 million in net restructuring and restructuring-related charges related to our Cost Plan that concluded in fiscal 2019. Other expenses in the six months ended March 31, 2019 included $204 million in net restructuring and restructuring-related charges related to our Cost Plan, partially offset by a $43 million gain due to the partial recovery of a fine we paid to the KFTC and a $31 million gain related to a favorable legal settlement.


Investment and Other Income (Expense), Net (in millions)
	Three Months Ended				Six Months Ended
	March 28, 2021		March 29, 2020		March 28, 2021		March 29, 2020
Interest and dividend income	$	22	$	47	$	42	$	107
Net (losses) gains on marketable securities	(85)		55		33		66
Net gains (losses) on other investments	176		(12)		209		36

Net gains (losses) on deferred compensation plan assets	23		(72)		77		(42)
Impairment losses on other investments	(15)		(265)		(16)		(337)
Net (losses) gains on derivative investments	(17)		0		(7)		1
Equity in net earnings (losses) of investees	12		(6)		11		(16)
Net (losses) gains on foreign currency transactions	(12)		6		(26)		3

	$	104	$	(247)	$	323	$	(182)

1013

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Investment and Other (Expense) Income, Net (in millions)
Three Months Ended Six Months Ended
March 29,
2020 March 31,
2019 March 29,
2020 March 31,
2019
Interest and dividend income $ 47 $ 78 $ 107 $ 143
Net gains (losses) on marketable securities 55 5 66 (19)
Net (losses) gains on other investments (12) 6 36 42
Net (losses) gains on deferred compensation plan assets (72) 37 (42) (2)
Impairment losses on other investments (265) (60) (337) (69)
Net (losses) gains on derivative investments — (1) 1 (9)
Equity in net losses of investees (6) (36) (16) (58)
Net gains (losses) on foreign currency transactions 6 (1) 3 5
$ (247) $ 28 $ (182) $ 33

Net gains (losses) on the revaluation of our deferred compensation plan assets are recorded within investment and other (expense) income, net and are not allocated to our segments. Corresponding offsetting amounts related to the revaluation of our deferred compensation plan liabilities are included in unallocated operating expenses (Note 6).

Note 3. Income Taxes

We estimate our annual effective income tax rate to be 12% for fiscal ~~2020,~~2021, which is lower than the U.S. federal statutory rate, primarily due to a significant portion of our income qualifying for preferential treatment as foreign-derived intangible income (FDII) at a 13% effective tax rate, ~~and due to~~ benefits from our federal research and development tax ~~credit.~~credit and excess tax benefits associated with share-based awards. The effective tax rate of ~~22%~~17% for the second quarter of fiscal ~~2020~~2021 was higher than the estimated annual effective tax rate of 12% primarily due to $87 million of discrete net tax charges recorded in the second quarter of fiscal 2021, which principally related to a tax audit settlement with the Internal Revenue Service and foreign currency losses on a noncurrent receivable related to our refund claim of Korean withholding tax. The effective tax rate of 22% for the second quarter of fiscal 2020 included $28 million of discrete net tax charges recorded in the second quarter of fiscal 2020, which principally related to foreign currency losses on a noncurrent receivable related to our refund claim of Korean withholding tax.

The United States Treasury Department has issued proposed regulations on several provisions of the 2017 Tax Cuts and Jobs Act, including FDII and interest expense deduction limitations, which may 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.

Unrecognized tax benefits were ~~$1.8~~$2.0 billion and ~~$1.7~~$1.9 billion at March ~~29, 2020~~28, 2021 and September ~~29, 2019,~~27, 2020, respectively, and primarily ~~relate~~related to our refund claim of Korean withholding tax. If successful, the refund will result in a corresponding reduction in U.S. foreign tax credits. We expect that the total amount of unrecognized tax benefits at March ~~29, 2020~~28, 2021 will increase in the next 12 months 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.

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 the six months ended March ~~29, 2020~~28, 2021 and March ~~31, 2019,~~29, 2020, we repurchased and retired ~~29.3~~14 million and ~~16.8~~29 million shares, respectively, for ~~$2.3~~$2.0 billion and ~~$1.0~~$2.3 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, if any, to retained earnings. At March ~~29, 2020, $4.7~~28, 2021, $2.6 billion remained authorized for repurchase under our stock repurchase program.~~Subsequent to March 29, 2020, to maintain our financial liquidity position and flexibility, we suspended our stock repurchases, at least for the near-term, in light of COVID-19.~~

~~Dividends~~Dividends.. On March 10, ~~2020,~~2021, we announced a 5% increase in our quarterly dividend per share of common stock from ~~$0.62~~$0.65 to ~~$0.65,~~$0.68, which is effective for dividends payable after March ~~26, 2020.~~25, 2021. On April ~~21, 2020,~~14, 2021, we announced a cash dividend of ~~$0.65~~$0.68 per share on our common stock, payable on June ~~25, 2020~~24, 2021 to stockholders of record as of the close of business on June ~~4, 2020.~~3, 2021.

~~QUALCOMM Incorporated~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Earnings Per Common Share. Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed by dividing net income by the combination of the weighted-average number 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 following table provides information about the diluted earnings per share calculation (in millions):


		Three Months Ended			Six Months Ended				Three Months Ended		Six Months Ended
		March 29, 2020	March 31, 2019	March 29, 2020	March 31, 2019		March 28, 2021	March 29, 2020	March 28, 2021	March 29, 2020
Dilutive common share equivalents included in diluted shares	Dilutive common share equivalents included in diluted shares	12.0	3.8	13.5	7.0	Dilutive common share equivalents included in diluted shares	18	12	20	13
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	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	0.2	17.2	0.2	14.4	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	0	0	0	0

Note 5. Commitments and Contingencies

Legal and Regulatory Proceedings.

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, as amended, and Rule 10b-5 thereunder, by

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.~~dismiss. On January 15, 2020, we filed a motion for judgment on the pleadings. The court has not yet ruled on our motion. We believe the plaintiffs’ claims are without merit.

In re Qualcomm/Broadcom Merger Securities Litigation: 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 then current officers. The complaints alleged, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, 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. 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, and on March 10, 2020, the court granted our motion. ~~The plaintiffs have until~~On May 11, 2020, the plaintiffs filed a second amended complaint, and on October 8, 2020, the court granted our motion to ~~file an amended complaint.~~ dismiss the case with prejudice. On November 7, 2020, the plaintiffs filed a notice of appeal. No hearing date has been set. We believe the plaintiffs’ claims are without merit.

Consumer Class Action ~~Lawsuit:~~Lawsuits: 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. ~~Currently, twenty-two such cases remained 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

~~QUALCOMM Incorporated~~

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~~(Unaudited)~~

permission to appeal the court’s class certification order. On January 24, 2019, the court stayed the case pending our appeal. On December 2, 2019, a hearing on our appeal of the class certification order was held before the Ninth Circuit. The Ninth Circuit has not yet ruled on our appeal. We believe the plaintiffs’ claims are without merit.

~~Canadian Consumer Class Action Lawsuits:~~Since November 9, 2017, ~~eight~~several other 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), Israel (in the Haifa District Court) and the United Kingdom (in the Competition Appeal Tribunal), each on behalf of a putative class of purchasers of cellular phones and other cellular devices, alleging ~~various~~ violations of ~~Canadian~~certain of those countries’ competition and consumer protection laws. The claims in these complaints are similar to those in the U.S. consumer class action ~~complaint.~~complaints. 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. We are awaiting 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.

ParkerVision, Inc. v. QUALCOMM Incorporated: On May 1, 2014, ParkerVision filed a complaint against us in the United States District Court for the Middle District of Florida alleging that certain of our products infringed seven ParkerVision patents. On August 21, 2014, ParkerVision amended the complaint, then captioned ParkerVision, Inc. v. QUALCOMM Incorporated, Qualcomm Atheros, Inc., HTC Corporation, HTC America, Inc., Samsung Electronics Co., LTD., Samsung Electronics America, Inc. and Samsung Telecommunications America, LLC, broadening the allegations. ParkerVision alleged that we infringed 11 ParkerVision patents and sought damages and injunctive and other relief. ParkerVision has subsequently reduced the number of patents asserted to four, granted covenants not to sue on the other patents and dismissed the Samsung and HTC entities from the case. The asserted patents are now expired, and injunctive relief is no longer available. ParkerVision continues to seek damages related to the sale of many of our radio frequency (RF) products sold between 2008 and 2018. On March 26, 2021, the court issued an order stating that trial is extremely unlikely to occur before November or December 2021, if then. We believe that ParkerVision’s claims are without merit.

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Korea Fair Trade Commission (KFTC) ~~Investigation:~~Investigation (2015): 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: (a) 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; (b) not demand that handset companies execute and perform under patent license agreements as a precondition for purchasing modem chipsets; (c) not demand unjustifiable conditions in our license agreements with handset companies and, upon request, renegotiate existing patent license agreements; and (d) notify modem chipset companies and handset 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: (1) handset manufacturers headquartered in Korea and their affiliate companies; (2) enterprises that sell handsets in or to Korea and their affiliate companies; (3) enterprises that supply handsets to companies referred to in (2) above and the affiliate companies of such enterprises; (4) modem chipset manufacturers headquartered in Korea and their affiliate companies; and (5) enterprises that supply modem chipsets to companies referred to in (1), (2) or (3) 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.~~ On February 21, 2017, we filed an action in the Seoul High Court to cancel the KFTC’s decision. The Seoul High Court held hearings concluding on August 14, 2019 and, on December 4, 2019, announced its judgment affirming certain portions of the KFTC’s decision and finding other portions of the KFTC’s decision unlawful. The Seoul High Court cancelled the KFTC’s remedial orders described in (c) above, and solely insofar as they correspond thereto, the Seoul High Court cancelled the KFTC’s remedial orders described in (d) above. The Seoul High Court dismissed the remainder of our action to cancel the KFTC’s decision. On December 19, 2019, we filed a notice of appeal to the Korea Supreme Court challenging those portions of the Seoul High Court decision that are not in our favor. The KFTC filed a notice of appeal to the Korea Supreme Court challenging the portions of the Seoul High Court decision that are not in its favor. Both we and the KFTC have filed briefs on the merits. The Korea Supreme Court has not yet ruled on our appeal or that of the KFTC. We believe that our business practices do not violate the MRFTA.

Korea Fair Trade Commission (KFTC) Investigation (2020): On June 8, 2020, the KFTC informed us that it was conducting an investigation of us relating to the MRFTA. The KFTC has not provided a formal notice on the scope of their investigation, but we believe it concerns our business practices in connection with our sale of radio frequency front-end (RFFE) components. We continue to cooperate with the KFTC as it conducts its investigation. If a violation is found, a broad range of remedies is potentially available to the KFTC, including imposing a fine (of up to 3% of our sales in the relevant markets during the alleged period of violation) and/or injunctive relief prohibiting or restricting certain business practices. It is difficult to predict the outcome of this matter or what remedies, if any, may be imposed by the KFTC. We believe that our business practices do not violate the MRFTA.

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

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~~(Unaudited)~~

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 European Union (EU) competition rules.

In the third quarter of fiscal 2019, we recorded a charge of $275 million to other expenses related to this 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

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adjustment. At March ~~29, 2020,~~28, 2021, the liability, including related foreign currency ~~gains~~losses and accrued interest (which, to the extent they were not related to the net investment hedge, were recorded in investment and other ~~(expense)~~ income, net), was ~~$272~~$292 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~~A hearing before the court ~~has not yet ruled on our appeal.~~is scheduled for May 4-6, 2021. 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 this 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 March ~~29, 2020,~~28, 2021, 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 ~~(expense)~~ income, net), was ~~$1.1~~$1.2 billion and included in other current liabilities.

European Commission (EC) Investigation regarding Radio Frequency Front ~~Ends~~End (RFFE): On December 3, 2019, we received a Request for Information from the EC notifying us that it iswas investigating whether we engaged in anti-competitive behavior in the European Union (EU)/European Economic Area (EEA) by leveraging our market position in 5G baseband processors in the RFFE space. We ~~have~~ responded to the Request for ~~Information.~~ ~~If a violation is found, a broad range of remedies is potentially available to~~Information and had several discussions with the EC. In March 2021, the EC including imposing a fine (of up to 10% of our annual revenues) and/or injunctive relief prohibiting or restricting certain business practices. It is difficult to predict the outcome of this matter or what remedies, if any, may be imposed by the EC. We believeinformed us that ~~our business practices do not violate the EU competition rules.~~it had closed its investigation.

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 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 Long Term Evolution (LTE) 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 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

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(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

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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. 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~~for Partial Stay. . On February 13, 2020, the Ninth Circuit heard oral ~~argument, but has~~argument.

On August 11, 2020, the Ninth Circuit issued its opinion, which reversed the district court’s judgment, vacated its injunction and vacated its partial grant of summary judgment. The Ninth Circuit stated that the district court erred in holding that we are under an antitrust duty to license rival chip manufacturers and noted that our practice of licensing our standard-essential patents exclusively at the OEM level does not ~~yet ruled~~violate the antitrust laws. The Ninth Circuit also held that the district court’s “anticompetitive surcharge” theory failed to state a cogent theory of anticompetitive harm and that our patent-licensing royalties and “no license, no chips” policy do not impose an anticompetitive surcharge on rivals’ modem chip sales and do not undermine competition in either the CDMA or premium LTE chip markets. While agreeing with the district court that our ~~appeal.~~2011 and 2013 agreements with Apple were structured like exclusive dealing contracts, the Ninth Circuit nonetheless held that neither agreement had the actual or practical effect of substantially foreclosing competition in the CDMA modem chip market, and because Apple terminated these agreements years ago, the district court had improperly issued an injunction. The Ninth Circuit noted that neither the Sherman Act nor any other law prohibits companies like us from (1) licensing their standard-essential patents independently from their chip sales and collecting royalties, and/or (2) limiting their chip customer base to licensed OEMs. On September 25, 2020, the FTC filed a Petition for Rehearing En Banc. On October 28, 2020, the Ninth Circuit denied the FTC’s petition. On March 26, 2021, the FTC’s deadline for filing a petition for certiorari with the U.S. Supreme Court to seek review of the Ninth Circuit’s decision expired. The case is now over.

Contingent losses and other considerations: We will continue to vigorously defend ~~ourself~~ourselves 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 0t recorded any accrual at March ~~29, 2020~~28, 2021 for contingent losses associated with these matters based on our belief that losses, while reasonably possible, are not probable. Further, any possible amount or 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 (for example, proceedings relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights) 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.

~~Indemnifications~~. We generally do not indemnify our customers, licensees and suppliers for losses sustained from infringement of third-party intellectual property rights. However, we are contingently liable under certain agreements to defend and/or indemnify certain customers, licensees and suppliers against certain types of liability and/or damages arising from the infringement of third-party intellectual property rights. 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.

Claims and reimbursements under indemnification arrangements have not been material to our consolidated financial statements. At March 29, 2020, accruals for contingent liabilities associated with these indemnification arrangements were negligible. We have not recorded accruals for certain claims under 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.

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~~Operating Leases.~~ We lease certain of our land, facilities and equipment under operating leases, with terms ranging from less than one year to 20 years, some of which include options to extend for up to 20 years. At March 29, 2020, other assets included $475 million of operating lease assets, with corresponding lease liabilities of $132 million recorded in other current liabilities and $389 million recorded in other liabilities.

Operating lease expense for the three and six months ended March 29, 2020 was $44 million and $88 million, respectively, and $35 million and $72 million for the three and six months ended March 31, 2019, respectively. Cash paid under our operating leases was $74 million for the six months ended March 29, 2020. As of March 29, 2020, the weighted-average remaining lease term and weighted-average discount rate for operating leases were 6.0 years and 4%, respectively.

~~At March 29, 2020, future lease payments under our operating leases were as follows (in millions):~~

Operating Leases
Remainder of fiscal 2020 $ 76
2021 130
2022 109
2023 66
2024 47
Thereafter 172
Total future lease payments 600
Imputed interest (79)
Total lease liability balance $ 521

~~At September 29, 2019,future minimum lease payments under our noncancelable operating leases under ASC 840 were as follows (in millions):~~

Operating Leases
2020 $ 138
2021 97
2022 66
2023 31
2024 18
Thereafter 35
Total $ 385

Note 6. Segment Information

We are organized on the basis of products and services and have three reportable segments. Our operating segments reflect the way our businesses and management/reporting structure are organized internally and the way our Chief Operating Decision Maker (CODM), who is our CEO, reviews financial information, makes operating decisions and assesses business performance. We also consider, among other items, the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined, as well as the similarity of business activities within our operating segments, such as the nature of products, the level of shared products, technology and other resources, production processes and customer base. We conduct business primarily through our QCT semiconductor business and our QTL licensing business.

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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QCT develops and supplies integrated circuits and system software based on ~~CDMA, OFDMA~~3G/4G/5G and other technologies for use in mobile devices, wireless networks, devices used in the ~~Internet of Things (IoT),~~IoT, broadband gateway equipment, consumer electronic devices and automotive systems for telematics and ~~infotainment systems.~~infotainment. QTL grants licenses or otherwise provides rights 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~~ investee. We also have nonreportable segments, including QGOV (Qualcomm Government Technologies), our cloud AI inference processing initiative and other technology and service initiatives.

~~We evaluate~~Our CODM allocates resources to and evaluates the performance of our segments based on revenues and 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 ~~compensatio~~n,compensation, gains and losses on our deferred compensation plan liabilities and related assets and certain research and ~~development~~development expenses, selling, general and

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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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~~awards, settlements and/or ~~damages.~~damages arising from legal or regulatory matters.

The table below presents revenues ~~EBT~~ and ~~total assets~~EBT for reportable segments (in millions):

Three Months Ended Six Months Ended
March 29,
2020 March 31,
2019 March 29,
2020 March 31,
2019
Revenues
QCT $ 4,100 $ 3,722 $ 7,719 $ 7,461
QTL 1,072 1,122 2,477 2,141
QSI 10 98 30 125
Reconciling items 34 40 66 97
Total $ 5,216 $ 4,982 $ 10,292 $ 9,824
EBT
QCT $ 667 $ 542 $ 1,145 $ 1,140
QTL 671 674 1,689 1,264
QSI (208) 17 (210) 25
Reconciling items (532) (427) (1,079) (1,063)
Total $ 598 $ 806 $ 1,545 $ 1,366

March 29,
2020 September 29,
2019
Assets
QCT $ 3,286 $ 2,307
QTL 1,465 1,541
QSI 1,281 1,708
Reconciling items 25,906 27,401
Total $ 31,938 $ 32,957

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, receivables and other investments. 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, operating lease assets, noncurrent income taxes receivabl~~es, deferred compensation plan assets~~ ~~and assets of nonreportable segments.~~

QCT accounts receivable increased by 75% in the first six months of fiscal 2020 from $908 million to $1.59 billion, primarily driven by an increase in revenues combined with the timing of integrated circuit shipments during the quarter and a decrease in the relative proportion of customer incentive arrangements that are recorded in accounts receivable. QCT inventories increased by 21% in the first six months of fiscal 2020 from $1.40 billion to $1.70 billion, primarily driven by the ramp in 5G.

At March 29, 2020, 26% of total accounts receivable included royalties from Guangdong OPPO Mobile Telecommunications Corp., Ltd. (Oppo) and BBK Communication Technology Co., Ltd. (vivo) (who were previously disclosed as two key Chinese licensees), primarily from sales made in the last four fiscal quarters (including amounts that are not yet due) under license agreements that expired on March 31, 2020. We entered into new long-term, world-wide patent license agreements with these licensees, effective as of April 1, 2020, covering 3G/4G/5G multimode devices. We also reached agreements with these licensees to provide for payment of amounts due under the license agreements that expired on March 31, 2020 and for which certain of such amounts for prior periods were withheld while good faith negotiations


	Three Months Ended				Six Months Ended
	March 28, 2021		March 29, 2020		March 28, 2021		March 29, 2020
Revenues
QCT	$	6,281	$	4,100	$	12,814	$	7,719
QTL	1,614		1,072		3,273		2,477
QSI	10		10		19		30
Reconciling items	30		34		64		66
Total	$	7,935	$	5,216	$	16,170	$	10,292
EBT
QCT	$	1,584	$	667	$	3,503	$	1,145
QTL	1,191		671		2,461		1,689
QSI	98		(208)		256		(210)
Reconciling items	(744)		(532)		(1,488)		(1,079)
Total	$	2,129	$	598	$	4,732	$	1,545

1719

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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occurred. The licensees have agreed to make full payment in the near term according to agreed upon payment schedules. These licensees/customers continue to make timely payments on purchases of integrated circuit products. NaN reversals of revenues were recognized in the second quarter of fiscal 2020 as a result of these agreements.

QSI segment assets, which primarily consist of non-marketable and marketable equity investments, decreased by 25% in the first six months of fiscal 2020 from $1.71 billion to $1.28 billion, primarily due to certain impairment losses on other investments (Note 2) and the sale of certain marketable equity investments.

Reconciling items for revenues and EBT in the previous table were as follows (in millions):


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
		March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019			March 28, 2021		March 29, 2020		March 28, 2021		March 29, 2020
Revenues	Revenues									Revenues
Nonreportable segments	Nonreportable segments	$	34	$	40	$	66	$	97	Nonreportable segments	$	30	$	34	$	64	$	66

		$	34	$	40	$	66	$	97
EBT	EBT									EBT

Unallocated cost of revenues	Unallocated cost of revenues	$	(84)	$	(104)	$	(175)	$	(218)	Unallocated cost of revenues	$	(72)	$	(84)	$	(148)	$	(175)
Unallocated research and development expenses	Unallocated research and development expenses	(216)		(190)		(475)		(337)		Unallocated research and development expenses	(415)		(216)		(821)		(475)
Unallocated selling, general and administrative expenses	Unallocated selling, general and administrative expenses	(56)		(84)		(172)		(148)		Unallocated selling, general and administrative expenses	(113)		(56)		(291)		(172)
Unallocated other income (expenses) (Note 2)		23		18		23		(130)
Unallocated other income (Note 2)										Unallocated other income (Note 2)	0		23		0		23
Unallocated interest expense	Unallocated interest expense	(145)		(159)		(293)		(313)		Unallocated interest expense	(141)		(145)		(282)		(293)
Unallocated investment and other (expense) income, net		(30)		109		52		130
Unallocated investment and other income (expense), net										Unallocated investment and other income (expense), net	14		(30)		85		52
Nonreportable segments	Nonreportable segments	(24)		(17)		(39)		(47)		Nonreportable segments	(17)		(24)		(31)		(39)
											$	(744)	$	(532)	$	(1,488)	$	(1,079)
		$	(532)	$	(427)	$	(1,079)	$	(1,063)

Note 7. Acquisitions

On March 16, 2021 (the Closing Date), we completed the acquisition of NuVia, Inc. (NUVIA) for $1.1 billion (net of cash acquired), substantially all of which was paid in cash. In connection with the acquisition, we assumed or replaced unvested NUVIA stock awards with Qualcomm stock awards with an estimated fair value of $258 million, for which $10 million was attributable to pre-acquisition services and included in the purchase price, and the remaining amount will be recognized as compensation expense over the related post-acquisition requisite service period of up to four years.

NUVIA has certain in-process technologies and is comprised of a CPU (central processing unit) and technology design team with expertise in high performance processors, SoC (system-on-chip) and power management for compute-intensive devices and applications. Upon completion of development, NUVIA’s technologies are expected to be integrated into certain QCT products.

We have not finalized the purchase price allocation. Accordingly, the preliminary purchase price allocation shown below could change as the fair values of the tangible and intangible assets acquired and liabilities assumed, and the related income tax effects, are finalized during the remainder of the measurement period (which will not exceed 12 months from the Closing Date). The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values was as follows (in millions):


Cash	$	174
In-process research and development (IPR&D)	247
Goodwill	887
Other assets	25
Total assets	1,333
Liabilities	(69)
Net assets acquired	$	1,264

Goodwill recognized in this transaction is not deductible for tax purposes and was allocated to our QCT segment for annual impairment testing purposes. Goodwill is primarily attributable to assembled workforce and certain revenue and cost synergies expected to arise after the acquisition. IPR&D related to a single project, which is expected to be completed in fiscal 2023 and, upon completion, will be amortized over its useful life (which is expected to be 7 years). The estimated fair value of the IPR&D asset acquired was determined using an income approach based on significant inputs that were not observable.

Our results of operations for the second quarter of fiscal 2021 included the operating results of NUVIA since the Closing Date, the amounts of which were not material. Pro forma results of operations have not been presented because the effects of this acquisition were not material to our condensed consolidated results of operations.

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7.8. Fair Value Measurements

The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at March ~~29, 2020~~28, 2021 (in millions):


		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	2,898	$	4,529	$	—	$	7,427	Cash equivalents	$	1,789	$	2,869	$	0	$	4,658
Marketable securities:	Marketable securities:									Marketable securities:
U.S. Treasury securities and government-related securities	U.S. Treasury securities and government-related securities	—		3		—		3		U.S. Treasury securities and government-related securities	0		11		0		11
Corporate bonds and notes	Corporate bonds and notes	—		1,253		—		1,253		Corporate bonds and notes	0		5,003		0		5,003

Mortgage- and asset-backed and auction rate securities	Mortgage- and asset-backed and auction rate securities	—		48		33		81		Mortgage- and asset-backed and auction rate securities	0		176		35		211

Equity securities	Equity securities	239		—		—		239		Equity securities	336		0		0		336

Total marketable securities	Total marketable securities	239		1,304		33		1,576		Total marketable securities	336		5,190		35		5,561
Derivative instruments	Derivative instruments	—		9		—		9		Derivative instruments	0		78		0		78
Other investments	Other investments	404		—		39		443		Other investments	617		0		10		627
Total assets measured at fair value	Total assets measured at fair value	$	3,541	$	5,842	$	72	$	9,455	Total assets measured at fair value	$	2,742	$	8,137	$	45	$	10,924
Liabilities	Liabilities									Liabilities

Derivative instruments	Derivative instruments	$	—	$	29	$	—	$	29	Derivative instruments	$	0	$	18	$	0	$	18
Other liabilities	Other liabilities	405		—		39		444		Other liabilities	617		0		0		617
Total liabilities measured at fair value	Total liabilities measured at fair value	$	405	$	29	$	39	$	473	Total liabilities measured at fair value	$	617	$	18	$	0	$	635

Activity within Level 3 of the Fair Value Hierarchy. Other investments ~~and other liabilities~~ included in Level 3 at March ~~29, 2020~~28, 2021 were comprised of non-marketable debt ~~instruments and contingent consideration related to business combinations, respectively.~~instruments. Activity for marketable securities and other investments classified within Level 3 was insignificant during the six months ended March 28, 2021 (primarily related to settlements of non-marketable debt instruments) and the six months ended March 29, 2020 (primarily related to impairments of certain non-marketable debt instruments and purchases of non-marketable debt instruments). Activity for other liabilities classified within Level 3 ~~of the valuation hierarchy~~ was insignificant during the six months ended March 29, ~~2020, which was primarily related to~~2020.

~~QUALCOMM Incorporated~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

impairments of certain of our non-marketable debt instruments (Note 2) and purchases of non-marketable debt instruments, and the six months ended March 31, 2019, which was primarily related to the issuance of a non-marketable debt instrument by a private company.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis. 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 the six months ended March 28, 2021 and March 29, 2020, certain of our non-marketable equity investments were written down to their estimated fair values, which was recorded as a component of impairment losses on other investments in investment and other ~~expense,~~income (expense), net (Note 2), and certain other non-marketable equity investments were remeasured to their estimated fair values based on observable price changes in orderly transactions for identical or similar securities, which is recorded as a component of net gains on other investments in investment and other income (expense), net (Note 2). For a significant portion of these impairments, the estimated fair values resulted in a full write-off of the carrying values. The estimation of fair values was judgmental in nature and involved the use of significant estimates and assumptions. We determined these fair value measurements primarily using a market approach and key inputs and assumptions included estimated market value of assets, ability of investees to access additional financing or otherwise continue as a going concern and liquidation and other rights of the securities we hold.

During the six months ended March 31, 2019, certain intangible assets and goodwill were written down to their estimated fair values. We also measured certain non-marketable equity securities received as non-cash consideration at fair value on a nonrecurring basis. We determined these fair value measurements using market and income approaches and key inputs and assumptions included projected cash flows, estimated selling prices, volatility and the rights of the securities we hold.

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. ~~During~~

Long-term Debt. At March 28, 2021 and September 27, 2020, the ~~six months ended March 29, 2020 and March 31, 2019, we did not have any other significant assets or liabilities that were measured at~~aggregate fair value of our outstanding floating- and fixed-rate notes, based on ~~a nonrecurring basis.~~Level 2 inputs, was approximately $16.6 billion and $17.5 billion, respectively.

QUALCOMM Incorporated

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8.9. Marketable Securities

~~We classify marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations.~~ Our marketable securities were comprised as follows (in millions):


		Current						Noncurrent (1)							Current				Noncurrent (1)
		March 29, 2020		September 29, 2019		March 29, 2020		September 29, 2019			March 28, 2021		September 27, 2020		March 28, 2021		September 27, 2020

Available-for-sale debt securities:	Available-for-sale debt securities:									Available-for-sale debt securities:
U.S. Treasury securities and government-related securities	U.S. Treasury securities and government-related securities	$	3	$	—	$	—	$	—	U.S. Treasury securities and government-related securities	$	11	$	10	$	0	$	0
Corporate bonds and notes	Corporate bonds and notes	1,253		4		—		—		Corporate bonds and notes	5,003		4,049		0		0

Mortgage- and asset-backed and auction rate securities	Mortgage- and asset-backed and auction rate securities	48		—		33		35		Mortgage- and asset-backed and auction rate securities	176		66		35		35

Total available-for-sale debt securities	Total available-for-sale debt securities	1,304		4		33		35		Total available-for-sale debt securities	5,190		4,125		35		35

Equity securities	Equity securities	239		417		—		1		Equity securities	336		352		0		0

Time deposit (2)										Time deposit (2)	0		30		0		0
Total marketable securities	Total marketable securities	$	1,543	$	421	$	33	$	36	Total marketable securities	$	5,526	$	4,507	$	35	$	35

(1) Noncurrent marketable securities were included in other assets.

(2) At September 27, 2020, marketable securities also included a time deposit with an original maturity of greater than 90 days.

The contractual maturities of available-for-sale ~~marketable~~ debt securities were as follows (in millions):


	March ~~29,~~28, ~~2020~~2021
Years to Maturity
Less than one year	$	~~813~~2,103
One to five years	~~443~~2,911


No single maturity date	81211
Total	$	~~1,337~~5,225

Debt securities with no single maturity date included mortgage- and asset-backed securities and auction rate securities.

1922

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This information should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in “Part I, Item 1” of this Quarterly Report and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended September ~~29, 2019~~27, 2020 contained in our ~~2019~~2020 Annual Report on Form 10-K.

This Quarterly Report (including but not limited to this section ~~entitled~~titled 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, cash flows and prospects. Forward-looking statements also include but are not limited to statements regarding the ~~rapid, global spread of the recent~~ coronavirus (COVID-19) pandemic and its potential future impact on the global economy, ~~including the potential for a global recession;~~ economic uncertainty and consumer and business confidence; demand for devices that incorporate our products and intellectual property; our and the global wireless industry’s supply chains, transportation and distribution networks and workforces; 5G network deployments; and our business, revenues, results of operations, cash flows and financial condition; as well as statements regarding our planning assumptions, workforce practices, the duration and severity of the pandemic, and government and other actions to mitigate the spread of, and to treat, COVID-19. Forward-looking statements further include but are not limited to statements regarding industry, market, business, product, technology, commercial, competitive or consumer ~~trends;~~trends, including seasonality; the 5G transition; our businesses, growth potential or strategies, or factors that may impact them; challenges to our licensing business, including by licensees, governments, governmental agencies or regulators, standards bodies or others; challenges to our QCT business; other legal or regulatory matters; competition; new or expanded product areas, adjacent industry segments orand applications; costs or expenditures including research and development, selling, general and administrative, restructuring or restructuring-related charges, working capital or information technology systems; our debt, financing, stock repurchase or dividend programs; our liquidity and capital resources, including our expected increase in operating cash outflows to secure long-term capacity commitments with certain of our suppliers; strategic investments or ~~acquisitions;~~acquisitions, and the anticipated timing or benefits thereof; adoption and application of future accounting guidance; tax law changes; our tax structure or strategies; U.S./China trade or national security policies; and the potential business or financial statement impacts of any of the above, among others. 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 Quarterly Report.

Although forward-looking statements in this Quarterly 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 the heading “Risk Factors” below, as well as those discussed elsewhere in this Quarterly Report. ~~In particular,~~Further, see the Risk Factor ~~entitled~~titled “The ~~recent~~ coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and ~~we expect its~~may continue to impact ~~will increase, at least~~us in the ~~near term,~~future,” and note that many of the risks and uncertainties set forth in ~~the~~ other Risk Factors ~~will~~ could be exacerbated by the COVID-19 pandemic, government and business responses thereto and any further resulting decline in the global business and economic ~~environment.~~environment, as well as the extent and speed of global economic recovery. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly 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 Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

Second Quarter Fiscal ~~2020~~2021 Overview ~~and Other Recent Events~~

Revenues for the second quarter of fiscal ~~2020~~2021 were ~~$5.2~~$7.9 billion, an increase of 5%52% compared to the year ago quarter, with net income of ~~$468 million, a decrease~~$1.8 billion, an increase of ~~29%~~276% compared to the year ago quarter. Highlights ~~and other key developments~~ from the second quarter of fiscal ~~2020~~2021 and other recent events included:

•The rapid, global spread of COVID-19 has negatively impacted consumer demand for devices that incorporate our products and intellectual property, which negatively impacted our business and results of operationsQCT revenues increased by 53% in the second quarter of fiscal 2020. The negative impacts of the COVID-19 pandemic varied by region. In China, sales were significantly impacted early in the second fiscal quarter, but we started to see meaningful recovery by the end of March. Other regions were impacted later in the second fiscal quarter, with increasing impacts exiting March. The impact of COVID-19 on our ability to fulfill customer orders has been minimal. In response to the pandemic, we implemented significant workforce changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations. This included significantly

~~reducing the number of people in our offices and implementing additional safety measures for employees continuing critical on-site work.~~

•QTL revenues in the second quarter of fiscal 2020 benefited from the inclusion of royalties from Apple for sales made during the March 2020 quarter (as a result of the settlement with Apple and its contract manufacturers in April 2019), which was partially offset by the negative impact of COVID-19. We did not record any revenues in the second quarter of fiscal 2020 for royalties due on the sales of Huawei’s consumer wireless products.

•~~QCT revenues increased by 10% in the second quarter of fiscal 2020~~2021 compared to the year ago quarter, primarily due to an increase in demand for 5G products ~~partially offset by the negative impact of COVID-19.~~across handsets and RFFE, along with higher automotive and IoT revenues.

•InQTL revenues increased by 51% in the second quarter of fiscal ~~2020, we recorded $265 million~~2021 compared to the year ago quarter, primarily due to an increase in ~~non-marketable investment impairments, resulting in part~~estimated sales of 3G/4G/5G-based multimode products, which was primarily driven by a recovery from the negative impacts of COVID-19.

•~~We entered~~On March 16, 2021, we completed the acquisition of NuVia, Inc. (NUVIA) for $1.1 billion, net of cash acquired. NUVIA has certain in-process technologies and is comprised of a CPU (central processing unit) and technology design team with expertise in high performance processors, SoC (system-on-chip) and power management for compute-intensive devices and applications. Upon completion of development, NUVIA’s technologies are expected to be integrated into ~~new long-term, world-wide patent license agreements~~certain QCT products.

•On March 26, 2021, the FTC’s deadline for filing a petition for certiorari with ~~Guangdong OPPO Mobile Telecommunications Corp., Ltd. (Oppo) and BBK Communication Technology Co., Ltd. (vivo) (who were previously disclosed as two key Chinese licensees), effective as~~the U.S. Supreme Court to seek review of ~~April 1, 2020, covering 3G/4G/5G multimode devices. We also reached agreements with these licensees to provide for payment of amounts due under~~ the ~~license agreements that expired on March 31, 2020 and for which certain of such amounts for prior periods were withheld while good faith negotiations occurred.~~Ninth Circuit’s decision in United States Federal Trade Commission (FTC) v. QUALCOMM Incorporated expired. The licensees have agreed to make full payment in the near term according to agreed upon payment schedules. These licensees/customers continue to make timely payments on purchases of integrated circuit products.case is now over.

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 QGOV (Qualcomm Government Technologies), our cloud AI inference processing initiative and other technology and service initiatives.

Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries. QTL is operated by QUALCOMM Incorporated, which owns the vast majority of our patent portfolio. 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. 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.

Seasonality. Many of our products ~~and/or~~and 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 when the~~ licensees’ sales ~~occurred. Our historical trends were~~occur. We expect QCT revenues to continue to be impacted by ~~our prior dispute with~~seasonal trends related to product launch timing for sales made to Apple ~~and its contract manufacturers, which was settled in April 2019. We expect to begin recording equipment revenues for new chipset models~~ under our multi-year chipset ~~agreement with Apple in the second half of fiscal 2020.~~supply agreement. These trends may or may not continue in the future and have been impacted by ~~the decline~~past declines in consumer demand resulting from COVID-19. Further, the trends for QTL have ~~been, and/or~~been, and 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.~~proceedings.

Results of Operations


Revenues (in millions)	Revenues (in millions)																			Revenues (in millions)
		Three Months Ended										Six Months Ended											Three Months Ended				Six Months Ended
		March 29, 2020		March 31, 2019		Change		March 29, 2020		March 31, 2019		Change			March 28, 2021		March 29, 2020		Change		March 28, 2021		March 29, 2020		Change
Equipment and services	Equipment and services	$	4,050	$	3,753	$	297	$	7,583	$	7,506	$	77	Equipment and services	$	6,239	$	4,050	$	2,189	$	12,681	$	7,583	$	5,098
Licensing	Licensing	1,166		1,229		(63)		2,709		2,318		391		Licensing	1,696		1,166		530		3,489		2,709		780
		$	5,216	$	4,982	$	234	$	10,292	$	9,824	$	468		$	7,935	$	5,216	$	2,719	$	16,170	$	10,292	$	5,878

Second quarter ~~2020~~2021 vs. ~~2019~~2020

The increase in revenues in the second quarter of fiscal ~~2020~~2021 was primarily due to:

+ ~~$389 million~~$2.2 billion in higher equipment and services revenues from our QCT segment

-+ ~~$88~~$542 million in ~~lower equipment and services revenues from our QSI segment~~

- ~~$50 million in lower~~higher licensing revenues from our QTL segment

First six months ~~2020~~2021 vs. ~~2019~~2020

The increase in revenues in the first six months of fiscal ~~2020~~2021 was primarily due to:

+ ~~$336 million in higher licensing revenues from our QTL segment~~

+ ~~$196 million~~$5.1 billion in higher equipment and services revenues from our QCT segment

-+ ~~$95~~$796 million in ~~lower equipment and services~~higher licensing revenues from our ~~QSI~~QTL segment


Costs and Expenses (in millions, except percentages)	Costs and Expenses (in millions, except percentages)																									Costs and Expenses (in millions, except percentages)
		Three Months Ended														Six Months Ended														Three Months Ended					Six Months Ended
		March 29, 2020			March 31, 2019			Change		March 29, 2020			March 31, 2019			Change			March 28, 2021			March 29, 2020			Change		March 28, 2021			March 29, 2020			Change
Cost of revenues	Cost of revenues	$	2,297		$	2,179		$	118	$	4,410		$	4,367		$	43	Cost of revenues	$	3,432		$	2,297		$	1,135	$	6,921		$	4,410		$	2,511
Gross margin	Gross margin	56		%	56		%			57		%	56		%			Gross margin	57		%	56		%			57		%	57		%

Second quarter ~~2020~~2021 vs. ~~2019~~2020

Gross margin percentage increased in the second quarter of fiscal 2021 primarily due to a decrease in charges related to the amortization of intangible assets as a percentage of revenues.

First six months 2021 vs. 2020

Gross margin percentage remained flat in the ~~second quarter~~first six months of fiscal ~~2020~~2021 primarily due to:

- decrease in higher margin QTL licensing revenues ~~as a~~in proportion ~~of total~~to QCT revenues

+ increase in QCT gross margin

~~First six months 2020 vs. 2019~~

~~Gross margin percentage increased in the first six months of fiscal 2020 primarily due to:~~

+ ~~increase~~decrease in ~~higher margin QTL licensing revenues~~charges related to the amortization of intangible assets as a ~~proportion~~percentage of ~~total~~ revenues


		Three Months Ended														Six Months Ended														Three Months Ended					Six Months Ended
		March 29, 2020			March 31, 2019			Change		March 29, 2020			March 31, 2019			Change			March 28, 2021			March 29, 2020			Change		March 28, 2021			March 29, 2020			Change
Research and development	Research and development	$	1,468		$	1,308		$	160	$	2,873		$	2,577		$	296	Research and development	$	1,780		$	1,468		$	312	$	3,433		$	2,873		$	560
% of revenues	% of revenues	28		%	26		%			28		%	26		%			% of revenues	22		%	28		%			21		%	28		%

Second quarter ~~2020~~2021 vs. ~~2019~~2020

The increase in research and development expenses in the second quarter of fiscal ~~2020~~2021 was primarily due to:

+ $~~149~~167 million increase driven by higher costs related to the development of wireless and integrated circuit technologies ~~including~~(including 5G and ~~RFFE technologies~~application processor technologies), a portion of which was attributable to higher employee cash incentive program costs

+ $6490 million increase in share-based compensation expense

-+ ~~$49~~$56 million increase in ~~lower~~ expenses driven by revaluation of our deferred compensation ~~plan liabilities~~obligation on ~~weakened~~improved stock market performance (which resulted in a corresponding increase in net ~~losses~~gains on ~~marketable securities~~deferred compensation plan assets within investment and other income (expense) ~~income,~~, net due to the revaluation of the related assets)

First six months ~~2020~~2021 vs. ~~2019~~2020

The increase in research and development expenses in the first six months of fiscal ~~2020~~2021 was primarily due to:

+ $~~213~~337 million increase driven by higher costs related to the development of wireless and integrated circuit technologies ~~including~~(including 5G and ~~RFFE technologies~~application processor technologies), a portion of which was attributable to higher employee cash incentive program costs

+ $~~115~~164 million increase in share-based compensation expense

+$59 million increase in expenses driven by revaluation of our deferred compensation obligation on improved stock market performance (which resulted in a corresponding increase in net gains on deferred compensation plan assets within investment and other income (expense), net due to the revaluation of the related assets)


	Three Months Ended								Six Months Ended
	March 28, 2021			March 29, 2020			Change		March 28, 2021			March 29, 2020			Change


Selling, general and administrative	$	557		$	483		$	74	$	1,124		$	1,011		$	113
% of revenues	7		%	9		%			7		%	10		%

2225

Three Months Ended Six Months Ended
March 29,
2020 March 31,
2019 Change March 29,
2020 March 31,
2019 Change
Selling, general and administrative $ 483 $ 573 $ (90) $ 1,011 $ 1,100 $ (89)
% of revenues 9 % 12 % 10 % 11 %

Second quarter ~~2020~~2021 vs. ~~2019~~2020

The ~~decrease~~increase in selling, general and administrative expenses in the second quarter of fiscal ~~2020~~2021 was primarily due to:

-+ $8438 million increase in ~~lower litigation costs, primarily resulting from the settlement of our prior dispute with Apple and its contract manufacturers in April 2019~~

-~~$58 million in lower~~ expenses driven by revaluation of our deferred compensation ~~plan liabilities~~obligation on ~~weakened~~improved stock market performance (which resulted in a corresponding increase in net gains on deferred compensation plan assets within investment and other income (expense), net due to the revaluation of the related assets)

+ $2331 million increase in employee-related expenses driven primarily by higher employee cash incentive program costs

+$21 million increase in share-based compensation expense

- $20 million decrease in litigation costs

First six months ~~2020~~2021 vs. ~~2019~~2020

The ~~decrease~~increase in selling, general and administrative expenses in the first six months of fiscal ~~2020~~2021 was primarily due to:

-+ $~~144~~58 million increase in ~~lower litigation costs, primarily resulting from the settlement~~expenses driven by revaluation of our ~~prior dispute with Apple~~deferred compensation obligation on improved stock market performance (which resulted in a corresponding increase in net gains on deferred compensation plan assets within investment and ~~its contract manufacturers in April 2019~~other income (expense), net due to the revaluation of the related assets)

+ $3543 million increase in share-based compensation expense

Three Months Ended Six Months Ended
March 29,
2020 March 31,
2019 Change March 29,
2020 March 31,
2019 Change
Other (income) expense $ (23) $ (18) $ (5) $ (23) $ 130 $ (153)
+$19 million increase in employee-related expenses driven by higher employee cash incentive program costs

- $38 million decrease in litigation costs


	Three Months Ended						Six Months Ended
	March 28, 2021		March 29, 2020		Change		March 28, 2021		March 29, 2020		Change
Other income	$	—	$	(23)	$	23	$	—	$	(23)	$	23

Second quarter and first six months 2020

Other income in the ~~three~~second quarter and first six months ~~ended March 29,~~of fiscal 2020 consisted of:

+ ~~$23~~$23 million gain related to a favorable legal settlement

~~Second quarter 2019~~


Interest Expense and Investment and Other Income (Expense), Net (in millions)
	Three Months Ended						Six Months Ended
	March 28, 2021		March 29, 2020		Change		March 28, 2021		March 29, 2020		Change
Interest expense	$	141	$	146	$	(5)	$	283	$	294	$	(11)


Investment and other income (expense), net
Interest and dividend income	$	22	$	47	$	(25)	$	42	$	107	$	(65)
Net (losses) gains on marketable securities	(85)		55		(140)		33		66		(33)
Net gains (losses) on other investments	176		(12)		188		209		36		173
Net gains (losses) on deferred compensation plan assets	23		(72)		95		77		(42)		119
Impairment losses on other investments	(15)		(265)		250		(16)		(337)		321

Net (losses) gains on derivative instruments	(17)		—		(17)		(7)		1		(8)
Equity in net earnings (losses) of investees	12		(6)		18		11		(16)		27

Net (losses) gains on foreign currency transactions	(12)		6		(18)		(26)		3		(29)
	$	104	$	(247)	$	351	$	323	$	(182)	$	505

~~Other income in~~Net gains on other investments for the ~~second quarter of fiscal 2019 consisted of:~~

+~~$43 million gain due to partial recovery of a fine imposed in fiscal 2009~~three and six months ended March 28, 2021 was driven primarily by realized gains resulting ~~from our appeal of the Korea Fair Trade Commission (KFTC) decision~~

- $25 million in net charges related to our Cost Plan that concluded in fiscal 2019, which included $70 million in restructuring and restructuring-related charges, partially offset by a $45 million net gain from the sale of certain ~~assets related to wireless electric vehicle charging applications and the sale~~ of our ~~mobile health nonreportable segment~~

~~First six months 2019~~

~~Other expenses in the first six months of fiscal 2019 consisted of:~~

+$204 million net charges related to our Cost Plan, which included $249 million in restructuring and restructuring-related charges, partially offset by a $45 million net gain from the sale of certain assets related to wireless electric vehicle charging applications and the sale of our mobile health nonreportable segment

- ~~$43 million gain due to the partial recovery of a fine imposed in fiscal 2009 resulting from our appeal of the KFTC decision~~

- ~~$31 million gain related to a favorable legal settlement~~QSI non-marketable investments.

2326

Interest Expense and Investment and Other (Expense) Income, Net (in millions)
Three Months Ended Six Months Ended
March 29,
2020 March 31,
2019 Change March 29,
2020 March 31,
2019 Change
Interest expense $ 146 $ 162 $ (16) $ 294 $ 317 $ (23)
Investment and other (expense) income, net
Interest and dividend income $ 47 $ 78 $ (31) $ 107 $ 143 $ (36)
Net gains (losses) on marketable securities 55 5 50 66 (19) 85
Net (losses) gains on other investments (12) 6 (18) 36 42 (6)
Net (losses) gains on deferred compensation plan assets (72) 37 (109) (42) (2) (40)
Impairment losses on other investments (265) (60) (205) (337) (69) (268)
Net (losses) gains on derivative instruments — (1) 1 1 (9) 10
Equity in net losses of investees (6) (36) 30 (16) (58) 42
Net gains (losses) on foreign currency transactions 6 (1) 7 3 5 (2)
$ (247) $ 28 $ (275) $ (182) $ 33 $ (215)

~~COVID-19 had an impact on certain companies in which we hold non-marketable investments, resulting in an increase in~~The impairment losses on other investments for the three and six months ended March 29, ~~2020.~~2020 were due in part to the impact COVID-19 had on certain of our investees. A significant portion of the impairment losses related to our investment in OneWeb ~~(an equity method investee)~~ who filed for bankruptcy in the second quarter of fiscal 2020. Additionally, COVID-19 had a negative impact on the fair values of our deferred compensation plan assets, resulting in a net loss on such assets in the three and six months ended March 29, 2020.

Income Tax Expense ~~(Benefit)~~ (in millions, except percentages)

The following table summarizes the primary factors that caused our income tax provision to differ from the expected income tax provision at the U.S. federal statutory rate:


		Three Months Ended									Six Months Ended										Three Months Ended						Six Months Ended
		March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019				March 28, 2021			March 29, 2020			March 28, 2021			March 29, 2020
Expected income tax provision at federal statutory tax rate	Expected income tax provision at federal statutory tax rate	$	126		$	169		$	324		$	287		Expected income tax provision at federal statutory tax rate	$	447		$	126		$	994		$	324

Benefit from foreign-derived intangible income (FDII) deduction	Benefit from foreign-derived intangible income (FDII) deduction	(43)			(48)			(89)			(88)			Benefit from foreign-derived intangible income (FDII) deduction	(115)			(43)			(189)			(89)
Excess tax benefit associated with share-based awards														Excess tax benefit associated with share-based awards	(22)			(10)			(184)			(56)
Benefit related to the research and development tax credit	Benefit related to the research and development tax credit	(35)			(22)			(60)			(46)			Benefit related to the research and development tax credit	(39)			(35)			(98)			(60)
Excess tax (benefit) deficiency associated with share-based awards		(10)			1			(56)			(1)
Valuation allowance on unused foreign tax credits		14			—			20			—
Foreign currency loss related to foreign withholding tax receivable		47			—			4			—
Benefit from establishing new U.S. net deferred tax assets		—			—			—			(570)

Audit settlement with Internal Revenue Service														Audit settlement with Internal Revenue Service	55			—			55			—
Foreign currency loss (gain) related to foreign withholding tax receivable														Foreign currency loss (gain) related to foreign withholding tax receivable	33			47			(46)			4

Other	Other	31			43			9			53			Other	8			45			(17)			29
Income tax expense (benefit)		$	130		$	143		$	152		$	(365)
Income tax expense														Income tax expense	$	367		$	130		$	515		$	152
Effective tax rate	Effective tax rate	22		%	18		%	10		%	(27		%)	Effective tax rate	17		%	22		%	11		%	10		%

We estimate our annual effective income tax rate to be 12% for fiscal ~~2020. The estimated annual effective tax rate for fiscal 2020~~2021, which is lower than the U.S. federal statutory rate, primarily due to a significant portion of our income qualifying for preferential treatment as ~~FDII~~foreign-derived intangible income (FDII) at a 13% ~~effecti~~ve effective tax rate, ~~and~~ benefits from our federal research and development tax ~~credit.~~credit and excess tax benefits associated with share-based awards.

In the first quarter of fiscal 2021, the United States Treasury Department issued final regulations on the foreign tax credit, which generally are applicable beginning in fiscal 2021, with certain provisions retroactive to fiscal 2019. As a result of these regulations, our fiscal 2021 estimated annual effective tax rate increased by approximately 1%. The retroactive impact resulting from these new regulations, which was related to fiscal 2019 and fiscal 2020 and recorded discretely in the first quarter of fiscal 2021, was not significant.

2427

The United States Treasury Department has issued proposed regulations on several provisions of the 2017 Tax Cuts and Jobs Act (the Tax Legislation), including FDII and interest expense deduction limitations, which may 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.

Segment Results

The following should be read in conjunction with our financial results for the second quarter and first six months of fiscal ~~2020~~2021 for each reportable segment included in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 6. Segment Information.”

QCT Segment (in millions, except percentages)


		Three Months Ended															Six Months Ended															Three Months Ended					Six Months Ended
		March 29, 2020			March 31, 2019			Change			March 29, 2020			March 31, 2019			Change				March 28, 2021			March 29, 2020			Change		March 28, 2021			March 29, 2020			Change
Revenues	Revenues																			Revenues
Equipment and services		$	4,011		$	3,622		$	389		$	7,496		$	7,300		$	196
Licensing		89			100			(11)			223			161			62
Handsets (1)																				Handsets (1)	$	4,065		$	2,652		$	1,413	$	8,281		$	5,004		$	3,277
RFFE (2)																				RFFE (2)	903			650			253		1,964			1,063			901
Automotive (3)																				Automotive (3)	240			171			69		452			318			134
IoT (Internet of Things) (4)																				IoT (Internet of Things) (4)	1,073			627			446		2,117			1,334			$	783
Total revenues	Total revenues	$	4,100		$	3,722		$	378		$	7,719		$	7,461		$	258		Total revenues	$	6,281		$	4,100		$	2,181	$	12,814		$	7,719		$	5,095

Earnings before taxes (EBT)		$	667		$	542		$	125		$	1,145		$	1,140		$	5

EBT (5)																				EBT (5)	$	1,584		$	667		$	917	$	3,503		$	1,145		$	2,358
EBT as a % of revenues	EBT as a % of revenues	16		%	15		%	1		%	15		%	15		%	—		%	EBT as a % of revenues	25		%	16		%	9 points		27		%	15		%	12 points

~~Equipment~~(1) Includes revenues from products sold for use in mobile handsets, excluding RFFE (radio frequency front-end) components.

(2) Includes all revenues from sales of 4G, 5G sub-6 and 5G millimeter wave RFFE products (a substantial portion of which are sold for use in handsets).

(3) Includes revenues from products sold for use in automobiles, including telematics, connectivity and digital cockpit.

(5) Earnings (loss) before income taxes.

Substantially all of QCT’s revenues consist of equipment and services revenues, ~~primarily relate to sales of MSM, Radio Frequency (RF), Power Management (PM)~~which were $6.2 billion and wireless connectivity chipsets. MSM integrated circuits include our stand-alone Mobile Data Modems (MDMs) and Snapdragon platforms, which include processors and modems. Approximately 129 million and 155 million MSM integrated circuits were sold$4.0 billion in the second quarter of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~approximately 283 million~~$12.6 billion and ~~341 million MSM integrated circuits were sold~~$7.5 billion in the first six months of fiscal 2021 and 2020, respectively. QCT handsets, automotive and ~~2019, respectively.~~ ~~We use the volume~~IoT revenues mostly relate to sales of ~~MSM integrated circuit shipments to allow~~our stand-alone Mobile Data Modems, Snapdragon platforms (which include processors and modems), radio frequency, power management and ~~investors to, in part, evaluate, assess and benchmark our QCT segment’s performance. MSM~~wireless connectivity integrated circuit shipments do not fully reflect the performance of our QCT segment, which can be impacted by other factors including changes in mix and average selling price of our MSM integrated circuits and revenues generated from products other than MSM integrated circuits, such as RFFE products, among others.chipsets.

Second quarter ~~2020~~2021 vs. ~~2019~~2020

The increase in QCT ~~equipment and services~~ revenues in the second quarter of fiscal ~~2020~~2021 was primarily due to:

+~~$378 million in~~ higher ~~revenues per MSM and accompanying RF, PM and wireless connectivity chipset shipments, primarily driven by a favorable shift in product mix as 5G devices launched~~

+~~$265 million in higher RFFE product~~handsets revenues, primarily driven by $1.5 billion in higher chipset shipments, which was primarily due to an increase in demand for 5G ~~device launches~~

-~~$262~~products from major OEMs, including Apple, partially offset by $155 million in lower ~~MSM and accompanying~~revenues per chipset ~~shipments,~~primarily due to unfavorable mix

+ higher RFFE revenues, primarily driven by ~~a decrease~~an increase in demand for 4G/5G products from major OEMs, including Apple

+ higher automotive revenues, primarily driven by an increase in demand for infotainment and telematics products

+ higher IoT revenues, primarily driven by an increase in demand for connected devices due to ~~COVID-19~~the continued work and ~~lower modem sales to Apple~~learn from home environment

QCT EBT as a percentage of revenues increased in the second quarter of fiscal ~~2020~~2021 primarily due to:

+ higher ~~QCT~~ revenues

+ -~~higher gross margin, primarily driven by a favorable shift in product mix towards 5G products~~

- higher operating expenses, primarily driven by higher research and development ~~costs~~expenses

First six months ~~2020~~2021 vs. ~~2019~~2020

The increase in QCT ~~equipment and services~~ revenues in the first six months of fiscal ~~2020~~2021 was primarily due to:

+~~$422~~higher handsets revenues, primarily driven by $2.3 billion in higher chipset shipments and $904 million in higher revenues per ~~MSM~~chipset, both of which were primarily due to an increase in demand for 5G products from Apple and ~~accompanying RF, PM and wireless connectivity chipset shipments, primarily driven by a favorable shift in product mix as 5G devices launched~~other major OEMs

+~~$295 million in~~ higher RFFE ~~product~~ revenues, primarily driven by an increase in demand for 4G/5G ~~device launches~~products from Apple and other major OEMs

-+ ~~$584 million in lower MSM and accompanying chipset shipments,~~higher automotive revenues, primarily driven by ~~a decrease~~an increase in demand for telematics and infotainment products

+ higher IoT revenues, primarily driven by an increase in demand for connected devices due to ~~COVID-19~~the continued work and ~~lower modem sales to Apple~~learn from home environment

QCT EBT as a percentage of revenues ~~remained flat~~increased in the first six months of fiscal ~~2020~~2021 primarily due to:

+ higher ~~QCT~~ revenues

-+ higher ~~operating expenses,~~gross margin percentage, primarily driven by higher average selling prices, partially offset by higher average unit costs

-higher research and development ~~costs~~expenses

decrease in the relative proportion of customer incentive arrangements that are recorded in accounts receivable. QCT inventories increased by 21% in the first six months of fiscal 2020 from $1.40 billion to $1.70 billion, primarily driven by the ramp in 5G.

QTL Segment (in millions, except percentages)


		Three Months Ended															Six Months Ended															Three Months Ended					Six Months Ended
		March 29, 2020			March 31, 2019			Change			March 29, 2020			March 31, 2019			Change				March 28, 2021			March 29, 2020			Change		March 28, 2021			March 29, 2020			Change

Licensing revenues	Licensing revenues	$	1,072		$	1,122		$	(50)		$	2,477		$	2,141		$	336		Licensing revenues	$	1,614		$	1,072		$	542	$	3,273		$	2,477		$	796

EBT	EBT	671			674			(3)			1,689			1,264			425			EBT	1,191			671			520		2,461			1,689			772

EBT as a % of revenues	EBT as a % of revenues	63		%	60		%	3		%	68		%	59		%	9		%	EBT as a % of revenues	74		%	63		%	11 points		75		%	68		%	7 points

As a result of the ~~settlement~~global patent license agreement entered into with ~~Apple and its contract manufacturers~~Huawei in ~~April 2019,~~July 2020, QTL results for the ~~second quarter and~~ first six months of fiscal ~~2020~~2021 included royalties from Apple and its contract manufactures. Revenues in the second quarter and first six months of fiscal 2019 did not include royalties from sales of Apple or other products by Apple’s contract manufacturers.

~~QTL~~ revenues in the second quarter and first six months of fiscal 2019 included $150 million and $300 million, respectively, of royalties from Huawei under a second interim agreement that concluded in the third quarter of fiscal 2019. This represented a minimum, non-refundable amount for royalties due on sales made by Huawei in the December 2020 and ~~does not reflect the full amount of royalties due under the underlying license agreement, which expired on December 31, 2019.~~March 2021 quarters. We ~~have not reached a final amended or new agreement with Huawei, and we~~ did not record any revenues in the first six months of fiscal 2020 for royalties due on the sales of Huawei’s consumer wireless products.

Second quarter ~~2020~~2021 vs. ~~2019~~2020

The ~~decrease~~increase in QTL licensing revenues in the second quarter of fiscal ~~2020~~2021 was primarily due to:

-+ $~~150~~561 million in ~~lower royalty revenues from Huawei due to the expiration of the interim agreement~~

-$76 million in lower estimated revenues per 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

+~~$182 million increase in~~higher estimated sales of 3G/4G/5G-based multimode products, ~~(including multimode products),~~ primarily due to a recovery from the negative impacts of COVID-19 and to a lesser extent, due to the new license agreement with ~~Apple, partially offset by the negative impact of COVID-19~~Huawei

+ $58 million in higher estimated revenues per unit, primarily due to ~~licensees’ sales~~favorable OEM mix

-$78 million in lower royalty revenues recognized related to devices sold in prior periods

QTL EBT as a percentage of revenues increased in the second quarter of fiscal ~~2020~~2021 primarily due to:

+~~lower selling, general and administrative expenses, primarily from lower litigation costs~~higher revenues

- higher research and development expenses

-~~lower QTL revenues~~

First six months ~~2020~~2021 vs. ~~2019~~2020

The increase in QTL licensing revenues in the first six months of fiscal ~~2020~~2021 was primarily due to:

+ $~~775~~765 million ~~increase~~ in higher estimated sales of 3G/4G/5G-based multimode products, ~~(including multimode products),~~ primarily due to a recovery from the negative impacts of COVID-19 and to a lesser extent, due to the new license agreement with ~~Apple, which reflected the impact of Apple’s fall device launches~~Huawei

+ $104 million in ~~advance of the holiday season, partially offset by the negative impact of COVID-19~~higher estimated revenues per unit, primarily due to ~~licensees’ sales~~favorable OEM mix

- $~~300~~72 million in lower royalty revenues ~~from Huawei due~~recognized related to ~~the expiration of the interim agreement~~

-~~$177 million~~devices sold in lower estimated revenues per 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 capsprior periods

QTL EBT as a percentage of revenues increased in the first six months of fiscal ~~2020~~2021 primarily due to:

+ higher ~~QTL~~ revenues

+~~lower selling, general and administrative expenses, primarily from lower litigation costs~~

- higher research and development expenses

QSI Segment (in millions)


		Three Months Ended										Six Months Ended											Three Months Ended				Six Months Ended
		March 29, 2020		March 31, 2019		Change		March 29, 2020		March 31, 2019		Change			March 28, 2021		March 29, 2020		Change		March 28, 2021		March 29, 2020		Change

Equipment and services revenues	Equipment and services revenues	$	10	$	98	$	(88)	$	30	$	125	$	(95)	Equipment and services revenues	$	10	$	10	$	—	$	19	$	30	$	(11)

EBT	EBT	(208)		17		(225)		(210)		25		(235)		EBT	98		(208)		306		256		(210)		466

Second quarter ~~2020~~2021 vs. ~~2019~~2020

The ~~decrease~~increase in QSI EBT in the second quarter of fiscal ~~2020~~2021 was primarily due to:

-+ $~~203~~247 million increase in impairment losses on other investments, of which a significant portion related to the full impairment of our investment in OneWeb (an equity method investee) who filed for bankruptcy in the second quarter of fiscal 2020

-~~$88 million~~ decrease ~~in revenues associated with certain development contracts with OneWeb~~

+~~$36 million increase in net gains on investments~~

+~~$26 million decrease in our share of equity method investee losses~~

~~First six months 2020 vs. 2019~~

~~The decrease in QSI EBT in the first six months of fiscal 2020 was primarily due to:~~

-~~$264 million increase~~ in impairment losses on other investments, of which a significant portion related to our investment in OneWeb

-+ $~~95 million decrease in revenues associated with certain development contracts with OneWeb~~

+~~$81~~41 million increase in net gains on investments

+
~~$29 million decrease~~

First six months 2021 vs. 2020

The increase in ~~our share of equity method investee losses~~

QSI ~~segment assets, which primarily consist of non-marketable and marketable equity investments, decreased by 25%~~EBT in the first six months of fiscal ~~2020 from $1.71 billion to $1.28 billion,~~2021 was primarily due toto:

+ $318 million decrease in impairment losses on other investments, ~~and the sale~~ of ~~certain marketable equity investments.~~which a significant portion related to our investment in OneWeb

+ $129 million increase in net gains on investments

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 ~~ramps~~to continue to ramp around the ~~world.~~world as we transition from 3G/4G multimode and 4G products and services. We ~~expect growth in emerging device categories and industries, resulting from the expanding~~believe that 5G will continue to drive adoption of certain technologies that are already commonly used in smartphones by industry segments ~~outside traditional cellular industries,~~and applications beyond mobile, such as automotive ~~computing, IoT~~ and ~~networking.~~IoT. We believe it is important that we remain a leader in 5G technology development, standardization, intellectual property creation and licensing, and a leading developer and supplier of 5G integrated circuit products in order to sustain and grow our business long-term.

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

•~~It is likely that~~We expect QCT revenues to continue to be favorably impacted compared to the ~~economic slowdown caused~~prior year as we make shipments to support Apple’s iPhone products, as well as to reflect increased demand for connected devices resulting from the continued work and learn from home environment.

•We have also seen and expect to continue to see increased demand for integrated circuit products, particularly from certain Chinese OEMs as they position to gain device share in China. However, since it will take time for us to adapt our supply chain processes, and due to the limited supply capacity across the semiconductor industry, we do not expect to realize the full benefit from this increased demand. We currently expect to see improvements in supply capacity by the end of the calendar year.

•We expect commercial 5G network deployments and device launches will continue through calendar 2021 and beyond.

•We expect our research and development costs will increase compared to the prior year, primarily due to increased investment towards advancements in 5G and application processor technologies and certain other long-term initiatives, as well as an increase in share-based compensation expense.

•We expect continued intense competition, particularly in China.

•Current U.S./China trade relations and/or national security protection policies may negatively impact our business, growth prospects and results of operations. See “Risk Factors” in this Quarterly Report, including the Risk Factor titled “A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.”

•The COVID-19 pandemic ~~will continue, potentially for an extended duration, and there may be~~has resulted in significant economic uncertainty, which resulted in a global recession. ~~We expect~~While the pandemic ~~to have an increasingly~~has had a negative impact on ~~QTL and QCT revenues in the near term based on a reduction in~~ consumer demand for ~~smartphones and other products. Our current planning assumption is that sales in China for~~some devices that incorporate our products and intellectual property, ~~will continue~~as compared to ~~improve throughout~~economic conditions and consumer demand prior to the ~~June quarter,~~ ~~which reflects gradual recovery from the exit rate of the March quarter. Outside o~~f China, our current planning assumption is that device sales will follow a similar pattern to that experienced in China, with a recovery starting in June. Our near-term planning assumptions also reflect the latest demand signals from our customers as they contemplate the impact of COVID-19 and reconcile their supply chains to lower anticipated device sell through. We have not experienced, andpandemic, we currently do not ~~anticipate~~expect a ~~material adverse~~significant impact on our ~~ability, or our suppliers’ ability, to manufacture and test our products or on our ability to provide our products to our customers. Workforce changes that we implemented~~results of operations in the ~~second quarter of fiscal 2020 are expected to remain in effect in the near term.~~future. The degree to which the COVID-19 pandemic impacts our business, financial condition and results of operations will depend on future developments, which are highly uncertain. See “Risk Factors” in this Quarterly Report, specifically the Risk Factor ~~entitled~~titled “The ~~recent~~ coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and ~~we expect its impact will increase, at least in the near term.~~”

•~~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 appealed the decision to, the Ninth Circuit Court of Appeals (Ninth Circuit). In July 2019, the Ninth

~~Circuit granted our appeal. In August 2019, the Ninth Circuit granted our partial motion to stay in its entire~~ty. In February 2020, the Ninth Circuit heard oral arguments from Qualcomm and the FTC. The Ninth Circuit also heard oral arguments from the Department of Justice who presented positions in support of Qualcomm’s appeal. Regulatory authorities in certain other jurisdictions are investigating and/or 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 they or 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 Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies” and “Risk Factors” in this Quarterly Report, including the Risk Factors entitled “Our business, particularly our licensing business, may suffer as a result of adverse rulings in government investigations or proceedings,” “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 “~~Efforts by some OEMs 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.”

•We did not record any revenues in the first six months of fiscal 2020 for royalties due on the sales of Huawei’s consumer wireless products, and our license agreement with Huawei expired on December 31, 2019. The agreement provides either party the right to initiate binding arbitration for a period of several months, the result of which will be a new license agreement effective January 1, 2020. To date, neither party has initiated arbitration. Huawei may not make any other payments or may not make full payments due under the prior or any new license agreement. This 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 have not been the sole supplier of modems for iPhone products beginning with products that launched in September 2016, and Apple is not utilizing our modems for iPhone products that launched in September 2019. We ~~currently~~ ~~expect QCT to begin recording revenues in the second half of fiscal 2020 under our multi-year chipset agreement with Apple announced in April 2019.~~

•~~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 may 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. In addition, the negative~~ impact ~~to our overall business of Huawei share gains at the expense of other Chinese OEMs may be further exacerbated if a new license agreement with Huawei is not signed~~us in the ~~near term and/or Huawei continues to not pay us royalties or does not make full payment due to us under the prior or any new license agreement;~~

◦future.”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;~~

◦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;

◦~~Lengthened handset replacement cycles and consumer demand, which is increasingly driven by new product launches and/or innovation cycles; and~~

◦~~Growth of device share by certain Chinese OEMs in China and in regions outside of China.~~

•Current U.S./China trade relations and/or national security protection policies, which may be further exacerbated by COVID-19, may negatively impact our business, growth prospects and results of operations.

•~~Commercial 5G network deployments and device launches will continue through calendar 2020 and beyo~~nd. We currently anticipate no significant delays in the timing of 5G network deployments and device launches in key regions resulting from the impacts of COVID-19; however, the timing of such deployments may be delayed and consumer demand for devices that are launched has been and may continue to be negatively impacted by COVID-19. The degree to which such delays and lower demand impacts our future business, financial condition and results of operations will depend on future developments, which are uncertain. 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.

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~~industry 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~~technologies 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 provided in the section labeled “Risk Factors” included in this Quarterly Report.

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~~tables present selected financial information related to our liquidity ~~as of~~at March ~~29, 2020~~28, 2021 and September ~~29, 2019~~27, 2020 and for the first six months of fiscal ~~2020~~2021 and ~~2019~~2020 (in millions):


		March 29, 2020		September 29, 2019		Change			March 28, 2021		September 27, 2020		Change
Cash, cash equivalents and marketable securities	Cash, cash equivalents and marketable securities	$	9,979	$	12,296	$	(2,317)	Cash, cash equivalents and marketable securities	$	11,561	$	11,249	$	312
Accounts receivable, net	Accounts receivable, net	3,081		2,471		610		Accounts receivable, net	3,346		4,003		(657)
Inventories	Inventories	1,700		1,400		300		Inventories	2,668		2,598		70
Short-term debt	Short-term debt	2,499		2,496		3		Short-term debt	500		500		—
Long-term debt	Long-term debt	13,449		13,437		12		Long-term debt	15,235		15,226		9
Noncurrent income taxes payable	Noncurrent income taxes payable	1,879		2,088		(209)		Noncurrent income taxes payable	1,715		1,872		(157)


		Six Months Ended											Six Months Ended
		March 29, 2020		March 31, 2019		Change			March 28, 2021		March 29, 2020		Change
Net cash provided by operating activities	Net cash provided by operating activities	$	2,201	$	1,150	$	1,051	Net cash provided by operating activities	$	6,086	$	2,201	$	3,885
Net cash used by investing activities	Net cash used by investing activities	(1,769)		(261)		(1,508)		Net cash used by investing activities	(3,034)		(1,769)		(1,265)
Net cash used by financing activities	Net cash used by financing activities	(3,868)		(2,531)		(1,337)		Net cash used by financing activities	(3,788)		(3,868)		80

The net ~~decrease~~increase in cash, cash equivalents and marketable securities was primarily due to ~~$2.3~~net cash provided by operating activities, $174 million in proceeds from the issuance of common stock (primarily under our Employee Stock Purchase Plan), and $167 million in proceeds from other investments, partially offset by $2.0 billion in payments to repurchase shares of our common stock, ~~$1.4~~$1.5 billion in cash dividends paid, ~~$641~~$1.2 billion in cash paid for acquisitions and other investments (primarily related to the acquisition of NUVIA), $952 million in capital expenditures and ~~$232~~$501 million in payments of tax withholdings related to the vesting of share-based ~~awards, partially offset by net cash provided by operating activities~~ ~~and $174 million in proceeds from the issuance of common stock.~~awards.

The ~~increase~~decrease in accounts receivable was primarily due to the payment of the second installment of $500 million (excluding the impact of foreign withholding taxes) under the previously disclosed settlement agreement with Huawei. Huawei paid the third installment of $300 million (excluding the impact of foreign withholding taxes) subsequent to March 28, 2021 in accordance with the agreed upon payment schedule. The decrease in accounts receivable was also attributable to the timing of settlement of certain QCT incentives, partially offset by an increase in QCT revenues ~~combined with the timing of QCT integrated circuit shipments~~ during the ~~quarter and a decrease in the relative proportion of customer incentive arrangements~~

~~recorded as a reduction to QCT accounts receivable at March 29, 2020, as compared to September 29, 2019. The increase in inventories was primarily driven by the ramp in 5G.~~quarter.

Debt. At March ~~29, 2020,~~28, 2021, we had $15.5 billion of principal floating- and fixed-rate notes ~~outstanding, $2.0 billion of which mature in May 2020. The~~outstanding. Our remaining debt has maturity dates in 2022 through ~~2047.~~2050.

Our Amended and Restated Revolving Credit Facility (Revolving Credit Facility) provides for unsecured revolving facility loans, swing line loans and letters of credit in the aggregate amount of up to $4.5 billion, which expires on November 8, 2021. At March 29, 2020, no amounts were outstanding under the Revolving Credit Facility.

We have an unsecured commercial paper program, which ~~currently~~ provides for the issuance of up to $4.5 billion of commercial paper. Net proceeds from this program are used for general corporate purposes. At March ~~29, 2020,~~28, 2021, we had ~~$499~~$500 million of commercial paper outstanding.

On December 8, 2020, we entered into a Revolving Credit Facility replacing our prior Amended and Restated Revolving Credit Facility. There were no outstanding borrowings under the Amended and Restated Revolving Credit Facility at the time of termination. The Revolving Credit Facility provides for unsecured revolving facility loans, swing line loans and letters of credit in an aggregate amount of up to $4.5 billion, which expires on December 8, 2025. At March 28, 2021, no amounts were outstanding under the Revolving Credit Facility.

We ~~currently~~ expect to issue ~~additional~~new debt in the ~~near~~ future. ~~COVID-19 has led to disruption and volatility in the global capital markets, which may adversely impact the cost of and access to capital.~~ The amount and timing of any such ~~additional borrowings, if any,~~new debt will depend on a number of factors, including but not limited to maturities of our existing debt, acquisitions and strategic investments, favorable and/or acceptable interest rates and changes in corporate income tax law. Additional information regarding our outstanding debt is provided in “Notes to Consolidated Financial Statements, Note 6. Debt” in our ~~2019~~2020 Annual Report on Form 10-K.

Income Taxes. At March ~~29, 2020,~~28, 2021, we estimated remaining future payments of ~~$2.1~~$1.9 billion for the one-time U.S. repatriation tax accrued in fiscal 2018, ~~(Toll Charge),~~ after application of certain tax credits, which is payable in installments over the next ~~six years~~. five years. At March ~~29, 2020,~~28, 2021, other current liabilities included ~~$176~~$213 million~~reflecting our estimate of~~ for the next installment due in January ~~2021.~~

2022. Additional information regarding our income taxes is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 3. Income Taxes.”

Capital Return Program. InIn fiscal 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 the first six months of fiscal ~~2020,~~ 2021, we repurchased and retired ~~29.3~~14 million shares of our common stock for ~~$2.3~~$2.0 billion, before commissions. At March ~~29, 2020, $4.7~~28, 2021, $2.6 billion remained authorized for repurchase under the stock repurchase ~~program~~.program. Our stock repurchase program is subject to periodic evaluations to determine when and if repurchases are in the best interests of our stockholders, and we may accelerate, suspend, delay or discontinue repurchases at any time. Subsequent to March 29, 2020, to maintain our financial liquidity position and flexibility, we suspended our stock repurchases, at least for the near-term, in light of COVID-19. We have the ability to reinstate repurchases if we determine it to be in the best interest of stockholders.

On March 10, ~~2020,~~2021, we announced a 5% increase in our quarterly dividend per share of common stock from ~~$0.62~~$0.65 to ~~$0.65,~~$0.68, which is effective for dividends payable after March ~~26, 2020.I~~n25, 2021. In the first six months of fiscal ~~2020,~~2021, we paid cash dividends totaling ~~$1.4~~$1.5 billion, or ~~$1.24~~ $1.30 per share. On April ~~21, 2020~~,14, 2021, we announced a cash dividend of ~~$0.65~~ $0.68 per share on our common stock, payable on June ~~25, 2020~~24, 2021 to stockholders of record as of the close of business on June ~~4, 2020~~.3, 2021. We currently intend to continue to use cash dividends as a means of returning capital to stockholders, subject to capital availability ~~which may be impacted by COVID-19, a~~ndand our view that cash dividends are in the best interests of our stockholders, among other factors.

Additional Capital Requirements. Expected working and other capital requirements are described in our ~~2019~~2020 Annual Report on Form 10-K in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We expect an increase in operating cash outflows to secure long-term capacity commitments with certain suppliers of our integrated circuit products. At March ~~29, 2020,~~28, 2021, other than for the changes disclosed in the “Notes to Condensed Consolidated Financial Statements” and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to our expected working and other capital requirements or contractual obligations described in our ~~2019~~2020 Annual Report on Form 10-K. ~~At March 29, 2020,~~ ~~$1.4 billion~~ was accrued related to two fines imposed by the EC (based on the exchange rate at March 29, 2020, 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 EC’s decisions.

Further, regulatory authorities in certain jurisdictions ~~are investigating and/or~~ 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, arbitration or ~~arbitration~~other strategies 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 Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies” and “Risk Factors” in this Quarterly Report.

~~Although we expect future estimated operating cash flows to be adversely affected by the impact of COVID-19, most significantly through reduced QTL royalty revenues and QCT equipment revenues, we~~We believe, based on our current business plan and the facts and factors known by us, 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.~~months and thereafter for the foreseeable future. See “Risk Factors” in this Quarterly ~~Report, including the Risk Factor entitled~~ ~~“The recent coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and we expect its impact will increase, at least in the near term.”~~

~~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 condensed consolidated financial statements, or otherwise disclosed in our 2019 Annual Report on Form 10-K. We have no material off-balance sheet arrangements as defined in Regulation S-K 303(a)(4)(ii).

Additional information regarding our financial commitments at March 29, 2020 is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 2. Composition of Certain Financial Statement Items,” “Note 3. Income Taxes” and “Note 5. Commitments and Contingencies.”Report.

Recent Accounting Guidance

Information regarding recent accounting guidance and the impact of such guidance on our condensed consolidated financial statements is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 1. Basis of Presentation and Significant Accounting Policies Update.”

Risk Factors

You should consider each of the following factors in evaluating our business and our prospects. ~~The~~However, 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, results of operations, cash flows and financial condition, ~~and cash flows,~~ and require significant management time and attention. In that case, the trading price of our common stock could ~~decline~~.decline. In addition to the risks and uncertainties set forth in the Risk Factor below ~~entitled~~titled “The ~~recent~~ coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and ~~we expect its~~may continue to impact ~~will increase, at least~~us in the ~~near term,~~future,” many of the risks and uncertainties set forth in the other Risk Factors below ~~will~~could be exacerbated by the COVID-19 pandemic, government and business responses thereto and any further resulting decline in the global business and economic ~~environment.~~environment, and may be impacted by the extent and speed of the global economic recovery. You should also consider the other information set forth in this Quarterly Report in evaluating our business and our prospects, including but not limited to our financial statements and the related notes, and “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” References to ~~“and”~~“and,” “or” and ~~“or”~~“and/or” should be read to include the ~~other as well as “and/or,”~~others, as appropriate.

~~Risks Related to Our Businesses~~

RISKS RELATED TO THE CORONAVIRUS (COVID-19) PANDEMIC

The ~~recent~~ coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and ~~we expect its~~may continue to impact ~~will increase, at least~~us in the ~~near term.~~future.

The rapid, global spread of COVID-19 and the fear it has created has resulted in significant economic uncertainty, significant declines in business and consumer confidence and global demand in the wireless industry (among others), and a global economic slowdown, ~~and could lead to~~which resulted in a global recession. Government policies and other preventive and precautionary measures that we, other businesses and governments have implemented to limit the spread of COVID-19, including but not limited to travel bans and restrictions, quarantines, shelter-in-place and social distancing orders, declarations of states of emergency and shutdowns, have exacerbated these issues and we expect will continue to do so, at least in the near term. Specifically, the decline in demand for smartphones and other consumer devices sold by our customers or licensees has resulted in decreased demand for our integrated circuit products (which are incorporated into such devices) and a decrease in the royalties we earn on the licensing of our intellectual property (which is dependent upon the number of such devices sold that utilize our intellectual property).

We However, we currently do not expect ~~that demand for~~a significant impact on our products and demand for the products of our customers or licensees will be increasingly negatively impacted in the near term, and to the extent that economic uncertainty, business and consumer confidence, demand for our products and demand for the products of our customers or licensees does not improve, our business and results of operations ~~will be further negatively impacted.~~in the future.

The COVID-19 pandemic, and government policies and business measures in response thereto, such as those described above, have also negatively impacted the global wireless supply chain and workforce, including the manufacturing facilities and workforces of our suppliers, customers and licensees. In particular, travel bans and restrictions, quarantines, shelter-in-

place and social distancing orders, declarations of states of emergency and shutdowns have resulted in longer product cycle times, transportation, shipment and delivery delays, additional costs and reductions in output across the supply chain. However,Further, while to date we have not seen a significant impact on our manufacturing facilities or our supply chain due to the COVID-19 pandemic, the ability of our suppliers to deliver on their commitments to us, or our ability to ship our products to our customers, ~~and we expect this to continue to be true, at least in the near term.~~

Nonetheless, continued negative effects on the global wireless supply chain could result in a reduction in our ability, or our inability, to supply our products to our customers, or a reduction in the ability, or the inability, of our suppliers to deliver on their commitments to us or of our customers or licensees to supply their products to consumers or other end users. In addition, if the suppliers (or their suppliers) that we rely on to perform the manufacturing and assembly, and most of the testing, of our integrated circuits produced in our fabless production model, the suppliers (or their suppliers) of raw materials or products utilized in our facilities that manufacture our RFFE modules and RF filter acoustic products, or our sources of distribution or transportation, continue to be or are further impacted, we may need to procure alternative or additional suppliers or sources of distribution or transportation, which may not be available or which may increase our costs or cause delays in our ability to provide our products to our customers or licensees. This risk is exacerbated to the extent we procure products, services or materials from a single source or limited sources. See also the Risk Factor entitled “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 reasonable margins, our business and results of operations may be ~~harmed. We are also subject to order~~negatively impacted by the pandemic and/or government responses thereto, such as travel bans and ~~shipment uncertainties that could negatively impact our results~~restrictions, quarantines, shelter-in-place and social distancing orders, declarations of ~~operations~~.”states of emergency and shutdowns.

~~Further,~~Although the spread of COVID-19 has caused us to modify our workforce practices, ~~and we may take further actions that we determine are in~~such as having the ~~best interests~~vast majority of our employees ~~or as required by governments. Since January 2020,~~working from home, we have complied with government restrictions in China which have limited our employees’ ability to work in our offices in China, although such restrictions have since lessened. On March 12, 2020, we announcednot experienced a global mandatory work from home policy for all of our other employees who are able to perform their jobs remotely, which remains in place. Prior to this announcement, we took various other measures to mitigate the risksignificant negative impact to our ~~employees and operations globally, including certain employee travel and visitor restrictions, and cancellation of~~business or limitations on physical participation in meetings, events and conferences, among others. On March 19, 2020, California, where our corporate headquarters is located, issued a shelter-in-place order, and other states and countries where we have employees have implemented similar restrictions. While this has not been the case to date, our business and results of ~~operations~~operations. However, we could be negatively affected in the future if, among others, a significant number of our employees, or employees who perform critical functions, such as certain engineering employees, employees necessary to maintain the continuity of our business operations, or employees that are critical to complete and support our key accounting close processes, financial reporting systems, internal control over financial reporting and disclosure controls and procedures, become ill and/or are quarantined as the result of exposure to COVID-19, or if government policies restrict the ability of those employees to perform their critical functions. ~~Any actions~~For example, we ~~take with respect to~~have offices and a significant number of employees located in India, which is currently experiencing a high rate of COVID-19 infections.

The COVID-19 pandemic could also impact our ~~workforce may not be sufficient to mitigate the risks posed by COVID-19, and our ability to perform critical functions could be harmed.~~

~~We expect the foregoing demand, supply and workforce issues to continue, and in some instances increase, at least in the near term. Our~~ business, ~~financial condition and~~ results of operations ~~could also be impacted by~~and financial condition through delayed, reduced or cancelled customer orders; the inability of our customers or licensees to purchase or pay for our products or technologies; the insolvency of key suppliers, customers or licensees; delays in reporting or payments from our customers or licensees; or failures by other counterparties.

~~Further, trade~~ Additionally, federal, state or foreign governments may in the future increase corporate tax rates, increase employer payroll tax obligations and/or ~~national security protection policies~~otherwise change tax laws to pay for stimulus and other actions that may be ~~adjusted~~taken as a result of the COVID-19 pandemic, such as actions by governments that limit, restrict or prevent the movement of certain goods into a country and/or region, and current U.S./China trade relations may be further exacerbated by the pandemic.

We monitor goodwill and other long-lived assets for events or changes in circumstances in interim periods that could indicate such assets may be impaired. At September 29, 2019, the estimated fair values of our QCT and QTL reporting units were substantially in excess of their respective carrying values. Based on facts and factors currently known by us, we did not record any impairment of goodwill or other long-lived assets during the second quarter of fiscal 2020 as a result of the impact of the COVID-19 pandemic on our business. Although we believe that our estimates and the assumptions supporting our impairment assessments are reasonable, future events or changes in circumstances could cause us to conclude that impairment indicators exist, and that goodwill or other long-lived assets are impaired.

In addition, in the second quarter of fiscal 2020, we recorded impairment losses on certain of our equity method and non-marketable equity and debt investments in part resulting from the impact of COVID-19, and we may in the future record additional impairment losses in part or entirely resulting from COVID-19. ~~Any resulting impairment losses in the future could have an adverse impact on our financial condition and results of operations. Further, while we have experienced~~

minimal impact to date, our customers or licensees may experience a negative impact to their cash flow, which may impact our ability to recognize revenues and/or result in the recognition of an allowance for doubtful accounts related to our accounts receivables, both of which would adversely impact our results of operations.

The degree to which the COVID-19 pandemic impacts our future business, ~~financial condition and~~ results of operations and financial condition will depend on future developments, which are uncertain, including but not limited to the duration, spread and severity of the pandemic, the availability, adoption and efficacy of vaccines, government responses and other actions to mitigate the spread of and to treat COVID-19, and when and to what extent normal business, economic and social activity and conditions resume. We are similarly unable to predict the extent to which the pandemic impacts our customers, licensees, suppliers and other partners ~~(and their suppliers and partners)~~ and their financial conditions, but adverse effects on these parties could also adversely affect us. Finally, the COVID-19 pandemic makes it challenging for management to estimate the future performance of our business.

RISKS RELATED TO INDUSTRY DYNAMICS AND COMPETITION

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;~~CDMA, OFDMA and ~~customers’~~other communications technologies, including 5G, and customer demand for our products ~~and services.~~based on these technologies.

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 5G4G single-mode devices, and to establish the selling prices for such devices. Further, the timing of our ~~shipment~~shipments of our products ~~and completion of services~~ is dependent 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,~~mobile, such as automotive ~~computing,~~and 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, 4G and 4G. The latest 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 also in new device types, industries and applications beyond traditional cellular communications, as described above (see also Part I, Item 1, “Business” in our most recent Annual Report on Form 10-K for further description of 5G).now 5G. Commercial deployments of 5G networks and devices have begun and will ~~continue through fiscal 2020 and beyond.~~continue. However, the timing and scale of such deployments, in certain regions, have been and may in the future be delayed due to the COVID-19 pandemic.

We believe it is ~~important~~critical that we remain a leader in 5G technology development, standardization, intellectual property cr~~eation~~creation and technology 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.

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;~~

•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 of such products, decline ~~do not grow or do not grow meaningfully~~ due to, for example, the maturity of smartphone penetration in developed regions and China;

•our intellectual property and technical leadership included in the continued 5G standardization effort is less than in 3G and 4G standards;

•~~the continued standardization or commercial deployment of 5G technologies is delayed or not widely deployed and/or adopted;~~

•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;~~mobile; or

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

Our industry is subject to intense competition in an environment of rapid technological change. Our success depends in part on our ability to adapt to such change and compete effectively; and such change and competition could result in decreased demand for our products ~~services~~ and technologies 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~~Competition may intensify as our current competitors expand their product ~~offerings,~~offerings, improve their products or re~~duce~~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: OEM concentrations; vertical integration; ~~growth in demand, consumption and~~ competition in certain geographic regions; government intervention or support of national industries or competitors; the ability to maintain product differentiation as the result of 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)~~technologies and the demand for always on, always connected capabilities); access to capacity in the supply chain; and value-added features that drive selling prices and consumer demand for new 3G/4G and 3G/4G/5G multimode devices, as well as 3G and 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.devices.

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, and technological and public policy ~~changes and relatively low barriers to entry in certain segments of the industry.~~changes. Additionally, the semiconductor industry has experienced and may continue to experience consolidation, which could result in significant changes to the competitive landscape. For example, if any key supplier of technologies and intellectual property to the semiconductor industry was sold to one of our competitors, it could negatively affect our ability to procure or license such technologies and intellectual property in the future, at all or upon acceptable terms, which could have wide-ranging impacts on our business and operations.

We expect that our future success will depend on, among other factors, our ability to:

•differentiate our integrated circuit products with innovative technologies across multiple products and features (e.g., modem, ~~Radio Frequency~~radio frequency front-end (RFFE), including millimeter wave (mmWave), 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 all geographic regions and all device tiers;

•continue to be a leader in mobile, and drive the adoption of our technologies and integrated circuit products, including RFFE, into the most popular device models and across a broad spectrum of devices in mobile, such as smartphones, tablets, laptops and other mobile computing ~~devices, automobiles, wearables, voice~~devices;

•increase or accelerate adoption of our technologies and ~~music~~products in industry segments and ~~other connected devices~~applications outside of mobile, including automotive and ~~infrastructure products;~~IoT;

•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 (and 4G) technology development, standardization, intellectual property creation and licensing, and develop, commercialize and beremain a leading supplier of 5G (and 4G) integrated circuit products, ~~and services;~~including RFFE products;

•~~increase or accelerate demand for~~maintain access to sufficient capacity in the supply chain relative to 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~~competitors to ~~address cellular RF band fragmentation while improving RF performance and assist OEMs in developing multiband, multimode mobile devices;~~meet customer demand;

•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 applications 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;~~products;

•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;

•provide a leading ~~service~~products and technologies to 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, industry segment or standard product, including those that produce products for ~~RFFE,~~mobile, automotive ~~computing,~~and IoT, ~~and networking applications.~~among others. Most of these competitors compete with us with respect to some, but not all, of our ~~businesses.~~businesses or product lines. 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, Texas Instruments and UNISOC (formally known as Spreadtrum ~~Communications (which is controlled by Tsinghua Unigroup)~~Communications). 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~~utilize 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;~~integrated circuit products; 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~~and applications beyond mobile (such as automotive ~~computing, IoT~~ and ~~networking)~~IoT); and a more established presence in certain regions.

In ~~particular,~~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 our competitors’ integrated circuit products in ~~certain~~some (or all) of their devices, rather than our ~~products (and they~~products. Further, certain of those customers have developed, are developing or may ~~sell~~develop their own integrated circuit products ~~to third parties, discretely or together with certain~~(effectively making them competitors), which they have in the past utilized, currently utilize and may in the future utilize in some (or all) of their ~~other products, in competition with us). Also, Apple, which has historically been one of our largest customers, has utilized products of one of our competitors in many of its~~ devices, rather than our ~~products, and is solely utilizing one~~products. See also the Risk Factor titled “Our business, particularly our semiconductor business, may suffer as a result of our ~~competitors’ products in its most recent smartphone launches. In April 2019, we entered into a new multi-year chipset supply agreement with Apple. W~~customers vertically integrating (i.e., developing their own integrated circuit products)~~e currently expect to begin recording revenues under this agreement~~.” Further, political actions, including trade and/or national security protection policies, or other actions by governments, particularly the U.S. and Chinese governments, have in the ~~second half~~past, currently are and could in the future limit or prevent us from transacting business with certain of ~~fiscal 2020. However, Apple may choose~~our customers or suppliers, limit, prevent or discourage certain of our customers or suppliers from transacting business with us, or make it more expensive to ~~use~~do so. This could advantage our ~~competitors’ products~~ competitors by enabling them with increased sales, economies of scale, operating income and/or ~~its own modem products~~cash flows and/or enable critical technology transfer, allowing them to increase their investments in ~~one or more~~technology development, research and development and commercialization of ~~its future devices.~~products. See also the Risk Factor titled “

A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.” Further, certain of our competitors develop and sell multiple components (including integrated circuit products) for use in devices and sell those components together to OEMs. 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 business, revenues, results of operations, cash flows and ~~cash flows.~~financial condition. 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. 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.

RISKS RELATED TO OUR OPERATING BUSINESSES

We derive a significant portion of our revenues from a small number of customers and licensees, ~~which increasingly includes a small number~~and particularly from their sale of ~~Chinese OEMs.~~premium tier devices. 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~~We derive a significant portion of ~~its~~our revenues from a small number of customers and licensees, and particularly from their sale of premium tier devices, 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.~~ OEMs as well. See also “Notes to Condensed Consolidated Financial Statements, Note 2. Composition of Certain Financial Statement Items - Concentrations.”

In addition, ~~certain~~a number of our largest integrated

circuit customers have developed, are developing or may develop their own integrated circuit products, or may choose our competitors’ 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~~some (or all) of their devices, rather than our products, ~~(and they~~which could significantly reduce the revenues we derive from these customers. See also the Risk Factor titled “Our business, particularly our semiconductor business, 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~~suffer as a result of our ~~largest~~ customers has utilized products of one of our competitors in many of its devices rather than our products, and is solely utilizing one of our competitor’s products in its most recent smartphone launches. In April 2019, we entered into a new multi-year chipset supply agreement with Apple. We currently expect to begin recording revenues under this agreement in the second half of fiscal 2020. However, Apple may choose to use our competitors’ products or its own modem 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~~vertically integrating (i.e., developing 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, including 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./China trade tensions, or otherwise.products).”

Further, political actions, including trade and/or national security protection policies, or other actions by governments, particularly the U.S. and Chinese governments, have in the past, currently are and could in the future limit or prevent us from transacting business with certain of our customers, limit, prevent or ~~limit or prevent certain of our~~discourage those customers from transacting business with ~~us.~~us, or make it more expensive to do so, any of which could also significantly reduce the revenues we derive from these customers. See also the Risk Factor titled “A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.”

In addition, 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, the COVID-19 pandemic 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 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 MD~~MMDM (or thin modem) p~~roducts,~~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. ToFurther, 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.

Our industry has also experienced, and we expect it will 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 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.

~~Further, companies that develop HLOS for~~A reduction in sales of premium-tier 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)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 premium-tier products, would reduce our revenues and margins and may harm our ability to ~~reduce~~achieve 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~~sustain expected financial results. Any 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, couldreduction in revenues would also impact our ~~business, particularly if~~cash resources available for other purposes, such ~~action impacts one of our larger customers.~~as research and development.

Although we have more than 300 licensees, ~~our QTL segment derives~~we derive a significant portion of ~~its~~our licensing 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~~their license agreements under similar terms as their existing agreements, 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 do not have 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 our per unit royalty caps that apply to certain categories of our licensees’ complete wireless devices, namely smartphones, tablets, laptops and smartwatches.

Our business, particularly our semiconductor business, may suffer as a result of our customers vertically integrating (i.e., developing their own integrated circuit products).

Certain of our largest integrated circuit customers (for example, Samsung) 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 utilize in some (or all) of their devices, rather than our products (and they have and may continue to sell their integrated circuit products to third parties, discretely or together with certain of their other products, in competition with us).

Apple has utilized modem products of one of our competitors in some of its devices rather than our products, and solely utilized one of our competitors’ products in several of its prior device launches. In April 2019, we entered into a new multi-year chipset supply agreement with Apple and began shipping modems under this agreement in the third quarter of fiscal 2020. In December 2019, Apple acquired Intel’s modem assets and is developing its own modem products using these assets. Accordingly, Apple is expected to use its own modem products, rather than our products, in some (or all) of its future devices.

Similarly, we derive a significant portion of our revenues from Chinese OEMs. Certain of our customers in China have developed, and others may in the future develop, their own integrated circuit products and use such integrated circuit products in their devices rather than our integrated circuit products, including due to pressure from or policies of the Chinese government (whose Made in China 2025 campaign targets 70% semiconductor self-sufficiency by 2025), concerns over losing access to our integrated circuit products as a result of actual, threatened or potential U.S. or Chinese government actions or policies, including trade protection or national security policies, or other reasons.

If some or all of our largest customers and/or the largest smartphone OEMs utilize their own integrated circuit/modem products in some (or all) of their devices rather than our products, our business, revenues, results of operations, cash flows and financial position could be materially adversely impacted. See also the Risk Factor titled “We derive a significant portion of our revenues from ~~the premium-tier device segment.~~a small number of customers and licensees, and particularly from their sale of premium tier devices. If ~~sales of premium-tier devices~~revenues derived from these customers or licensees decrease or ~~sales~~the timing of such revenues fluctuates, our ~~premium-tier integrated circuit products decrease, our~~business and results of operations could be negatively ~~affected.~~affected.”

A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.

We derive a significant portion of our revenues from Chinese OEMs, and from non-Chinese OEMs that utilize our integrated circuit products in their devices and sell those devices into China, which has the ~~premium-tier device segment, and we expect this trend to continue~~largest number of smartphone users in the ~~foreseeable future. The industry has experienced,~~world. We also source certain critical integrated circuit products from suppliers in China.

Due to various factors, including pressure, encouragement or incentives from, or policies of, the Chinese government (including its Made in China 2025 campaign), concerns over losing access to our integrated circuit products as a result of actual, threatened or potential U.S. or Chinese government actions or policies, including trade protection or national security policies, or other reasons, some of our Chinese integrated circuit customers have developed, and we expect it will 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 andothers may in the future ~~utilize~~develop, their own ~~internally-developed~~ integrated circuit products and use such integrated circuit products in their devices, or use our competitors’ integrated circuit products in their devices, rather than our ~~products~~products.

Political actions, including trade protection and national security policies of the U.S. and Chinese governments, such as tariffs, bans or placing companies on restricted entity lists, have in ~~all~~the past, currently are and could in the future limit 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~~prevent us from transacting business with certain of our ~~premium-tier~~Chinese customers or suppliers, limit, prevent or discourage certain of our Chinese customers or suppliers from transacting business with us, or make it more expensive to do so. Given our revenue concentration in China, if, due to actual, threatened or potential U.S. or Chinese government actions or policies, we were further limited in, or prohibited from, selling our integrated circuit products ~~(which have a higher revenue~~to Chinese OEMs; if our non-Chinese OEM customers were limited in, or prohibited from, selling devices into China that incorporate our integrated circuit products; if Chinese OEMs develop and ~~margin contribution~~use their own integrated circuit products or use our competitors’ integrated circuit products in some (or all) of their devices rather than our ~~lower-tier~~ integrated circuit ~~products)~~products; if Chinese tariffs on our integrated circuit products or ~~a shift~~on devices which incorporate our integrated circuit products made purchasing such products or devices more expensive to Chinese OEMs or Chinese consumers; or if our Chinese licensees delay or cease making payments of license fees they owe us, our business, revenues, results of operations, cash flows and financial position could be materially harmed. Similarly, if, due to U.S. or Chinese government actions or policies, we were limited in ~~share away~~or prohibited from ~~OEMs~~obtaining critical integrated circuit products from our suppliers in China, our business, revenues, results of operations, cash flows and financial position could be materially harmed.

Finally, government policies in China that ~~utilize our premium-tier~~ ~~products, would reduce our revenues~~regulate the amount and ~~margins~~timing of funds that may flow out of the country have impacted and may ~~harm~~continue to impact the timing of our receipt of, and/or ability to ~~achieve or sustain expected financial results. Any such reduction~~receive, payments from our customers and licensees in ~~revenues would also~~China, which may negatively impact our cash ~~resources available for other purposes, such as research and development.~~flows.

RISKS SPECIFIC TO OUR LICENSING BUSINESS

Efforts by some OEMs ~~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.

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, ~~taking a position~~alleging that we do not license our patents on fair, reasonable and nondiscriminatory (FRAND) terms, or alleging 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~~order to lower 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~~property, 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 or not renew their existing license agreements, and may encourage other licensees or unlicensed companies to delay entering into, or to 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, cash flows and 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 FTC.~~proceedings. Certain of these matters are described more fully in this Quarterly Report in

~~“Notes~~ “Notes to Condensed Consolidated Financial Statements, Note 5. 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, cash flows and financial ~~condition and cash flows.~~condition. See also the Risk Factors below ~~entitled~~titled “~~Our business, particularly our licensing business, may suffer as a result of adverse rulings in government investigations or proceedings”~~ ~~and~~ ~~“Changes~~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.~~operations” and “Our business may suffer as a result of adverse rulings in government investigations or proceedings.”

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.~~commitments (referred to as standard-essential patents). 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~~third parties 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. Further, SDOs in certain countries may attempt to modify widely accepted standards and claim the resulting standard as their own.

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 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~~technologies for inclusion in future standards (which could make our ~~technology~~technologies 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~~expect 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.

Changes in our patent licensing practices, whether due togovernmental 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 below titled “Our business ~~particularly~~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, as well as private legal proceedings, challenging our patent licensing and chipset sales practices. Certain of these matters are described more fully in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.” We believe that one intent of certain of these investigations and legal proceedings has been 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.

If we were required to reduce the royalty rates in 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 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 OEMs), 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 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 could have a material adverse effect on our licensing program and our results of operations, cash flows and financial condition.

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, we could incur delays in recognizing revenues until license negotiations were completed, and our business, revenues, results of operations, cash flows and financial condition could be harmed. 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.

The 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 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, our future licensing revenues could be negatively impacted.

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, our patent license agreements in effect that constitute a significant portion of our licensing revenues 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. We might not be able to extend or modify 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 and may impact the financial or other terms of license agreements not subject to the litigation or arbitration. 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 licensees.

RISKS RELATED TO REGULATORY AND LEGAL CHALLENGES

Our 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.~~proceedings. Certain of these matters are described more fully in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. 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 ~~manufacturers,~~manufacturers; that our royalty rates are too ~~high,~~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,~~chipsets; that we have entered into exclusive agreements with chipset customers that foreclose ~~competition,~~competition; that we leverage our position in baseband chipsets in the RFFE space; and that we violate antitrust laws, and 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, cash flows and financial ~~condition and cash flows.~~condition. Depending on the matter, various remedies that could result from an unfavorable resolution include, among ~~others,~~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 result in terms which are less favorable to us than existing terms, or lead to arbitration or litigation to resolve the licensing terms, which could also be less favorable to us than existing terms, and 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.~~ The occurrence of any of the above could have a material adverse effect on our business, revenues, results of operations, cash flows and financial condition, and our stock price could decline, possibly significantly, in which case we may 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, suspend or eliminate our capital return programs, and our ability to timely pay our indebtedness may be impacted. In addition, 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~~significant legal costs until the respective matters are resolved.

~~Changes in our patent licensing practices, whether due togovernmental 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, as well as 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 Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.” We believe that one intent of certain 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 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 anticipate that a significant portion of our licensing revenues will continue to 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 to obtain 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.

~~negatively impacted if we were not able to obtain, in the aggregate, equivalent revenues under such a multi-level licensing structure.~~

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, 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 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. See also the Risk Factor entitled “Our business and operations could suffer in the event of security breaches of our information technology systems, or other misappropriation of our technology, intellectual property or other proprietary or confidential information.”

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 or not renew their existing license agreements, 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~~. See also the Risk Factor entitled “~~Efforts by some OEMs 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.”

~~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 litiga~~tion or arbitration),~~ 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.

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 utilizing 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 frames we anticipate, we may incur significant costs and asset impairments, our business may not grow or grow meaningfully, our revenues and margins may be negatively impacted, and our reputation may be harmed.

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.

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 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 agreement with Huawei expired on December 31, 2019. Such agreement provides either party with the right to initiate binding arbitration for a period of several months, the result of which will be a new license agreement. We might not be able to extend or modify 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.RISKS RELATED TO SUPPLY AND MANUFACTURING

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 supply assurance, technology leadership

~~supply assurance~~ and reasonable margins, 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~~We primarily ~~utilizes~~utilize 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 certain of our RFFE modules and RF (radio frequency) 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. There are a limited number of such third-party suppliers, and even fewer who are capable of manufacturing at the leading process technology nodes. 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~~products 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 for our products;

•an inability to procure or utilize raw materials, components or products from our suppliers due to government prohibitions or restrictions on transactions with certain countries and/or companies, and alternative suppliers, raw material sources or raw materials are not available or not available in acceptable time frames or upon acceptable terms;

•a failure by our suppliers to allocate adequate manufacturing or test capacity for our products;

•our suppliers’ inability to react to shifts in product demand or an increase in raw material or component prices;

•our suppliers’ ~~delay in developing leading process technologies, or~~ inability to develop or maintain, or a delay in developing or building out manufacturing capacity for 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;

•natural disasters, the effects of climate change or geopolitical conflicts impacting our suppliers; ~~and~~

•health crises, including epidemics or pandemics, such as the COVID-19 pandemic, and government and business responses thereto, which impact our suppliers, including as a result of quarantines or ~~closure.~~closure; and

~~Additionally, supply and costs of raw materials may be negatively impacted by~~ •trade or national security protection policies, ~~such as tariffs,~~particularly U.S. or ~~actions by governments~~Chinese government policies, that limit or prevent us from transacting business with ~~certain companies~~suppliers of critical integrated circuit products, or that limit or prevent ~~certain companies~~such suppliers from transacting business with us or ~~escalating trade tensions, particularly with countries in Asia.~~from procuring materials, machinery or technology necessary to manufacture goods for us.

While we have established alternate suppliers for certain technologies, wethere are a limited number of such suppliers, and even fewer who are capable of operating at the leading process technology nodes or who are willing to operate at older process technology nodes. We rely on sole- or limited-source suppliers for certain products, ~~subjecting~~which may exacerbate the risks identified above, and subject us to other significant risks, including: ~~possible shortages of raw materials or manufacturing capacity;~~ poor product ~~performance;~~performance and reduced control over delivery schedules, manufacturing capability and yields, quality assurance, quantity and costs. To the extent we have established or in the future establish alternate suppliers, these suppliers may require significant amounts of time and levels of support to bring ~~complex~~such technologies to ~~production.~~production, both of which may increase for complex or leading process technologies. 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~~the elimination or limitation of a foundry supplier’s ability to manufacture components or products for us due to trade or national security protection policies could increase our vulnerability to sole- or limited-source arrangements and limit or prevent us from procuring critical components or products from those suppliers. Future consolidation of foundry suppliers could also 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.~~costs and limit the amount of capacity available to us. 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 maintain leading process technologies, including transitions to smaller geometry process technologies (which adds risk to manufacturing yields and reliability), 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, most 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.~~products, and such capacity may be limited based on our suppliers’ ability and willingness to invest in the capital required to manufacture in the leading process technologies. 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 the production of our products.

In addition, we may not receive reasonable pricing, manufacturing or delivery terms from our ~~suppliers.~~suppliers, and our ability to obtain favorable terms may be diminished during times of high demand and/or limited manufacturing capacity for integrated circuit products. 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 demand for our products, 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 demand, or if demand is impacted by factors outside of our or our customers’ control, such as the COVID-19 pandemic, that is not under a binding commitment from our customers, we may experience increased excess or obsolete inventory, which would negatively impact our results of operations.

Conversely, if we or our customers underestimate demand, or if demand increases significantly and/or rapidly, we have in the past been, currently are and may in the future be unable to obtain, on a timely basis or at all, the additional manufacturing and test capacity necessary to meet such demand, which could result in lost sales opportunities, reduced revenue growth and harm to our customer relationships. Currently, the global semiconductor industry is experiencing demand for integrated circuits that exceeds the industry’s capacity to meet that demand.

See also the Risk Factor below titled “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, impacts related to climate change, exposure to natural disasters, timely supply of equipment and materials, and various manufacturing issues” for additional risks that may also be applicable to our third-party suppliers’ manufacturing facilities, which could result in disruptions to our business or additional costs to us, and negatively impact our results of operations.

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, ~~issues~~impacts related to climate change, 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, we now also~~We own and operate various facilities that manufacture certain of 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.~~environments, or due to our failure to win and/or retain designs with OEMs. During such periods, our manufacturing facilities could operate at lower capacity levels, while the fixed costs associated with such facilities would 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, storage, generation, handling and disposal of hazardous substances and other waste; the investigation and remediation of soil and ground water contamination; and the health and safety of our employees. Certain environmental laws impose strict, and in certain circumstances joint and several, liability on current or previous owners or operators of real property, or parties who arranged for hazardous substances to be sent to disposal or treatment facilities, for the cost of investigation, removal or remediation of hazardous substances. As a result, we may incur clean-up costs in connection with any such removal or remediation efforts, as well as other third-party claims in connection with contaminated sites. In addition, we could be held liable for consequences arising out of human exposure to hazardous substances or other environmental damage. If we, or companies oror facilities we acquire or have acquired, in the past failed or in the future fail to comply with any such laws and regulations, then we could incur ~~liabilities,~~liabilities, fines or prohibitions on the sale of products we manufacture, and our operations could be suspended. Such laws and regulations could also restrict our ability to modify or expand our facilities, could require us to acquire costly equipment, or could require other significant expenditures. We are also required to obtain and maintain environmental permits from governmental authorities for certain of our operations. While we have ~~designed~~ policies and procedures designed to ensure compliance with applicable laws, regulations and permits, we cannot make assurances that we, or our employees, contractors or agents, will at all times be in compliance with such laws, regulations and permits, or our related policies and procedures.

Climate change concerns and the potential resulting environmental impact may result in new environmental, health and safety laws and regulations that may affect us, our suppliers ~~and/or~~and our customers. Such laws or regulations could cause us to incur additional direct costs for compliance, including costs associated with changes to manufacturing processes or the procurement of raw materials used in manufacturing processes, as well as increased indirect costs resulting from our customers, suppliers or both incurring additional compliance costs that are passed on to us. These costs may adversely impact our results of operations and financial condition. In addition, climate change ~~may~~could cause certain natural disasters, such as drought, wildfires, storms, flooding or rising sea levels, to occur more frequently or with greater intensity, which could pose physical risks to usour manufacturing facilities or our ~~suppliers, including~~suppliers’ facilities; could disrupt the availability of water necessary for the operation of our manufacturing facilities or our suppliers’ facilities; and could increase or decrease temperatures resulting in increased ~~extreme weather events that could result in supply delays~~ operating costs and/or ~~disruptions.~~business disruption.

We have manufacturing facilities in Asia and Europe. If tsunamis, flooding, earthquakes, volcanic eruptions, drought or other natural disasters, effects of climate change 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, effects of climate change or geopolitical conflicts may result in disruptions in transportation, distribution channels and supply chains, and significant increases in the prices of raw materials. Further, health crises, including epidemics or pandemics, such as the COVID-19 pandemic, and government and business responses thereto, could affect our manufacturing

facilities, including by resulting in quarantines and/or closures, which would result in disruptions to and ~~potentially~~potential closures of our manufacturing operations.

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, including in some cases sole suppliers, particularly in Asia. ~~Accordingly, there~~There may be cases where supplies of raw materials and other products are interrupted by disaster, accident or some other event at a ~~supplier,~~supplier; supply is suspended due to quality or other ~~issues, or~~issues; there is a shortage of supply due to a rapid increase in ~~demand,~~demand; and/or we or our suppliers are prohibited from utilizing certain raw materials, or products or components that incorporate such raw materials, due to government restrictions related to the countries from which such raw materials originate, and acceptable alternative suppliers, raw materials or raw materials sources are not available or not available in acceptable time frames or upon acceptable terms, among others, which could impact production and prevent us from supplying our 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 countries or 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 our 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, cash flows and financial ~~condition and cash flows.~~condition.

Finally, we typically begin manufacturing our products using our or our customers’ forecasts of demand for our products, 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 customers overestimate demand, or if demand is impacted by factors outside of our or our customers’ control such as the COVID-19 pandemic or trade or national security protection policies, that is not under a binding commitment from our customers, we may experience higher inventory carrying and operating costs and/or increased excess or obsolete inventory, which would negatively impact our results of operations.

RISKS RELATED TO NEW AND ADJACENT INITIATIVES

Our growth depends in part on our ability to extend our technologies and products into new and expanded product areas, and adjacent industry segments and applications beyond mobile. Our research, development and other investments in these new and expanded product areas, industry segments and applications, and related technologies and products, as well as in our existing technologies and products, and new technologies, may not generate operating income or contribute to future results of operations that meet our expectations.

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 utilizing our existing technical and business expertise and through acquisitions.

In particular, our future growth depends in part on new and expanded product areas, such as RFFE, and adjacent industry segments and applications beyond mobile, such as automotive and IoT; our ability to develop leading and cost-effective technologies and products for new and expanded product areas, adjacent industry segments and applications; and third parties incorporating our technologies and products 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 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 and products, as well as in our existing, technologies and products and new technologies, such as 5G, use of licensed, shared and unlicensed spectrum and convergence of cellular and Wi-Fi, may not succeed because, 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, adjacent industry segments and applications, and consumer demand therein, may not develop or grow as anticipated; our strategies or the strategies of our customers, licensees or partners may not be successful; alternate technologies may be better or may reduce the advantages we anticipate from our investments; competitors’ technologies or products may be more cost effective, have more capabilities or fewer limitations or be brought to market faster than our new technologies or products; 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 may have longer operating histories in industry segments and applications 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.

If our new technologies and products are not successful, or are not successful in the time frames we anticipate, we may incur significant costs and asset impairments, our business and revenues may not grow or grow as anticipated, our revenues and margins may be negatively impacted, our stock price may decline and our reputation may be harmed.

We may engage in strategic acquisitions and other 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 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 (or enhancing existing products) for mobile, and for new industry segments and applications beyond mobile. 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 or products. 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 have in the past and may record impairment charges in the future related to our strategic activities. Any losses or impairment charges that we incur related to strategic activities will have a negative impact on our results of operations and financial condition, 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, facilities, technology, products, processes, operations (including supply and manufacturing operations), sales and distribution channels, business models and business systems; retaining customers and suppliers of the businesses; consolidating research and development 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, geographic regions, industry segments and applications served by or adjacent to the associated businesses or in addressing potential new opportunities that may arise out of our strategic acquisitions.

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 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 proposed 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 relations remain strained, our ability to consummate any transaction that would require approval from the relevant regulatory agency(ies) in China may be severely impacted.

RISKS RELATED TO CYBERSECURITY OR MISAPPROPRIATION OF OUR CRITICAL INFORMATION

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

Third parties regularly attempt to gain unauthorized access to our information technology systems, and many such attempts are increasingly more sophisticated. The perception that the COVID-19 pandemic has made companies’ information technology systems more vulnerable has increased the already significant volume of such attempts. These attempts, which might be related to industrial, corporate 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. We may also be subject to ransom-style cyber-attacks, which could impact our information technology systems and cause widespread disruption to our business, including our manufacturing operations, and expose our confidential or propriety information. In addition, third parties that we may rely on to store and/or process our confidential information may also be subject to similar threats. Such threats could result in the misappropriation, theft, misuse, disclosure, loss or destruction of the technology, 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. We believe that we have a robust cybersecurity program that is aligned to international cybersecurity frameworks, and that we leverage industry best practices across people, processes and technologies in an attempt to mitigate cybersecurity threats. However, we may not be able to anticipate, detect, repel or implement effective preventative measures against all cybersecurity threats, particularly because the techniques used are increasingly sophisticated and constantly evolving. Attempts to gain unauthorized access to our information technology systems or other attacks have in the past, in certain instances and to certain degrees, been successful (but have not caused significant harm), and may in the future be successful, and in some cases, we might be unaware of an incident or its magnitude and effects.

In addition, employees and former employees, in particular former employees who become employees of our competitors, customers, licensees or other third parties, including state actors, have in the past and may in the future misappropriate, use, publish or provide to our competitors, customers, licensees or other third parties, including state actors, our technology, intellectual property or other proprietary or confidential information. This risk is exacerbated as competitors for talent, particularly engineering talent, increasingly attempt to hire our employees. See also the Risk Factor titled “We may not be able to attract and retain qualified employees.” Similarly, we provide access to certain of our technology, intellectual property and other proprietary or confidential information to our direct and indirect customers and licensees and certain of our consultants, who have in the past and may in the future wrongfully use such technology, intellectual property or information, or wrongfully disclose such technology, intellectual property or information to third parties, including our competitors or state actors. We also provide access to certain of our technology, intellectual property and other proprietary or confidential information to certain of our joint venture partners, including those affiliated with state actors and including in foreign jurisdictions where ownership restrictions may require us to take a minority ownership interest in the joint venture. Such joint venture partners may wrongfully use such technology, intellectual property or information, or wrongfully disclose such technology, intellectual property or information to third parties, including our competitors or state actors.

The misappropriation, theft, misuse, disclosure, loss or destruction of the technology, 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, and our technology, intellectual property and proprietary and confidential information.

Further, China has implemented, and other countries or regions may implement, cybersecurity laws that require our overall information technology security environment to meet certain standards and/or 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.

RISKS RELATED TO INTELLECTUAL PROPERTY

The enforcement and protection of our intellectual property may be expensive, could fail to prevent misappropriation or unauthorized use of our intellectual property, 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 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 intellectual property, including our patent portfolio. Policing unauthorized use of our products, technologies and intellectual property is difficult 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 products, technologies or intellectual property, particularly in foreign countries where the laws may not protect our rights as fully or as readily as U.S. laws or where the enforcement of such laws may be lacking or ineffective. See also the Risk Factor titled “Our business and operations could suffer in the event of security breaches of our information technology systems, or other misappropriation of our technology, intellectual property or other proprietary or confidential information.”

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 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 and may in the future have difficulty in certain circumstances in protecting or enforcing our intellectual property 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 or political actions of governments, including trade protection and national security policies; 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. See also the Risk Factors titled “Efforts by some OEMs 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” and “Our business may suffer as a result of adverse rulings in government investigations or proceedings.”

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 or arbitration), 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.

Additionally, although our license agreements generally 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. See also the Risk Factor titled “Efforts by some OEMs 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.”

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~~claims 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, or~~ to license such ~~rights~~intellectual property or pay damages or other compensation to such other company (any of which could be costly). 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.~~our products. 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 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 Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.”

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 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, facilities, technology, products, processes, operations (including supply and ma~~nufacturing operations), sales and distribution channels, business models and business systems; retaining customers and suppliers of the businesses; consolidating research and development 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 our strategic acquisitions.

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.

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 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.

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. Similarly, due to pressure from the Chinese government as part of its broader economic policies, our Chinese OEMs’ concerns over losing access to our integrated circuit products as a result of U.S./China trade tensions, or other policies, regulations or decisions arising out of U.S./China trade tensions, our Chinese OEM customers may develop their own integrated circuit products and use such products, or use other integrated circuit products, in their devices rather than our integrated circuit products, and our Chinese licensees may delay or cease payments of license fees they owe to us. See also the Risk Factor entitled “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.”

National, state and local environmental laws and regulations affect our operations around the world. These laws may make it more expensive to manufacture 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 also 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, issues related to climate change, 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.

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 that we will continue to see, ~~an increase in~~ customers ~~requesting~~request 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~~our products’ source code and may expose our 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~~that 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~~third-party open source projects that could ~~obligate~~subject 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~~program 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.~~property. Also, our use and our customers’ use of open source software may subject our products and our customers’ products to governmental and third-party 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, among other reasons. 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 Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.”

~~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. At March 29, 2020, $4.7 billion remained authorized for repurchase under the stock repurchase program. This stock repurchase program has significantly reduced and is expected to 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.

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, corporate 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 technology, 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.

In addition, employees and former employees, in particular former employees who become employees of our competitors, customers, licensees or other third parties, including state actors, have in the past and may in the future misappropriate, use, publish or provide to our competitors, customers, licensees or other third parties, including state actors, our technology, intellectual property or other proprietary or confidential information. This risk is exacerbated as competitors for talent, particularly engineering talent, increasingly attempt to hire our employees. See also the Risk Factor entitled ~~“We may not be able to attract and retain qualified employees.”~~ Similarly, we provide access to certain of our technology, intellectual property and other proprietary or confidential information to our direct and indirect customers and licensees and certain of our consultants, who have in the past and may in the future wrongfully use such technology, intellectual property or information, or wrongfully disclose such technology, intellectual property or information to third parties, including our competitors or state actors. We also provide access to certain of our technology, intellectual property and other proprietary or confidential information to certain of our joint venture partners, including those affiliated with state actors and including in foreign jurisdictions where ownership restrictions may require us to take a minority ownership interest in the joint venture. Such joint venture partners may wrongfully use such technology, intellectual property or information, or wrongfully disclose such technology, intellectual property or information to third parties, including our competitors or state actors.

The misappropriation, theft, misuse, disclosure or loss or destruction of the technology, 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 liabilityand otherwise adversely affect our business. We expect to continue to devote significant resources to the security of our information technology systems, and our technology, intellectual property and proprietary and confidential information.

~~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 FDII 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 historical and future Singapore tax rate could increase prior to fiscal 2022 and/or fiscal 2027, 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 intellectual

property 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.

Similarly, due to pressure from the Chinese government as part of its broader economic policies, our Chinese OEMs’ concerns over losing access to our integrated circuit products as a result of U.S./China trade tensions, or other policies, regulations or decisions arising out of U.S./China trade tensions, our Chinese OEM customers may develop their own integrated circuit products and use such products, or use other integrated circuit products, in their devices rather than our integrated circuit products, and our Chinese licensees may delay or cease payments of license fees they owe to us.

Further, the COVID-19 pandemic, and government and business responses thereto, are currently negatively affecting, and we expect will continue to, at least in the near term, negatively affect global economic conditions, resulting in reduced consumer confidence and demand for consumer devices and other goods containing our integrated circuit products or that use our intellectual property and may negatively affect our manufacturing facilities and/or the manufacturing facilities of our customers, licensees and/or suppliers, including due to quarantines and/or closures. A prolonged COVID-19 health crisis may result in an even more significant negative impact on global economic conditions and may lead to a global recession.

Any such prolonged economic downturn, “trade war” or outbreak may result in a decrease in demand for our products and technologies; a decrease in demand for the products and services of our customers or licensees; the inability of our suppliers to deliver on their supply commitments to us, our inability to supply our products to our customers and/or the inability of our customers or licensees to supply their products to end users; the insolvency of key suppliers, customers or licensees; delays in reporting or payments from our licensees or customers; failures by counterparties; and/or 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, cancellation or delay of orders for our products and services.RISKS RELATED TO HUMAN CAPITAL MANAGEMENT

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 or expanding local offices near our headquarters in San Diego, ~~California.~~California or by allowing employees to permanently work from home. 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.RISKS RELATED TO PRODUCT DEFECTS OR SECURITY VULNERABILITIES

Failures 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.

Our products (including related software) and the technology we use (which may be developed by us or third parties, and may be designed to meet industry standards) are complex and may contain defects, errors or security vulnerabilities, or experience failures or unsatisfactory performance, due to any number of issues, including issues in materials, design, fabrication, packaging and/or use within a system. Further, because of the complexity of our products, defects, errors or ~~errors~~security vulnerabilities might only be detected when the products are in use. Development of products in new domains of technology, such as the transition to 5G, and the migration to integrated circuit technologies with smaller geometric feature sizes, ~~is complex,~~increases complexity and adds risk to manufacturing yields and reliability, and increases the likelihood of product defects, errors or ~~errors.~~security vulnerabilities. Risks associated with product or technology defects, errors or security vulnerabilities are exacerbated by the fact that our customers typically integrate our products into consumer and other devices.

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. Security vulnerabilities in our products or the technologies we use could expose our customers or end users to hackers or other unscrupulous third parties who develop and deploy viruses, worms and other malicious software programs that could attack our products or those of our customers. While we continue to focus on this issue and ~~are taking~~take 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.~~failures, and techniques used to perpetrate cybersecurity attacks are increasingly sophisticated and constantly evolving.

Our products may be responsible for critical functions in our customers’ products and networks. Failure of our products to perform to specifications, or other product defects, errors or security vulnerabilities, could lead to substantial damage to the products we sell to our customers, the devices into which our products are integrated and to the end users of such devices. Such defects, errors or security vulnerabilities could give rise to significant costs, including costs related to developing

solutions, recalling products, repairing or replacing defective products, writing down defective inventory, or indemnification ~~clauses in~~obligations under our agreements, and could result in the loss of sales and divert the attention of our engineering personnel from our product development efforts. In addition, defects, errors or security vulnerabilities in our products could result in failure to achieve market acceptance, a loss of design wins, a shifting of business to our competitors, and litigation or regulatory action against us, and could harm our reputation, our relationships with customers and partners and our ability to attract new customers, as well as the perceptions of our brand. Other potential adverse impacts of product defects, errors or security vulnerabilities include shipment delays, write-offs of property, plant and equipment and intangible assets, and losses on unfavorable purchase ~~commitments, and a decrease in demand for connected devices and wireless services generally.~~commitments. In addition, defects, errors or security vulnerabilities in the products of our customers or licensees could cause a delay or decrease in demand for the products into which our products are integrated, and thus for our ~~products generally and our premium-tier products in particular.~~products.

In addition, the occurrence of defects, errors or security vulnerabilities may give rise to product liability claims, particularly if such defects, errors or security vulnerabilities in our products or the technology we use, or the products into which they are integrated, result in personal injury or ~~death.~~death, and could result in significant costs, expenses and losses. If a product liability claim is brought against us, the cost of defending the claim could be significant, and could divert the efforts of our technical and management personnel and harm our ~~business.~~business, even if we are successful. We may be named in product liability claims even if there is no evidence that our products caused the damage in question, and even though we may have indemnity from our customers, and such claims could result in significant costs and expenses. Further, our business liability insurance may be inadequate, or future coverage may be unavailable on acceptable terms, which could adversely impact our financial results. The above is exacerbated by the fact that our products may be used, and perform critical functions, in various high-risk applications such as automobiles, including autonomous driver assistance programs; cameras and artificial intelligence, including home and enterprise security; home automation, including smoke and noxious gas detectors; medical condition monitoring; location and asset tracking and management, including wearables for child safety and elderly health; robotics, including public safety drones and autonomous municipality

vehicles; and extended reality (XR) for treatment of phobias or PTSD, early detection of disorders or special needs, among others.

Accordingly, defects, errors or security vulnerabilities in our products or ~~services~~the technologies we use could have an adverse impact on us, on our customers and the end users of our customers’ products. If any of these risks materialize, there could be a material adverse effect on our business, results of operations and financial condition.

GENERAL RISK FACTORS

We operate in the highly cyclical semiconductor industry, which is subject to significant downturns. We are also susceptible to declines in global, regional and local economic conditions generally. Our stock price and financial results are subject to substantial quarterly and annual fluctuations due to these dynamics, among others.

The semiconductor industry is highly cyclical, volatile, subject to downturns and characterized by constant and rapid technological change, price erosion, evolving technical standards, frequent new product introductions, short product life cycles and fluctuations in product supply and demand. Periods of downturns have been characterized by diminished demand for end-user products, high inventory levels, excess or obsolete inventory adjustments, underutilization of manufacturing capacity, changes in revenue mix and erosion of average selling prices. We expect our business to continue to be subject to such cyclical downturns. Consequently, our revenues may decline, and our results of operations and financial condition may be adversely impacted.

A decline in global, regional or local economic conditions or a slow-down in economic growth, 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 our business and financial results, including a decrease in demand for our products and technologies; a decrease in demand for the products and services of our customers or licensees; the inability of our suppliers to deliver on their supply commitments to us, our inability to supply our products to our customers and/or the inability of our customers or licensees to supply their products to end users; the insolvency of key suppliers, customers or licensees; delays in reporting or payments from our customers or licensees; failures by counterparties; and/or negative effects on wireless device inventories. In addition, our customers’ and licensees’ ability to purchase or pay for our products and intellectual property and network operators’ ability to upgrade their wireless networks could be adversely affected, potentially leading to a reduction, cancellation or delay of orders for our products.

Our stock price and financial results 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 our financial results include those identified above and throughout this Risk Factors section; volatility of the stock market in general and technology 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. In the past,

securities class action litigation has been brought against companies following periods of volatility in the market price of their securities, among other reasons. 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 Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.”

Our 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.

Our business and products, and those of our customers and licensees, are subject to various laws, rules and regulations globally as well as government policies and the specifications of international, national and regional communications standards bodies (collectively, Regulations). Compliance with, or changes in the interpretation of, existing Regulations, changes in the oversight of our activities by governments or standards bodies, or rulings in court, regulatory, administrative or other proceedings relating to such Regulations, including, among others, Regulations affecting patent licensing practices; antitrust, competition and competitive business practices; the flow of funds out of certain countries (e.g., China); cybersecurity; import and export regulations such as the U.S. Export Administration Regulations administered by the U.S. Department of Commerce; protection of intellectual property; trade and trade protection including tariffs; foreign policy and national security; environmental protection, health and safety; supply chain, responsible sourcing, including the use of conflict minerals, and human rights; spectrum availability and license issuance; adoption of standards; taxation; privacy and data protection; labor, employment and human capital; corporate governance; public disclosure; or business conduct, could have an adverse effect on our business and results of operations.See also the Risk Factors titled “Our business may suffer as a result of adverse rulings in government investigations or proceedings,” “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,” “A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions,” “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, issues related to climate change, exposure to natural disasters, timely supply of equipment and materials, and various manufacturing issues,” and “Tax liabilities could adversely affect our results of operations.”

Regulations are complex and changing (which may create uncertainty regarding compliance), are subject to varying interpretations, and their application in practice may evolve over time. As a result, our efforts to comply with Regulations may fail, particularly if there is ambiguity as to how they should be applied in practice. Failure to comply with any Regulation may adversely affect our business, results of operations and cash flows. New Regulations or evolving interpretations thereof, 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.

There are risks associated with our debt.

Our outstanding debt and any additional debt 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 debt, 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, general corporate or other purposes; and limiting our flexibility in planning for, or reacting to, changes in our business, industries or the market. 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, many of which are beyond our control. If we are unable to generate sufficient cash flow from operations to service our debt, we may be required to, among other things: refinance or restructure all or a portion of our debt; reduce or delay planned capital or operating expenditures; reduce, suspend or eliminate our dividend payments and/or our stock repurchase program; 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. Further, 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 financing in the future and the terms of such debt could be adversely affected.

Tax liabilities could adversely affect our results of operations.

countries where we earn a routine return and the tax authorities believe substantial value-add activities are performed, as well as countries where we own intellectual property. 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 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.

Tax rules may change in a manner that adversely affects our future reported results of operations or the way we conduct our business. In response to the 2017 Tax Cuts and Jobs Act and to better align our profits with our activities, we implemented certain restructuring in fiscal 2018 and 2019. After our restructuring, most of our income is taxable in the United States with a significant portion qualifying for preferential treatment as FDII (foreign-derived intangible income). Beginning in fiscal 2027, the effective tax rate for FDII increases from 13% to 16%. Further, if U.S. tax rates increase and/or the FDII deduction is eliminated or reduced, both of which have been proposed by the current U.S. presidential administration and Congress, our provision for income taxes, results of operations and cash flows would be adversely (potentially materially) affected. Also, if our customers move manufacturing operations to the United States, our FDII deduction may be reduced.

We have tax incentives in Singapore that require we meet specified employment and other criteria. Although our profit in Singapore has declined as a result of our 2018 restructuring, failure to meet these incentive requirements through March 2022 could result in a retroactive Singapore tax increase for 2017 and 2018.

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 and continues to develop new proposals including allocating greater taxing rights to countries where customers are located and establishing a minimum tax on global income. 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 intellectual property from Singapore to the United States as part of our 2018 and 2019 restructuring.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial market risks related to interest rates, foreign currency exchange rates and equity prices are described in our ~~2019~~2020 Annual Report on Form ~~10-K. During~~10-K. At March 28, 2021, the second quarter of fiscal 2020, the rapid, global spread of COVID-19 and the fear it has created has resulted in significant declines in the condition of economies and financial markets globally, that could cause a global recession. This has adversely affected certain of our investments. See “Notes to Condensed Consolidated Financial Statements, Note 2. Composition of Certain Financial Statement Items” and “Risk Factors” in this Quarterly Report. In addition, while the fairrecorded value of our ~~investment portfolio is~~marketable equity securities was $336 million, which primarily consisted of holdings in certain Chinese companies that we may be required to divest by November 11, 2021 as a result of regulations in the U.S., which are subject to ~~higher interest rate risk based on an increased holdings in marketable debt securities at March 29, 2020,~~pending litigation between one of the Chinese companies and the U.S. government. As a ~~hypothetical increase in interest rates~~result, the price and/or volatility of ~~100 basis points across the entire yield curve on~~ such ~~holdings would have resulted in a negligible decrease~~investments may be affected in the ~~fair value of our holdings. W~~efuture. At March 28, 2021, there have been no other material changes to the financial market risks described at September 27, 2020. We do not currently anticipate any other near-term changes in the nature of our financial market risk exposures or in management’s objectives and strategies ~~with~~with respect to managing such exposures.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our principal executive officer and 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. 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 Quarterly Report.

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting in the second quarter of fiscal ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding certain legal proceedings is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. 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 1A. RISK FACTORS

We have provided updated Risk Factors in the section labeled “Risk Factors” in “Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ~~Other than the Risk Factors entitled “Failures 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” (which had previously been included in our Quarterly Report on Form 10-Q for the fiscal quarter ended December 29, 2019) an~~d ~~“The recent coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and we expect its impact will increase, at least in the near term,”~~ weWe do not believe those updates have materially changed the type or magnitude of the risks we face in comparison to the ~~disclosures~~disclosure provided in our ~~most recent~~2020 Annual Report on Form 10-K. However, many of the risks we face, including a number of those set forth in the “Risk Factors” section, will be exacerbated by the COVID-19 pandemic, government and business responses thereto and any further resulting decline in the global business and economic environment.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Issuer~~In January 2021, we entered into an Agreement and Plan of Merger (the Merger Agreement) for the acquisition of NuVia, Inc. (NUVIA), which transaction closed in March 2021. Pursuant to the Merger Agreement, we are obligated to issue shares of our common stock to three specific founders of NUVIA and certain affiliated entities of such founders from time to time upon the satisfaction of certain conditions specified in the Merger Agreement. These shares will be issued in transactions not involving a public offering pursuant to the exemption from registration set forth in Section 4(a)(2) of the Securities Act. During the quarter ended March 28, 2021, we became obligated to issue an aggregate of 104,013 shares of our common stock to the three founders of NUVIA and their affiliates, each of whom had advised us that he or such entity was an accredited investor.

Our purchases of our equity securities in the second quarter of fiscal ~~2020~~2021 were:

Total Number of
Shares Purchased
Average Price Paid Per Share (1) 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 thousands) (In millions)
December 30, 2019 to January 26, 2020 2,000 $ 89.98 2,000 $ 6,122
January 27, 2020 to February 23, 2020 2,771 88.92 2,771 5,875
February 24, 2020 to March 29, 2020 15,279 75.38 15,279 4,724
Total 20,050 20,050


	Total Number of Shares Purchased	Average Price Paid Per Share (1)		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 thousands)	(In millions)
December 28, 2020 to January 24, 2021	1,383	$	154.23	1,383	$	3,957
January 25, 2021 to February 21, 2021	3,949	148.98		3,949	3,368
February 22, 2021 to March 28, 2021	5,209	138.18		5,209	2,649


Total	10,541			10,541

(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 March ~~29, 2020, $4.7~~28, 2021, $2.6 billion remained authorized for repurchase. The stock repurchase program has no expiration date. 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~~. Subsequent to March 29, 2020, to maintain our financial liquidity position and flexibility, we suspended our stock repurchases, at least for the near-term, in light of COVID-19. We have the ability to reinstate repurchases if we determine it to be in the best interest of stockholders.above.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

5453

ITEM 6. EXHIBITS

Exhibit
Number
Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith
3.1
Amended and Restated Certificate of Incorporation.
8-K 4/20/2018 3.1
3.2
Amended and Restated Bylaws.
8-K 7/17/2018 3.1
4.1
Indenture, dated May 20, 2015, between the Company and U.S. Bank National Association, as trustee.
8-K 5/21/2015 4.1
4.2
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.
8-K 5/21/2015 4.2
4.3
Form of Floating Rate Notes due 2020.
8-K 5/21/2015 4.4
4.4
Form of 2.250% Notes due 2020.
8-K 5/21/2015 4.6
4.5
Form of 3.000% Notes due 2022.
8-K 5/21/2015 4.7
4.6
Form of 3.450% Notes due 2025.
8-K 5/21/2015 4.8
4.7
Form of 4.650% Notes due 2035.
8-K 5/21/2015 4.9
4.8
Form of 4.800% Notes due 2045.
8-K 5/21/2015 4.10
4.9
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.
8-K 5/31/2017 4.2
4.10
Form of Floating Rate Notes due 2023.
8-K 5/31/2017 4.5
4.11
Form of 2.600% Notes due 2023.
8-K 5/31/2017 4.8
4.12
Form of 2.900% Notes due 2024.
8-K 5/31/2017 4.9
4.13
Form of 3.250% Notes due 2027.
8-K 5/31/2017 4.10
4.14
Form of 4.300% Notes due 2047.
8-K 5/31/2017 4.11
10.7
Amended and Restated 2016 Long-Term Incentive Plan . (1)
X
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Steve Mollenkopf.
X
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Akash Palkhiwala.
X
32.1
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.
X
32.2
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.
X
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X
101.SCH XBRL Taxonomy Extension Schema. X
101.CAL XBRL Taxonomy Extension Calculation Linkbase. X
101.LAB XBRL Taxonomy Extension Labels Linkbase. X
101.PRE XBRL Taxonomy Extension Presentation Linkbase. X
101.DEF XBRL Taxonomy Extension Definition Linkbase. X

Exhibit
Number

Exhibit Description

Form

Date of First Filing

Exhibit Number

Filed Herewith

2.1

Agreement and Plan of Merger, dated as of January 12, 2021, among Qualcomm Technologies, Inc., Nile Acquisition Corporation and NuVia, Inc. (1)

8-K

1/13/2021

2.1

3.1

Amended and Restated Certificate of Incorporation.

8-K

4/20/2018

3.1

3.2

Amended and Restated Bylaws.

8-K

7/17/2018

3.1

4.1

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

8-K

5/21/2015

4.1

4.2

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.

8-K

5/21/2015

4.2

4.3

Form of 3.000% Notes due 2022.

8-K

5/21/2015

4.7

4.4

Form of 3.450% Notes due 2025.

8-K

5/21/2015

4.8

4.5

Form of 4.650% Notes due 2035.

8-K

5/21/2015

4.9

4.6

Form of 4.800% Notes due 2045.

8-K

5/21/2015

4.10

4.7

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.

8-K

5/31/2017

4.2

4.8

Form of Floating Rate Notes due 2023.

8-K

5/31/2017

4.5

4.9

Form of 2.600% Notes due 2023.

8-K

5/31/2017

4.8

4.10

Form of 2.900% Notes due 2024.

8-K

5/31/2017

4.9

4.11

Form of 3.250% Notes due 2027.

8-K

5/31/2017

4.10

4.12

Form of 4.300% Notes due 2047.

8-K

5/31/2017

4.11

4.13

Officers’ Certificate, dated May 8, 2020, for the 2.150% Notes due 2030 and the 3.250% Notes due 2050.

8-K

5/11/2020

4.2

4.14

Form of 2.150% Notes due 2030.

8-K

5/11/2020

4.3

4.15

Form of 3.250% Notes due 2050.

8-K

5/11/2020

4.4

4.16

Officers’ Certificate, dated August 14, 2020, for the 1.300% Notes due 2028 and the 1.650% Notes due 2032.

8-K

8/18/2020

4.2

4.17

Form of 1.300% Rule 144A Global Notes due 2028.

8-K

8/18/2020

4.3

4.18

Form of 1.300% Regulation S Global Notes due 2028.

8-K

8/18/2020

4.4

4.19

Form of 1.650% Rule 144A Global Notes due 2032.

8-K

8/18/2020

4.5

4.20

Form of 1.650% Regulation S Global Notes due 2032.

8-K

8/18/2020

4.6

4.21

Registration Rights Agreement, dated as of August 14, 2020.

8-K

8/18/2020

4.7

5554

~~Exhibit~~

~~Number~~

~~Exhibit Description~~

~~Form~~

~~Date of First Filing~~

~~Exhibit Number~~

~~Filed Herewith~~

~~104~~

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

Exhibit
Number

Exhibit Description

Form

Date of First Filing

Exhibit Number

Filed Herewith

4.23

Officers’ Certificate, dated January 6, 2021, for the 1.300% Notes due 2028 and the 1.650% Notes due 2032.

10-Q

2/3/2021

4.23

4.24

Form of 1.300% Notes due 2028.

10-Q

2/3/2021

4.24

4.25

Form of 1.650% Notes due 2032.

10-Q

2/3/2021

4.25

10.4

Forms 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 in Hong Kong. (2)

10.8

10.23

Special Advisor Employment Agreement between the Company and Steven M. Mollenkopf dated as of January 4, 2021. (2)

31.1

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

31.2

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

32.1

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.

32.2

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.

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

101.LAB

XBRL Taxonomy Extension Labels Linkbase.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.

101.DEF

XBRL Taxonomy Extension Definition Linkbase.

104

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

(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).

5655

SIGNATURES

Pursuant to the requirements 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.


			QUALCOMM Incorporated
Dated: April 28, 2021			/s/ Akash Palkhiwala
			Akash Palkhiwala
			Executive Vice President and Chief Financial Officer

~~Dated: April 29, 2020~~

5756


	March 29, 2020		September 29, 2019
Equity method investments	$	210	$	343
Non-marketable equity investments	726		787
	$	936	$	1,130


Short-term Debt (in millions)
	March 29, 2020		September 29, 2019
Commercial paper	$	499	$	499

Current portion of long-term debt	2,000		1,997
	$	2,499	$	2,496


	Operating Leases
Remainder of fiscal 2020	$	76
2021	130
2022	109
2023	66
2024	47
Thereafter	172
Total future lease payments	600
Imputed interest	(79)
Total lease liability balance	$	521


	Operating Leases
2020	$	138
2021	97
2022	66
2023	31
2024	18
Thereafter	35
Total	$	385


	Total Number of Shares Purchased	Average Price Paid Per Share (1)		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 thousands)	(In millions)
December 30, 2019 to January 26, 2020	2,000	$	89.98	2,000	$	6,122
January 27, 2020 to February 23, 2020	2,771	88.92		2,771	5,875
February 24, 2020 to March 29, 2020	15,279	75.38		15,279	4,724


Total	20,050			20,050