Qualcomm posted a better-than-expected set of Q3 FY'25 earnings. While revenue rose almost 10% compared to last year to $10.37 billion, adjusted earnings stood at $2.80 per share. Growth was driven by a strong performance of the company's Automotive and Internet of Things offerings.
Note: Qualcomm's Q3 FY'25 ended on June 29.
Qualcomm's chips are currently exempt from the steep tariffs the U.S. has imposed on key trading partners as of May 2025. However, the broader economic weakness and weaker consumer spending could hurt smartphone and consumer electronics sales, indirectly impacting Qualcomm's chipset shipments.
Apple's new iPhone 16e features an Apple-designed modem, the Apple C1, replacing Qualcomm’s chipsets. Apple's entire lineup will likely move towards its own modems in the coming years. Although Apple’s transition is likely to be somewhat gradual, the effect could be quite pronounced on Qualcomm’s margins, as Apple’s devices typically demand cutting-edge technology and higher-end components. To be sure, this risk has been known for some time, but it continues to present a downside to Qualcomm’s financials.
Below are key drivers of Qualcomm's value that present opportunities for upside or downside to the current Trefis price estimate for Qualcomm:
For additional details, select a driver above or select a division from the interactive Trefis split for Qualcomm at the top of the page.
Qualcomm designs and sells advanced semiconductors, including Snapdragon processors for smartphones, AI chips, automotive solutions, and Internet of Things devices. The company earns revenue via its chip sales as well as licensing royalties from its extensive portfolio of wireless patents, including 5G, 4G LTE, and Wi-Fi technologies. Customers include leading smartphone makers such as Apple, Samsung, and Xiaomi. Qualcomm is also expanding its presence in the AI computing, automotive, and industrial IoT space.
Our financial model is based on Qualcomm's fiscal year, which ends in September.
Qualcomm derives over 80% of its valuation from its mobile chipset business.
The wireless industry is transitioning from 4G to 5G, and Qualcomm appears to have a lead in this space. While the transition to this technology could benefit Qualcomm's licensing business, the chipset operations could stand to gain more in the interim, as 5G devices generally require a tighter coupling between the various components, potentially enabling Qualcomm to sell more related components, including power amplifiers, filters, RF transceivers, and antenna tuners to OEMs.
Qualcomm charges royalties on each mobile device sold based on its technology, as well as one-time licensing fees from mobile chipset vendors for using its proprietary technology. Royalty rates have always been a debatable issue, and the tussle between mobile device vendors and Qualcomm has escalated, as is evident from an increasing number of lawsuits against Qualcomm.
