A maker of the chips that power many of the world's smartphones, cars, and connected devices, most famously the Snapdragon platform found in handsets from Apple, Samsung, and Xiaomi. It also earns royalties licensing its cellular patents to manufacturers around the globe. Founded in 1985 in San Diego, its name blends "quality" and "communications." A fun quirk: Snapdragon was reportedly named to suggest "fast" (snap) and "fierce" (dragon).
Q3 FY2026 revenue fell 4% to $9.9B as handset chip sales dropped on OEM inventory cuts.
Handset chip shipments fell again, extending the decline that began last quarter. dropped 4% to $9.9B and fell 23% to $1.87 as handset revenues decreased $1.2B from OEM reductions amid memory supply constraints, while declined 2.5 points to 53.1%. The business is contracting in its largest just as Apple's own modem shift adds further pressure.
Key takeaways
handset revenues fell $1.2B due to lower chipset shipments as OEMs reduced amid memory supply constraints and price increases, driving the 4% decline to $9.9B.
automotive revenues rose $604M on higher shipments and favorable mix from new vehicle launches with digital cockpit and ADAS/AD products, and QCT IoT revenues increased $149M from favorable mix.
declined to 53.1% from 55.3% a year earlier, mainly from higher product costs partially offset by higher average selling prices.
Section summaries
Management's Discussion and Analysis
Q3 FY2026 revenue fell 4% to $9.9B and net income dropped 25% to $2.0B, driven by lower handset chip sales and higher R&D costs.
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handset revenues fell $1.2B due to lower chipset shipments as OEMs reduced amid memory supply constraints and price increases.
R&D expenses rose $381M, largely from lower and higher , contributing to falling 29.6% sequentially to $1,626M.
dropped 24.9% to $2.0B and fell 23% to $1.87; investment income rose $656M from net gains on marketable securities from IPOs of certain equity investments, a non-recurring item.
fell 65.5% to $991M and fell 80.8% to $495M.
What changed
handset impact from Apple's own modem and memory constraints: Q2 FY2026 flagged handset pressure next quarter; Q3 handset revenues fell $1.2B on OEM cuts amid memory supply constraints, confirming the flagged decline.
licensing in Q3 FY2026: prior filings watched if it held above $1.4B (Q2) or $1.6B (Q1); the table shows QTL was not separately reported this quarter but total revenue of $9.9B fell 4% and 6.2% QoQ.
Pace of share repurchases against the $15B authorization: Q2 used $5.4B in first half; this filing does not report repurchases for Q3, leaving cumulative FY2026 buybacks unstated.
: Q2 flagged whether higher product costs persist after dropping to 53.8%; Q3 gross margin declined further to 53.1%, confirming the cost pressure continued.
trajectory vs prior annual report: FY2025 rose 14% to $44.3B; Q1 FY2026 rose 5% to $12.3B, Q2 fell 3% to $10.6B, Q3 fell 4% to $9.9B — three straight quarters of decelerating then declining growth.
What to watch
handset in Q4 FY2026 to see if shipments fall further as Apple increases use of its own modem and memory constraints persist.
licensing in Q4 FY2026 to see if it holds above prior levels as Huawei royalties remain absent and OEM agreements age.
next quarter to see if higher product costs ease from the 53.1% reported this quarter.
Share repurchases in Q4 FY2026 against the $15B authorization after $5.4B used in the first half.
automotive revenues rose $604M, driven by higher shipments and favorable mix from new vehicle launches with digital cockpit and ADAS/AD products.
IoT revenues increased $149M, primarily from higher revenues per unit due to favorable mix.
declined to 53% from 56%, mainly due to higher product costs in , partially offset by higher average selling prices.
R&D expenses rose $381M, largely from lower and higher .
Investment income surged $656M, primarily from net gains on marketable securities from IPOs of certain equity investments.
Quantitative and Qualitative Disclosures About Market Risk
Financial market risks related to interest rates, equity prices and foreign currency exchange rates are described in our 2025 Annual Report on Form 10-K. Apart from the update described below, at June 28, 2026, there have been no material changes to the financial market risks de…
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Financial market risks related to interest rates, equity prices and foreign currency exchange rates are described in our 2025 Annual Report on Form 10-K. Apart from the update described below, at June 28, 2026, there have been no material changes to the financial market risks described at September 28, 2025.
Equity Price Risk. At June 28, 2026, the recorded value of our marketable equity securities was $926 million. Certain of our marketable equity investments are in growth stage public companies, and the fair values of these investments have been and may continue to be subject to increased volatility.
Information regarding certain legal proceedings is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.”
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Information regarding certain legal proceedings is provided in this Quarterly Report in “Notes to Condensed Consolidated Financial Statements, Note 5. Commitments and Contingencies.”
Customer concentration, vertical integration by key customers, and U.S.-China trade tensions pose material risks to revenue and operations.
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A small number of customers and licensees, especially in premium-tier handsets, account for a significant portion of revenues; loss or reduction in purchases by any of them would materially harm results.
Key customers like Apple, Samsung, and Chinese OEMs are developing their own integrated circuits, which could significantly reduce revenues, particularly as Apple shifts to its own modems.
Heavy concentration in China is exacerbated by U.S.-China trade and national security tensions, including export license revocations (e.g., Huawei) and potential supply chain disruptions.
Growth initiatives in automotive, IoT, and data center may not succeed due to long design cycles, stringent requirements, and competition, risking asset impairments and limited returns.
Dependence on a limited number of third-party suppliers for fabless manufacturing exposes the company to capacity constraints, geopolitical disruptions, and cost increases.
Licensing revenues face pressure from licensees disputing or underpaying royalties, expiring agreements, and adverse regulatory or legal challenges to patent licensing practices.