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Composition of Certain Financial Statement Items (Notes) | 9 Months Ended
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Jun. 27, 2021
Balance Sheet Related Disclosures [Abstract] |
Composition of Certain Financial Statement Items | Composition of Certain Financial Statement Items
Inventories (in millions) |  |  |
| June 27, 2021 |  | September 27, 2020
Raw materials | $ | 231 |  |  | $ | 94 |
Work-in-process | 1,422 |  |  | 1,155 |
Finished goods | 1,480 |  |  | 1,349 |
| $ | 3,133 |  |  | $ | 2,598 |
Short-term Debt (in millions) |  |  |
| June 27, 2021 |  | September 27, 2020
Commercial paper | $ | 500 |  |  | $ | 500 |
Current portion of long-term debt | 1,545 |  |  | — |
| $ | 2,045 |  |  | $ | 500 |
Revolving Credit Facility. 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 June 27, 2021, no amounts were outstanding under the Revolving Credit Facility. 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 June 27, 2021, we were in compliance with the applicable covenants under the Revolving Credit Facility. Interest Rate Swaps. During the nine months ended June 27, 2021, we entered into forward-starting interest rate swaps to hedge the variability of forecasted interest payments on anticipated debt issuances through 2025. At June 27, 2021, the notional amount of the forward-starting interest rate swaps outstanding, which are denominated in U.S. dollars, was $2.6 billion. The fair values of the forward-starting interest rate swaps recorded in other current liabilities and other noncurrent liabilities were $38 million and $38 million, respectively, at June 27, 2021. Revenues. We disaggregate our revenues by segment (Note 6) and type of products and services (as presented on our condensed consolidated statement of operations), 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 determination of QCT revenues by industry segment and application requires the use of certain assumptions. Substantially all of QCT’s 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 and are principally from royalties generated through our licensees’ sales of mobile handsets. QCT revenue streams were as follows (in millions):
|  |  |  |  |  |  |  |  | Three Months Ended |  | Nine Months Ended
|  |  |  |  | June 27, 2021 |  | June 28, 2020 |  | June 27, 2021 |  | June 28, 2020
Handsets (1) |  |  |  |  |  |  |  |  | $ | 3,863 |  |  | $ | 2,457 |  |  | $ | 12,144 |  |  | $ | 7,461 |
RFFE (2) |  |  |  |  |  |  |  |  | 957 |  |  | 447 |  |  | 2,921 |  |  | 1,509 |
Automotive (3) |  |  |  |  |  |  |  |  | 253 |  |  | 138 |  |  | 705 |  |  | 456 |
IoT (internet of things) (4) |  |  |  |  |  |  |  |  | 1,399 |  |  | 765 |  |  | 3,517 |  |  | 2,100 |
Total QCT revenues |  |  |  |  |  |  |  |  | $ | 6,472 |  |  | $ | 3,807 |  |  | $ | 19,287 |  |  | $ | 11,526 |
(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) and excludes radio frequency transceiver components. (3) Includes revenues from products sold for use in automobiles, including telematics, connectivity and infotainment (also known as digital cockpit). (4) Primarily includes products sold for use in the following industry segments and applications: consumer (including computing, voice and music and XR), industrial (including handhelds, retail, transportation and logistics, and utilities) and edge networking (including mobile broadband and wireless access points). Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were $170 million and $258 million for the three and nine months ended June 27, 2021, respectively, and primarily related to certain QCT customer incentives, the release of a variable constraint against revenues not previously allocated to our segment results (Note 6), and QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due). Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were $141 million and $258 million for the three and nine months ended June 28, 2020, respectively, and primarily related to QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due) and certain QCT customer incentives. Unearned revenues (which are considered contract liabilities) consist primarily of license fees for intellectual property with continuing performance obligations. In the nine months ended June 27, 2021 and June 28, 2020, we recognized revenues of $437 million and $424 million, respectively, that were recorded as unearned revenues at September 27, 2020 and September 29, 2019, 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 June 27, 2021, we had $1.1 billion of remaining performance obligations, of which $143 million, $567 million, $274 million, $88 million and $31 million was expected to be recognized as revenues for the remainder of fiscal 2021 and each of the subsequent four years from fiscal 2022 through 2025, respectively, and $2 million 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 |  | Nine Months Ended |  |  |  |  |  |  |  |  |  |
| June 27, 2021 |  | June 28, 2020 |  | June 27, 2021 |  | June 28, 2020 |  |  |  |  |  |  |  |  |  |
Customer/licensee (v) | 16 | % |  | * |  | 22 | % |  | * |  |  |  |  |  |  |  |  |  |
Customer/licensee (w) | 16 |  |  | 14 | % |  | 14 |  |  | 15 | % |  |  |  |  |  |  |  |  |  |
Customer/licensee (x) | 13 |  |  | 17 |  |  | 14 |  |  | 20 |  |  |  |  |  |  |  |  |  |  |
Customer/licensee (y) | 10 |  |  | 11 |  |  | 10 |  |  | 10 |  |  |  |  |  |  |  |  |  |  |
Customer/licensee (z) | * |  | 10 |  |  | * |  | * |  |  |  |  |  |  |  |  |  |
* Less than 10% Accounts receivable at September 27, 2020 included approximately $1.3 billion, excluding the impact of foreign withholding taxes, from Huawei related to the remaining amounts due under the previously disclosed settlement agreement and estimated royalties for sales made in the September 2020 quarter. Since September 27, 2020 and subsequent to June 27, 2021, Huawei paid all such amounts, including the final installment under the settlement agreement in accordance with the agreed upon payment schedule. Other Income, Costs and Expenses. Other income in the nine months ended June 28, 2020 consisted of a $23 million gain related to a favorable legal settlement.
Investment and Other Income, Net (in millions) |  |  |  |  |  |
| Three Months Ended |  | Nine Months Ended
| June 27, 2021 |  | June 28, 2020 |  | June 27, 2021 |  | June 28, 2020
Interest and dividend income | $ | 21 |  |  | $ | 30 |  |  | $ | 63 |  |  | $ | 135 |
Net gains on marketable securities | 53 |  |  | 117 |  |  | 86 |  |  | 183 |
Net gains on other investments | 97 |  |  | 48 |  |  | 307 |  |  | 84 |
Net gains on deferred compensation plan assets | 38 |  |  | 57 |  |  | 115 |  |  | 16 |
Impairment losses on other investments | (7) |  |  | (12) |  |  | (24) |  |  | (349) |
Net gains (losses) on derivative investments | — |  |  | 1 |  |  | (7) |  |  | 2 |
Equity in net earnings (losses) of investees | 1 |  |  | (6) |  |  | 12 |  |  | (21) |
Net losses on foreign currency transactions | (3) |  |  | (6) |  |  | (29) |  |  | (4) |
| $ | 200 |  |  | $ | 229 |  |  | $ | 523 |  |  | $ | 46 |

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