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Composition of Certain Financial Statement Items | 9 Months Ended
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Jun. 25, 2023
Condensed Financial Information Disclosure [Abstract] |
Composition of Certain Financial Statement Items | Composition of Certain Financial Statement Items
Inventories (in millions) |  |  |
| June 25, 2023 |  | September 25, 2022
Raw materials | $ | 194 |  |  | $ | 221 |
Work-in-process | 4,366 |  |  | 3,329 |
Finished goods | 2,068 |  |  | 2,791 |
| $ | 6,628 |  |  | $ | 6,341 |
Revenues. We disaggregate our revenues by segment (Note 7), by 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 the industry and application in which our products are sold (as presented below). Beginning in the first quarter of fiscal 2023, QCT RFFE (radio frequency front-end) revenues, which were previously presented as a separate revenue stream, are now included within our Handset, Automotive and internet of things (IoT) revenue streams, as applicable, based on the industry and application in which the related RFFE products are sold. Prior period information has been recast to reflect this change. RFFE revenues include revenues from the sale of 4G, 5G sub 6 and 5G millimeter wave RFFE products (a substantial portion of which relate to mobile handsets) and exclude radio frequency transceiver components. This change aligns with changes made to our internal reporting of revenues. We believe this change provides a more meaningful presentation in understanding QCT revenues going forward, as we expect RFFE revenues to correspond with trends in Handsets, Automotive and IoT (as applicable) and is more consistent with how our revenue diversification is viewed externally. In certain cases, the determination of QCT revenues by industry 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 25, 2023 |  | June 26, 2022 |  | June 25, 2023 |  | June 26, 2022
Handsets (1) |  |  |  |  |  |  |  |  | $ | 5,255 |  |  | $ | 7,047 |  |  | $ | 17,114 |  |  | $ | 21,385 |
Automotive (2) |  |  |  |  |  |  |  |  | 434 |  |  | 385 |  |  | 1,337 |  |  | 1,044 |
IoT (3) |  |  |  |  |  |  |  |  | 1,485 |  |  | 1,946 |  |  | 4,557 |  |  | 5,344 |
Total QCT revenues |  |  |  |  |  |  |  |  | $ | 7,174 |  |  | $ | 9,378 |  |  | $ | 23,008 |  |  | $ | 27,773 |
(1) Includes revenues from products sold for use in mobile handsets. (2) Includes revenues from products sold for use in automobiles, including connectivity, digital cockpit and advanced driver assistance systems (ADAS) and automated driving (AD). (3) Primarily includes products sold for use in the following industries and applications: consumer (including computing, voice and music and extended reality (XR)), edge networking (including mobile broadband and wireless access points) and industrial (including handhelds, retail, transportation and logistics and utilities). Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods generally include certain QCT sales-based royalty revenues related to system software, certain amounts related to QCT customer incentives 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) and were as follows (in millions):
| Three Months Ended |  | Nine Months Ended
| June 25, 2023 |  | June 26, 2022 |  | June 25, 2023 |  | June 26, 2022
Revenues recognized from previously satisfied performance obligations | $ | 216 |  |  | $ | 260 |  |  | $ | 521 |  |  | $ | 578 |
Unearned revenues (which are considered contract liabilities) consist primarily of certain customer contracts for which QCT received fees upfront and QTL license fees for intellectual property with continuing performance obligations. In the nine months ended June 25, 2023 and June 26, 2022, we recognized revenues of $302 million and $482 million, respectively, that were recorded as unearned revenues at September 25, 2022 and September 26, 2021, respectively. Remaining performance obligations, which are primarily included in unearned revenues (as presented on our condensed consolidated balance sheet), 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. 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/licensee 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 25, 2023 |  | June 26, 2022 |  | June 25, 2023 |  | June 26, 2022
Customer/licensee (x) | 24 | % |  | 22 | % |  | 21 | % |  | 20 | %
Customer/licensee (y) | 23 |  |  | 17 |  |  | 28 |  |  | 20 |
Other Income, Costs and Expenses. Other expense in the nine months ended June 25, 2023 consisted of $285 million in restructuring and restructuring-related charges, substantially all of which related to severance costs, resulting from certain cost reduction initiatives committed to in fiscal 2023. We expect actions associated with existing restructuring plans to be substantially completed (including payments of the related severance) by the end of fiscal 2023. Given the continued uncertainty in the macroeconomic and demand environment, we expect to take additional restructuring actions to enable continued investments in key growth and diversification opportunities. While we are in the process of developing our plans, we currently expect these actions to consist largely of workforce reductions, and in connection with any such actions we would expect to incur significant additional restructuring charges, a substantial portion of which we expect to incur in the fourth quarter of fiscal 2023. We currently anticipate these additional actions to be substantially completed in the first half of fiscal 2024. Other income in the three and nine months ended June 26, 2022 consisted of a $1.1 billion benefit resulting from the General Court of the European Union issuing a ruling to annul a decision made by the European Commission (EC). The benefit was the result of reversing a previously accrued fine and the associated interest that was accrued as a financial guarantee for the decision made by the EC in fiscal 2018.
Investment and Other Income (Expense), Net (in millions) |  |  |  |  |  |
| Three Months Ended |  | Nine Months Ended
| June 25, 2023 |  | June 26, 2022 |  | June 25, 2023 |  | June 26, 2022
Interest and dividend income | $ | 79 |  |  | $ | 22 |  |  | $ | 193 |  |  | $ | 59 |
Net losses on marketable securities | (23) |  |  | (104) |  |  | (3) |  |  | (327) |
Net gains on other investments | 17 |  |  | 25 |  |  | 17 |  |  | 97 |
Net gains (losses) on deferred compensation plan assets | 48 |  |  | (80) |  |  | 95 |  |  | (110) |
Impairment losses on other investments | (19) |  |  | (20) |  |  | (120) |  |  | (41) |
Other | 4 |  |  | (6) |  |  | (16) |  |  | 1 |
| $ | 106 |  |  | $ | (163) |  |  | $ | 166 |  |  | $ | (321) |

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