The Customers Who Cannot Build Their OwnNarrow moat
Qualcomm (QCOM) — moat facet
The manufacturers who genuinely cannot leave are the ones who buy the least.
Qualcomm's stickiest relationships are with the customers who cannot afford to build an alternative, and its largest are with the three who can.
The Android industry below the top tier — the manufacturers shipping tens of millions rather than hundreds of millions of phones a year — has no realistic path to its own silicon. For them Snapdragon is not a preference; it is the only way to ship a competitive premium device with a modem that carriers will certify. That is a durable position, and it is the part of the customer base that behaves most like a moat.
It is also the part that generates the least revenue. Apple, Samsung and Xiaomi were each 10% or more of consolidated revenue in fiscal 2025, and all three have either built their own processor, built their own modem, or both.1 Samsung has shipped Exynos for over a decade and buys Snapdragon anyway for its flagship tier, which is the strongest available evidence that the product wins on merit.
The tension is that Qualcomm's revenue is concentrated in exactly the customers where switching costs bind least, and its switching costs bind hardest on customers who contribute least.
The metric is revenue from outside the top three, which Qualcomm does not disclose directly but which the 10% threshold bounds.
Concentration in the customers who can build alternatives is rising: China went from 37% to 46% of revenue in two years, and all three named customers have built their own silicon.
The customers that cannot design their own chips are mostly outside the United States, while the largest U.S. customer, Apple, is replacing Qualcomm's modems. A falling U.S. share shows revenue concentrating in the buyers who still need Qualcomm.
Source: Qualcomm Form 10-K, FY2025 ↗- ReportedApple, Samsung and Xiaomi were each 10% or more of consolidated revenue in fiscal 2025, and all three have either built their own processor, built their own modem, or both.Qualcomm Incorporated, Form 10-K for the fiscal year ended 28 September 2025 (SEC, CIK 804328) — Item 1, Business, and the revenue-concentration and geographic disclosures. Qualcomm operates through QCT (semiconductors) and QTL (licensing), with QSI making strategic investments. QTL grants licences to portions of a patent portfolio including rights essential to and/or useful in the manufacture and sale of certain wireless products. In fiscal 2025 revenues from Apple, Samsung and Xiaomi each comprised 10% or more of consolidated revenues. Revenues by country, reported by customer or licensee headquarters: China including Hong Kong $20,340M (46%), United States $10,515M (24%), South Korea $9,542M (21%), other foreign $3,887M (9%), total $44,284M; the equivalent 2023 figures were $13,386M (37%), $10,503M (29%), $8,075M (23%) and $3,856M (11%). Approximately 52,000 full-time, part-time and temporary workers at 28 September 2025, in over 200 locations in 38 countries, with a voluntary turnover rate around 6%. Named registry and semiconductor competitors and the risk factors relating to customer vertical integration are set out in the same Item. — FY2025 · publ. 2025-11-05 · source ↗