⚠ The Lock-In Protects the Wrong CustomersHigh threat

Qualcomm (QCOM) — threat to the moat

A lock-in that protects the small customers and evaporates at the large ones is not doing the work the word implies.

The customers who cannot leave contribute least, and the customers who contribute most can.

Concentration, and which way it movedCustomers at 10%+ of revenueThree, all namedChina share, FY202337%China share, FY202546%Direction over two yearsWorse on every measureTotal revenue grew 24% over the same span, so this is concentration deepening.
A lock-in that protects the small customers and evaporates at the large ones.

Qualcomm's switching costs bind hardest on mid-sized Android manufacturers with no path to their own silicon, and those are not where the money is. Apple, Samsung and Xiaomi were each 10% or more of consolidated revenue in fiscal 2025, and all three have built their own processor, their own modem, or both.1

That inverts the usual moat argument. A lock-in that protects the least valuable relationships and evaporates at the most valuable ones is not doing the work the phrase implies.

The concentration is also rising rather than falling: China including Hong Kong went from 37% to 46% of revenue in two years, and the Chinese manufacturers are precisely the buyers most responsive to MediaTek's pricing.2

The offset is the royalty, which continues whatever chip a licensee uses.3 It converts a chip loss into a margin downgrade rather than a total loss.

The number is revenue from outside the named three customers, which Qualcomm does not break out.

References
  1. ReportedApple, Samsung and Xiaomi were each 10% or more of consolidated revenue in fiscal 2025, and all three have built their own processor, 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 ↗
  2. ReportedThe concentration is also rising rather than falling: China including Hong Kong went from 37% to 46% of revenue in two years, and the Chinese manufacturers are precisely the buyers most responsive to MediaTek's pricing.
    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 ↗
  3. ReportedThe offset is the royalty, which continues whatever chip a licensee uses.
    Qualcomm Incorporated, Form 10-K FY2025 — Item 7, Management's Discussion and Analysis, and the reportable-segment note. QCT revenues $38,367M (2024 $33,196M, 2023 $30,382M) with EBT of $11,670M ($9,527M, $7,924M) at 30% of revenues (29%, 26%); QCT revenue streams handsets $27,793M ($24,863M, $22,570M), automotive $3,957M ($2,910M, $1,872M) and IoT $6,617M ($5,423M, $5,940M). QTL revenues $5,582M ($5,572M, $5,306M) against total costs and expenses of $1,539M ($1,545M, $1,678M), for EBT of $4,043M ($4,027M, $3,628M) — 72% of revenues in each of the three years. Reportable-segment revenues $43,949M, $38,786M and $35,716M against consolidated revenues of $44,284M, $38,962M and $35,820M. During the second quarter of fiscal 2025 Qualcomm executed final agreements for new long-term licensing arrangements. — FY2025 · publ. 2025-11-05 · source ↗
Sources
Generated September 23, 2026