⚠ Rented Manufacturing Means Rented CostsModerate threat
Qualcomm (QCOM) — threat to the moat
The advantage rented from TSMC is available to MediaTek at the same counter, and in a squeeze the largest customer is served first.
Renting your manufacturing means your costs are somebody else's price list, and in a squeeze you are in a queue.
Qualcomm owns no fabrication capacity; TSMC and Samsung build its parts, and they build MediaTek's and Apple's on the same processes.1 No node is available to Qualcomm that is not available to its competitors, and no yield advantage is proprietary.
The cost side showed up plainly in the June 2026 quarter, where management attributed part of the 20% handset revenue decline to memory supply constraints and higher input costs feeding device pricing and demand.2 None of those are Qualcomm's decisions.
Allocation is the sharper risk. When leading-edge capacity is scarce, a foundry serves its largest customers first, and Apple has been TSMC's largest customer for years.
The consolation is symmetry: every fabless competitor faces the same list, so relative position is unchanged even as the whole industry's margin moves.
QCT gross margin is where this lands, and it moves before revenue does.
- ReportedQualcomm owns no fabrication capacity; TSMC and Samsung build its parts, and they build MediaTek's and Apple's on the same processes.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 ↗
- ReportedThe cost side showed up plainly in the June 2026 quarter, where management attributed part of the 20% handset revenue decline to memory supply constraints and higher input costs feeding device pricing and demand.Coverage of Qualcomm's third-quarter fiscal 2026 results, July 2026 — revenue of $9.9 billion and non-GAAP earnings per share of $2.21, meeting the high end of revenue guidance and short of consensus on earnings. QCT handset revenue of $5.09 billion declined 20% year over year on industry-wide memory supply constraints, higher input costs affecting device pricing and demand, and inventory adjustments at major OEMs; automotive revenue of $1.59 billion rose 61% and IoT of $1.83 billion rose 9%. Management said a sharper-than-expected reduction in Apple modem-related sales contributed to a lighter fourth-quarter outlook, with Apple-related revenues expected to fall by approximately 50% between the September and December quarters, and doubled the fiscal 2029 non-handset revenue target to $40 billion. Fourth-quarter guidance was $9.7-10.5 billion of revenue and $2.05-2.25 of non-GAAP diluted EPS, both below consensus near $10.02 billion and $2.36. — Q3 FY2026 · publ. 2026-07-30 · source ↗