Qualcomm 2011 Annual Report Download - page 36

general and administrative expenses.
We conduct business primarily through four reportable segments. These segments are: Qualcomm CDMA Technologies, or QCT;
Qualcomm Technology Licensing, or QTL; Qualcomm Wireless & Internet, or QWI; and Qualcomm Strategic Initiatives, or QSI.
QCT is a leading developer and supplier of integrated circuits and system software based on CDMA, OFDMA and other technologies for use
in voice and data communications, networking, application processing, multimedia and global positioning system products. QCT’s integrated
circuit products and system software are sold to or licensed to manufacturers that use our products in wireless devices, particularly mobile
phones, tablets, laptops, data modules, handheld wireless computers and gaming devices, access points and routers, data cards and infrastructure
equipment, and in wired devices, particularly broadband gateway equipment, desktop computers, televisions and Blu-ray players. The MSM
integrated circuits, which include the Mobile Data Modem, Qualcomm Single Chip and Qualcomm Snapdragon devices, perform the core
baseband modem functionality in wireless devices providing voice and data communications, as well as multimedia applications and global
positioning functions. In addition, our Snapdragon enabled integrated circuits provide advanced application processing capabilities. QCT’s
system software enables the other device components to interface with the integrated circuit products and is the foundation software enabling
manufacturers to develop devices utilizing the functionality within the integrated circuits. QCT revenues comprised 59%, 61% and 59% of total
consolidated revenues in fiscal 2011 , 2010 and 2009 , respectively.
QCT utilizes a fabless production business model, which means that we do not own or operate foundries for the production of silicon wafers
from which our integrated circuits are made. Integrated circuits are die, cut from silicon wafers, that have been assembled into packages or
modules and have completed the final test manufacturing processes. We rely on independent third-party suppliers to perform the manufacturing
and assembly, and most of the testing, of our integrated circuits. Our suppliers are also responsible for the procurement of most of the raw
materials used in the production of our integrated circuits. We employ both turnkey and two-stage manufacturing business models to purchase
our integrated circuits. Turnkey is when our foundry suppliers are responsible for delivering fully assembled and tested integrated circuits. Under
the two-stage manufacturing business model, we purchase wafers and die from semiconductor manufacturing foundries and contract with
separate third-party manufacturers for probe, assembly and final test services.
QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which includes certain patent rights
essential to and/or useful in the manufacture and sale of certain wireless products, including, without limitation, products implementing
cdmaOne, CDMA2000, WCDMA, CDMA TDD (including TD-SCDMA), GSM/GPRS/EDGE and/or OFDMA standards and their derivatives.
QTL licensing revenues are comprised of license fees as well as royalties based on worldwide sales by licensees of products incorporating or
using our intellectual property. License fees are fixed amounts paid in one or more installments. Royalties are generally based upon a percentage
of the wholesale (i.e., licensee’s) selling price of licensed products, net of certain permissible deductions (e.g., certain shipping costs, packing
costs, VAT, etc.). QTL revenues comprised 36%, 33% and 35% of total consolidated revenues in fiscal 2011 , 2010 and 2009 , respectively. The
vast majority of such revenues were generated through our licensees’ sales of cdmaOne, CDMA2000 and WCDMA subscriber equipment
products.
QWI, which includes Qualcomm Enterprise Services (QES), Qualcomm Internet Services (QIS), Qualcomm Government Technologies
(QGOV) and Firethorn, generates revenues primarily through mobile information products and services and software and software development
aimed at support and delivery of wireless applications. QES sells equipment, software and services used by transportation and other companies
to connect wirelessly with their assets and workforce. Through September 2011 , QES has shipped approximately 1,511,000 terrestrial-
based and
satellite-based mobile information units. QIS provides content enablement services for the wireless industry, including Brew, the Plaza suite and
other services. QIS also provides QChat push-to-talk and other products for wireless operators. QGOV provides development, hardware,
analytical expertise and services involving wireless communications technologies to United States government agencies. Firethorn builds and
manages software applications that enable mobile commerce services. QWI revenues comprised 4%, 6% and 6% of total consolidated revenues
fiscal 2011 , 2010 and 2009 , respectively.
QSI makes strategic investments that we believe will open new opportunities for our technologies, support the design and introduction of
new products and services for voice and data communications or possess unique capabilities or technology. Many of these strategic investments
are in early-stage companies. QSI also holds wireless spectrum. As part of our strategic investment activities, we intend to pursue various exit
strategies at some point in the future.
The results of QSI’s FLO TV business is presented as discontinued operations. Since the shut down of the FLO TV business and network on
March 27, 2011, we have been working to sell our remaining assets and exit contracts. On December 20, 2010, we announced that we have
agreed to sell substantially all of our 700 MHz spectrum for $1.9 billion, subject to the satisfaction of customary closing conditions, including
approval by the U.S. FCC.
Nonreportable segments include the Qualcomm MEMS Technologies division, which continues to develop an IMOD display technology
based on micro-electro-mechanical-system (MEMS) structure combined with thin film optics, and
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