InterDigital, Inc.

Company Overview

Business Model: InterDigital, Inc. is a global research and development company specializing in wireless, video, artificial intelligence ("AI"), and related technologies. The company designs and develops foundational technologies that enable connected, immersive experiences across a broad range of communications and entertainment products and services. Its primary revenue generation mechanism is licensing these patented innovations worldwide to companies that incorporate them into their products and services, including manufacturers of wireless communications devices, consumer electronics, internet of things ("IoT") devices, cars, other motor vehicles, and providers of cloud-based services such as video streaming. InterDigital, Inc. is positioned as one of the largest pure research and development and licensing companies globally.

Market Position: InterDigital, Inc. holds a leadership position in wireless technology, contributing to standards from early digital cellular systems to 5G, 6G, and advanced Wi-Fi technologies (IEEE 802.11 suite). It is also a leader in video processing and video encoding/decoding technology, with contributions to standards by ISO/IEC Moving Picture Expert Group (MPEG), ITU-T Video Coding Expert Group (VCEG), Joint Collaborative Team on Video Coding (JCT-VC), and Joint Video Expert Team (JVET). As of December 31, 2025, the company's portfolio comprised over 38,000 patents and patent applications worldwide, many of which are believed to be essential to existing or future industry standards. The company has successfully licensed 8 of the 10 largest smartphone vendors, representing approximately 85% of the global smartphone market. Additionally, it has licensed approximately 60% of the tablets and personal computers market and 35% of the television market. Through the Avanci platform, InterDigital, Inc.'s cellular standard essential patents are licensed to over 80% of annual connected car shipments.

Recent Strategic Developments:

• 2025 Patent Licensing Activity: InterDigital, Inc. signed eight patent license agreements in 2025. This included new multi-year, worldwide, non-exclusive, royalty-bearing license agreements with vivo Mobile Communication Co., Ltd and Honor Device Co., Ltd., two major Chinese smartphone vendors. A new multi-year license agreement was also signed with HP Inc., licensing its personal computers for Wi-Fi and video decoding technologies. Additional device licenses were secured with a significant social media company, Eaton, Seiko Solutions Inc., Sharp, and Teltronic.
• Samsung Arbitration: In July 2025, an International Chamber of Commerce arbitration panel determined royalties for a patent license agreement with Samsung Electronics Co., Ltd. (excluding digital televisions and computer display monitors) at $1.05 billion for an eight-year term (January 1, 2023, through December 31, 2030). This agreement established approximately $131 million in recurring annual revenue, a 67% increase from the previous license, and contributed $118 million in catch-up revenue in 2025.
• Acquisition: In October 2025, InterDigital, Inc. acquired Deep Render, an AI startup specializing in AI-based video coding, integrating its team of AI experts and patent portfolio into the company's Video Lab.
• Video Services Licensing Program: The company launched a Video Services licensing program, initially targeting subscription-based video on demand (“SVOD”) and advertisement-based video on demand (“AVOD”) markets. In 2025, patent infringement actions were initiated against major streaming ecosystem participants, including Disney and Amazon. Courts in Brazil and Germany awarded injunctions against Disney video streaming services in 2025.
• Subsequent Agreements (January 2026): InterDigital, Inc. signed a new patent license agreement with LG Electronics, Inc. for digital televisions and computer display monitors under its joint licensing program with Sony, covering technologies including ATSC 3.0, Wi-Fi, and video codecs. The company also renewed a five-year, worldwide, non-exclusive, royalty-bearing license with Xiaomi Corporation, covering its cellular products, including smartphones and other cellular-enabled devices, under standard essential cellular, Wi-Fi, and HEVC patents.

Geographic Footprint: InterDigital, Inc.'s headquarters are located in Wilmington, Delaware, USA. Its primary research and development activities are conducted in facilities in Conshohocken, Pennsylvania, USA; New York, New York, USA; Los Altos, California, USA; Montreal, Quebec, Canada; London, United Kingdom; and Rennes, France. The company also maintains smaller research and/or office spaces in Melville, New York, USA; Indianapolis, Indiana, USA; Brussels, Belgium; Espoo, Finland; Paris, France; Ottawa, Canada; and Beijing, China, and owns an administrative office in Washington, District of Columbia, USA. The majority of the company's revenue is derived from licensees headquartered outside the United States, primarily in Asia. Approximately 85% of its net property and equipment and patents are located in the United States, with the remainder primarily in Canada and Europe.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin: 55.3% (2025)
• Net Margin: 48.7% (2025)

Investment in Growth:

• R&D Expenditure: $211.4 million (25.3% of revenue)
• Capital Expenditures: $70.5 million (comprising $15.9 million in property and equipment purchases and $54.6 million in capitalized patent costs)
• Strategic Investments: $8.75 million cash outflow for the acquisition of Deep Render in 2025.

Business Segment Analysis

InterDigital, Inc. operates as a single reportable segment, with its Chief Executive Officer assessing company-wide performance and allocating resources based on consolidated financial information. The strategic purpose of all operating activities is to support this single segment.

Revenue by Licensing Program:

Smartphone

Financial Performance:

• Revenue: $678.9 million (+14.0% YoY)
• Key Growth Drivers: New multi-year license agreements with vivo Mobile Communication Co., Ltd and Honor Device Co., Ltd. in 2025. The Samsung Electronics Co., Ltd. arbitration decision in 2025. Continued global uptake of 5G smartphones and migration from feature phones to smartphones in emerging regions. Product Portfolio:
• Major product lines and services: Smartphones, tablets, base stations, and other wireless communication devices and infrastructure equipment. Market Dynamics:
• Competitive positioning within segment: 8 of the 10 largest smartphone vendors (based on shipments) and approximately 85% of the entire global smartphone market are under license.

CE, IoT/Auto

Financial Performance:

• Revenue: $154.6 million (-42.4% YoY)
• Key Growth Drivers: A new multi-year license agreement with HP Inc. in 2025. The Avanci licensing platform for the IoT industry, particularly in the automotive market. Product Portfolio:
• Major product lines and services: Televisions, laptops, gaming consoles, set-top boxes, streaming devices, and connected automobiles. Market Dynamics:
• Competitive positioning within segment: Approximately 60% of the tablets and personal computers market and 35% of the television market are under license. Through Avanci, over 80% of annual connected car shipments are covered.

Video Services

Financial Performance:

• Revenue: Not yet generating revenue from this grouping in 2025.
• Key Growth Drivers: Launched a licensing program with an initial focus on subscription-based video on demand (“SVOD”) and advertisement-based video on demand (“AVOD”) markets. Initiated patent infringement actions against major streaming ecosystem participants, including Disney and Amazon, in 2025, resulting in injunctions against Disney video streaming services in Brazil and Germany. Product Portfolio:
• Major product lines and services: SVOD, AVOD, Virtual Multichannel Video Programming Distributor ("vMVPD"), Free Ad-Supported Streaming TV ("FAST"), social media platforms, video conferencing, cloud gaming, and other cloud-based services. Market Dynamics:
• Market trends: The Video Services market is expected to grow from approximately $475 billion of annual revenue in 2025 to approximately $675 billion by 2029.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $102.3 million (385 thousand shares) in 2025.
• Dividend Payments: $67.1 million ($2.60 per share) in 2025.
• Future Capital Return Commitments: As of December 31, 2025, $127.2 million remained under the Share Repurchase Program authorization. The company expects to continue paying dividends in accordance with its dividend policy.

Balance Sheet Position:

• Cash and Equivalents: $739.0 million (2025)
• Total Debt: $474.7 million (comprising $458.4 million current portion of long-term debt and $16.3 million long-term debt) (2025)
• Debt Maturity Profile: The 3.50% Senior Convertible Notes due 2027 (the "2027 Notes") had $459.986 million principal outstanding as of December 31, 2025. $80.0 million of principal was elected for conversion in December 2025 (settling in Q1 2026), with the remaining $380.0 million due at maturity in 2027. Long-term debt from the Technicolor Patent Acquisition, with a carrying value of $17.9 million as of December 31, 2025, has repayment obligations contingent on future royalty revenue from the Madison Arrangement, with no minimum or maximum payments.

Cash Flow Generation:

• Operating Cash Flow: $544.5 million (2025)

Operational Excellence

Production & Service Model: InterDigital, Inc. operates as a pure research and development company, focusing on designing and developing foundational technologies. Its operational philosophy centers on continuous innovation and licensing these innovations globally. InterDigital Research & Innovation ("InterDigital R&I") is a diversified R&D operation that actively participates in Standards Development Organizations (SDOs) and industry consortia, and collaborates with leading inventors and industry players to source and develop new technologies.

Supply Chain Architecture: Key Suppliers & Partners:

• Joint Licensing Program: Sony (through the Madison Arrangement for digital televisions and computer display monitors).
• Licensing Platform: Avanci (an industry marketplace for cellular standards-essential technology for the IoT, with participants including BMW Group, Audi, Ford, Toyota, BYD, and Volvo Cars).
• Technology Acquisition: Deep Render (an AI startup acquired in October 2025, whose team of AI experts joined InterDigital, Inc.'s Video Lab).

Facility Network:

• Research & Development: Key R&D centers are located in Conshohocken, Pennsylvania, USA; New York, New York, USA; Los Altos, California, USA; Montreal, Quebec, Canada; London, United Kingdom; and Rennes, France. Additional smaller R&D and office spaces are maintained in Brussels, Belgium; Espoo, Finland; Indianapolis, Indiana, USA; Melville, New York, USA; Paris, France; Beijing, China; and Ottawa, Canada.

Operational Metrics:

• The company's 5G and video codec technology is designed to efficiently use energy throughout its ecosystem.
• InterDigital, Inc.'s Pixel Value Reduction (PVR) solution optimizes the brightness of pixels on a device display to reduce energy consumption without compromising perceived video quality. The AI-based Deep PVR solution can achieve up to a 15% reduction in a display’s power consumption.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: InterDigital, Inc. directly licenses its patented innovations to companies globally.
• Channel Partners: The company leverages strategic partnerships, including the Madison Arrangement (a joint licensing program with Sony for digital televisions and computer display monitors) and Avanci (an industry marketplace for licensing cellular standards-essential technology for the IoT, particularly in the automotive sector).

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Key licensees include Apple Inc., Google LLC, Honor Device Co., Ltd., Lenovo Group Limited, LG Electronics, Inc., Guangdong OPPO Mobile Telecommunications Corp., Ltd., Samsung Electronics Co., Ltd., vivo Mobile Communication Co., Ltd, and Xiaomi Corporation in the smartphone sector. In consumer electronics and IoT, key licensees include HP Inc., Eaton, Seiko Solutions Inc., Sharp, and Teltronic.
• Strategic Partnerships: The company maintains strategic partnerships through joint licensing programs like the Madison Arrangement with Sony and the Avanci platform, which includes major automotive manufacturers such as BMW Group, Audi, Ford, Toyota, BYD, and Volvo Cars.
• Customer Concentration: In fiscal year 2025, Samsung Electronics Co., Ltd., Apple Inc., and vivo Mobile Communication Co., Ltd. each accounted for 10% or more of InterDigital, Inc.'s consolidated revenue. Overall, 61% of total revenue in 2025 was attributable to companies that individually accounted for 10% or more of total revenue.

Geographic Revenue Distribution:

• China: 37.1% of total revenue ($309.3 million)
• South Korea: 31.5% of total revenue ($262.5 million)
• United States: 28.7% of total revenue ($239.4 million)
• Taiwan: 1.5% of total revenue ($12.3 million)
• Japan: 0.8% of total revenue ($7.1 million)
• Europe: 0.4% of total revenue ($3.3 million)
• Growth Markets: The smartphone market grew in 2025 due to the continued global uptake of 5G smartphones and migration from feature phones in emerging regions. The Video Services market is projected to grow from approximately $475 billion in 2025 to $675 billion by 2029. The IoT/Automotive market is also a significant growth area, with cellular IoT device shipments expected to increase from approximately 550 million in 2025 to 800 million by 2029, and connected passenger vehicles growing significantly from 65 million in 2025.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The wireless and consumer electronics industries are characterized by the widespread adoption of industry standards to achieve economies of scale and ensure interoperability. Standards Development Organizations (SDOs) play a crucial role in defining these standards, requiring participants to declare essential patents and commit to licensing them on fair, reasonable, and non-discriminatory (FRAND) terms. The licensing market for video and cloud-based services is less developed compared to device-based licensing. The smartphone market, with an estimated 1.2 billion units shipped globally in 2025, experienced growth due to 5G adoption and feature phone migration in emerging regions. The television market exceeds 200 million units shipped globally. The IoT/Automotive market is expanding rapidly, with cellular IoT device shipments projected to reach 800 million by 2029 and connected passenger vehicles growing significantly from 65 million in 2025. The Video Services market is a high-growth sector, expected to increase from $475 billion in 2025 to $675 billion by 2029.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: InterDigital, Inc. faces competition from other wireless and video technology companies, consumer electronics device companies, semiconductor companies, wireless operators, video streaming and cloud service companies, and other technology providers developing similar or competitive technologies. In the licensing arena, it competes with other patent holders for a share of royalties. Emerging Competitive Threats: New entrants, disruptive technologies, and alternative solutions pose competitive threats. The adoption of proprietary systems in the IoT space and the emergence of open source and/or purportedly royalty-free solutions (e.g., AV1/VP9, OCF) in video coding and IoT markets represent competitive challenges. Increasing participation within standards-setting organizations also contributes to greater competition for influence and standard adoption. Competitive Response Strategy: InterDigital, Inc.'s strategy involves continuous investment in advanced research to grow and enhance its patent portfolio, active participation in SDOs, and strategic partnerships. The company aims to expand its patent-based revenue by securing new licensees, extending into video streaming and other cloud-based services, and entering new product markets. It also pursues strategic research partnerships and focuses on attracting and retaining top talent. When necessary, the company enforces its intellectual property rights through litigation and other legal means.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The company faces risks related to the expansion of its revenue opportunities, particularly in the less developed video and cloud-based services licensing market, where holdout behavior and the use of alternative technologies may hinder success. Challenges in entering new patent license agreements and renewing existing ones, including identifying users and negotiating with reluctant licensees, can lead to revenue declines and less favorable terms. Royalty determinations by arbitrators, courts, or regulators, especially in jurisdictions like China, could result in lower-than-anticipated royalties or unfavorable terms. Downward pricing pressures on wireless products and consumer electronics may reduce royalties tied to product pricing. There is a risk that the company's technologies, including 5G, HEVC, VVC, AI, and IoT solutions, may not become patented, adopted by standards, or widely deployed due to competing technologies, proprietary systems, or open-source alternatives. Geopolitical Exposure: Deterioration in United States-China relations and broader trade and geopolitical conditions, including tariffs, could materially harm the business, particularly given China's significance as a key market and customer base. Customer Concentration: A significant portion of revenue is derived from a limited number of licensees (Samsung Electronics Co., Ltd., Apple Inc., and vivo Mobile Communication Co., Ltd. each comprised 10% or more of 2025 consolidated revenue). Failure to renew these agreements, payment defaults, or decreased shipments by major licensees could materially impact revenue and cash flow. Industry consolidation could also reduce licensing opportunities.

Operational & Execution Risks

Not applicable. The company's business activities do not entail concerns related to manufacturing or raw materials sourcing and disposal.

Financial & Regulatory Risks

Market & Financial Risks: Operating results may fluctuate significantly due to the timing of revenue recognition and the inherent judgment in applying revenue recognition principles. The company's total indebtedness of approximately $478 million as of December 31, 2025, could limit cash flow for operations and growth, restrict access to additional financing, and increase vulnerability to economic changes. Convertible note and warrant transactions may lead to dilution if the stock price exceeds strike prices. The company is exposed to counterparty risk with financial institutions in convertible note hedge transactions. Tax Liabilities: InterDigital, Inc. is subject to complex and evolving tax laws in the United States and foreign jurisdictions. Significant judgment is required in determining income tax provisions, and ongoing tax audits could impact future liabilities. Changes in tax laws, such as the increase in the Foreign-Derived Intangible Income (FDII) effective tax rate in 2026 and the implementation of the OECD Model Rules under Pillar Two (15% minimum corporate tax rate) from 2026, could adversely affect the tax rate and cash flow. The French government has also challenged the company's eligibility for portions of the Crédit Impôt Recherche (CIR). Regulatory & Compliance Risks: The company is routinely involved in costly and time-consuming litigation, arbitration, and administrative proceedings to enforce and defend its intellectual property rights and licensing practices. These proceedings carry risks of adverse rulings, including lower royalties, injunctions, damages, and reputational harm. Potential changes to U.S. and international patent laws, rules, and regulations, as well as the intellectual property rights policies of worldwide standards bodies, could negatively impact R&D investments, patent prosecution, enforcement mechanisms, and available remedies. Scrutiny by antitrust authorities regarding the use of standard essential patents (SEPs) could lead to investigations, enforcement actions, fines, or restrictions on licensing practices. The company is also subject to evolving domestic and international data protection laws (e.g., GDPR, UK GDPR, CCPA, CPRA, China's PIPL), which entail compliance costs, regulatory uncertainty, and potential fines.

Innovation & Technology Leadership

Research & Development Focus: InterDigital, Inc.'s Research & Development (R&D) efforts are concentrated on core technology areas that drive connected and immersive experiences. Core Technology Areas:

• Wireless Technology: Focuses on cellular technologies (3G, 4G, 5G, 5G Advanced, and 6G) and Wi-Fi technologies (IEEE 802.11 suite, including Wi-Fi 4/5/6/7 and development towards Wi-Fi 8). This includes physical layer design (CDMA, TDMA, OFDM/OFDMA, MIMO), radio interface protocols, and system architecture. The company is developing solutions for ubiquitous connectivity across licensed and unlicensed spectrum, terrestrial and non-terrestrial networks, and frequencies up to terahertz (THz) bands.
• Advanced Video Coding and Transmission Technology: Engaged in research and innovation for modern video codecs (H.264/Advanced Video Coding, H.265/High Efficiency Video Coding ("HEVC"), H.266/VVC, and MPEG Immersive (MPEG-I) standards suite). Research extends to groundbreaking technologies beyond VVC, utilizing both traditional and AI-based techniques. The company also develops technologies for high dynamic range (HDR) video production, distribution, and display, leveraging AI to maximize quality. New media coding areas include point cloud compression, haptics, and avatars for future immersive video experiences.
• Artificial Intelligence/Machine Learning (AI/ML): AI research is focused on its intersection with wireless and video technologies, including energy-efficient deep learning, design of novel AI-based video codecs, and integration of AI into current and next-generation 3GPP wireless systems. InterDigital, Inc. also leverages existing large language model (LLM) based solutions to enhance internal research outcomes and IP portfolio. Innovation Pipeline: The company is actively conducting research for the next generation of video codecs beyond VVC and developing evolutionary and revolutionary solutions for future connectivity requirements, including 6G.

Intellectual Property Portfolio:

• Patent Strategy: InterDigital, Inc. is committed to growing and enhancing its worldwide patent portfolio through internal investment, joint development projects, and select acquisitions, seeking patent coverage globally.
• Patent Holdings: As of December 31, 2025, the company held a portfolio of more than 38,000 patents and patent applications worldwide, predominantly related to cellular wireless standards (4G, 5G), other wireless standards (802.11 Wi-Fi), and various video technologies and standards (HEVC, VVC). Issued patents expire between 2026 and 2045.
• Licensing Programs: The company generates revenue primarily from device-based licensing, and is expanding into service-based licensing (Video Services). It also participates in joint licensing programs (e.g., Madison Arrangement with Sony) and platform licensing (e.g., Avanci).

Technology Partnerships: InterDigital, Inc. pursues strategic research partnerships and joint development projects with other technology companies and leading inventors to source and develop new technologies. The acquisition of AI startup Deep Render in October 2025 is an example of enhancing its technology leadership through strategic alliances.

Leadership & Governance

Executive Leadership Team

Board Composition: The Nominating and Corporate Governance Committee has primary oversight over environmental, social, and other sustainability matters. The Audit Committee oversees risks associated with cybersecurity threats. The Human Capital Committee is responsible for overseeing policies and strategies related to culture and human capital.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, InterDigital, Inc. had approximately 460 employees globally, with about 240 employees based outside the United States. The workforce is highly specialized, comprising engineers and technical talent, patent portfolio creation and enhancement experts, IP licensing and enforcement talent, and other business and operational professionals. Employees represent more than 60 countries.

Talent Management: Acquisition & Retention: The company's talent philosophy focuses on attracting, engaging, and retaining a talented workforce through market-competitive compensation programs (including base salary, short- and long-term incentives, healthcare, retirement plans, and hybrid work arrangements). It provides a minimum of twelve weeks of paid parental leave globally and offers paid time off for employee volunteerism. Diversity & Development: InterDigital, Inc. invests in employee development and engagement through talent practices, leadership development resources, and performance management processes. It refreshed its company values in 2025 based on employee feedback and strives to foster a diverse and stimulating environment.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: InterDigital, Inc. is committed to reducing its environmental footprint by investing in best practices to track and reduce its carbon footprint, including environmental considerations and reporting related to data center needs, and investigating and reducing unnecessary energy consumption. Product Impact: The company's innovation provides a framework for a sustainable future by developing technologies that fundamentally improve efficiency and power consumption across billions of devices, network infrastructure, and delivered services. Its sustainable video innovation addresses the energy-intensive nature of video streaming and display technologies. The award-winning Pixel Value Reduction (PVR) solution, particularly the AI-based Deep PVR, optimizes display brightness to reduce energy consumption by up to 15% without compromising perceived video quality.

Social Impact Initiatives: The company supports community investment through its "Charity Day" program, offering paid time off for employee volunteerism.

Business Cyclicality & Seasonality

Demand Patterns: The company's business is sensitive to macroeconomic conditions, including market volatility, inflation, supply chain issues, high interest rates, and the potential for a recession. The smartphone market, a primary market for its technologies, experienced growth in 2025 after several stagnant years, driven by the global uptake of 5G smartphones and migration from feature phones in emerging regions, with continued growth anticipated beyond 2025. The Video Services and IoT/Automotive markets are characterized by rapid growth.

Planning & Forecasting: Forecasts are influenced by the challenges associated with entering new license agreements and renewing existing ones. The company estimates revenue for variable agreements based on historical, current, and forecasted trends and growth rates.

Regulatory Environment & Compliance

Regulatory Framework: InterDigital, Inc. operates within a regulatory environment where wireless and consumer electronics products adhere to industry standards. Standards Development Organizations (SDOs) require participants to declare essential patents and commit to licensing them on fair, reasonable, and non-discriminatory (FRAND) terms. The company is subject to evolving international compliance requirements, including California and European Union reporting regimes on emissions and climate-related risks. Legal Proceedings: The company is routinely involved in disputes related to intellectual property enforcement and licensing activities, including litigations, arbitrations, and administrative proceedings.

• Amazon: In 2025, InterDigital, Inc. initiated multiple patent infringement claims against Amazon.com, Inc. in the UK, Brazil, Germany, the Unified Patent Court (UPC), the U.S. International Trade Commission, the Federal District Court of the District of Delaware, and the Federal District Court of the Eastern District of Virginia, primarily concerning video coding and streaming technologies. Amazon.com, Inc. filed counterclaims alleging non-infringement and invalidity in the UK and Brazil.
• Disney: In 2025, InterDigital, Inc. filed patent infringement claims against The Walt Disney Co. in the U.S. Central District of California, Brazil, Germany, and the UPC, related to video coding and streaming technologies. Injunctions were awarded against Disney video streaming services by courts in Brazil and Germany. The Walt Disney Co. filed an antitrust complaint against InterDigital, Inc. in the Federal District Court of the District of Delaware.
• Lenovo Group Limited: In 2024, InterDigital, Inc. and Lenovo Group Limited agreed to binding arbitration to determine the terms of a new patent license agreement for cellular and other technologies, effective January 1, 2024. The arbitration hearing is anticipated before year-end 2026.
• Samsung Electronics Co., Ltd.: In July 2025, an arbitration panel determined royalties for a patent license agreement between InterDigital, Inc. and Samsung Electronics Co., Ltd. at $1.05 billion for an eight-year term. Samsung Electronics Co., Ltd. filed a request in December 2025 to challenge these royalties.
• Tesla: In December 2023, Tesla initiated proceedings in the UK High Court challenging the validity of three of InterDigital, Inc.'s 5G patents and seeking a FRAND determination for the Avanci 5G Connected Vehicle platform license. The UK Court of Appeal upheld the lower court's decision dismissing FRAND claims against InterDigital, Inc. and Avanci, while maintaining patent claims against InterDigital, Inc. The Supreme Court granted Tesla's request for permission to appeal in July 2025 on specific issues, with a hearing scheduled for April 2026.
• Transsion Holdings Pvt Ltd: In September and October 2025, InterDigital, Inc. filed patent infringement claims against Transsion Holdings Pvt Ltd in the UPC, Delhi High Court (India), and the Regional Business Court of Rio de Janeiro (Brazil), related to cellular SEP and video coding technologies.

Tax Strategy & Considerations

Tax Profile: InterDigital, Inc.'s effective tax rate was 13.4% in 2025, down from 16.5% in 2024, primarily due to a higher percentage of foreign-derived intangible income deduction and increased share-based compensation deductions. Most of the company's income is taxable in the United States, with a significant portion qualifying for preferential treatment as foreign-derived intangible income ("FDII"). Tax Reform Impact: The effective tax rate for FDII is set to increase from 13% to 14% beginning in 2026. Starting in 2026, the company will also be subject to the OECD Model Rules under Pillar Two, which introduce a minimum corporate tax rate of 15% for multinational enterprises with annual consolidated revenue exceeding €750 million, adopted by various jurisdictions including France and the UK. The One Big Beautiful Bill Act (OBBBA), signed in July 2025, contains significant tax law changes affecting the timing and amount of certain tax deductions, though it did not impact the 2025 tax provision. The French government has challenged InterDigital, Inc.'s eligibility for portions of the Crédit Impôt Recherche (CIR) on patent costs for tax years 2019 and 2020, for which the company has recorded approximately $29 million in benefits between 2019 and 2025.

Insurance & Risk Transfer

Risk Management Framework: InterDigital, Inc. employs a defense-in-depth security model with multiple, layered controls to protect its data, customer data, infrastructure, and employees. A cybersecurity steering committee of senior executives assesses and manages cybersecurity risks, meeting semi-annually. The Audit Committee of the Board oversees cybersecurity threats, receiving quarterly updates. The company maintains cybersecurity policies, including an incident response framework. Insurance Coverage: The company holds commercial and cybersecurity insurance policies, but acknowledges the risk of these policies being insufficient or becoming cost-prohibitive due to escalating premiums and deductibles.