Problem at QUALCOMM, Inc. (QCOM)?

Coming to the issue of royalties, the scenario should be even better for Qualcomm. That’s because 4G-based royalties tend to be a little lower than the 3G-based ones. Keeping that in mind, the massive transition to 3G technology in emerging markets should work in Qualcomm’s favor for quite some time to come, given the sheer volume of newly upgraded 3G users in China and similar nations. And the number of such users is steadily likely to go up to around 2.8 billion by the year 2014, if research firm Wireless Intel (NASDAQ:INTC)ligence is to be believed. Advantage Qualcomm!

Competition’s still far, far away

And if you ask me about the competition, all that rivals Intel Corporation (NASDAQ:INTC) and Broadcom Corporation (NASDAQ:BRCM) may be doing now is jostling for second space. Intel Corporation (NASDAQ:INTC), which is already at a disadvantage, given the dying PC industry, has managed to gain less than even 1% share of worldwide chip sales, according to data from research firm Strategy Analytics. And Intel’s much-touted Clover Trail+ processors do not provide integrated LTE connectivity, an area where QUALCOMM, Inc. (NASDAQ:QCOM)’s Snapdragon processors score enough brownie points.

Broadcom Corporation (NASDAQ:BRCM) is certainly better positioned to compete with Qualcomm than Intel, though, as the former’s WiFi/Bluetooth ‘combo’ chips can be found in devices manufactured by the big two, namely Apple and Samsung. While Broadcom does have a worthy product in the BCM21892 LTE baseband chipset, that supports a whole lot of cellular standards, Qualcomm has provided the perfect answer with the RF360 chipset, that supports up to 7 cellular standards.

As readers are able to see by now, Qualcomm has enough going in its favor. Users will continue to upgrade from 2G to 3G technology in emerging markets such as China, while the LTE-based transition will witness increased traction in countries such as the US. And QUALCOMM, Inc. (NASDAQ:QCOM)’s twin first mover advantages in the realms of royalties and LTE baseband chips will ensure profitability for quite some time to come, something which competitors will find hard to match. This is one stock which you can safely add to your portfolio and relax over the next couple of years, at least.

The article Is There a Problem With This Company? originally appeared on Fool.com and is written by Subhadeep Ghose.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.