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Qualcomm, (NASDAQ: QCOM) has a dominant position in the mobile chip industry and has benefited largely because of its first mover advantage in the smartphone revolution. The company's performance has been spectacular in the past two years, with revenue and profits averaging 32% and 29%. Let's find out what has helped and what should continue to work in Qualcomm's favor in the future.

Omnipresent

Qualcomm's Snapdragon line of processors has been successful at almost all major handset makers. Its processors have powered the most high-end smartphones from Sony (NYSE:SNE), BlackBerry (NASDAQ:BBRY), Apple (NASDAQ:AAPL) and Samsung (OTC:SSNLF). Although Apple's A5 and A6 processors have powered its latest iPhones and iPads, but still Qualcomm remains a trusted engineering solution for other major players keeping its position strong in the future too.

Currently, as the trend is moving more toward low-end smartphones and developing markets are becoming a major driver of growth, Qualcomm has come up with a stripped down version of its flagship Snapdragon series, the Snapdragon 200. The processor aims to target entry-level smartphones by providing dual- and quad-core devices in 28-nm manufacturing process technology. Further, these chips can handle even more than two SIM cards at a time, which is a much sought out feature in phones in Asia.

China, 3G and More

In emerging countries, especially China, there has been a major transition to 3G as in the last one year as the number of subscribers has moved past 300 million compared to 170 million a year ago and the growth is expected to continue. Qualcomm understands the scope that this transition provides, and is thus positioning itself for China Mobile's (NYSE: CHL) promising 3G market. The company's latest Snapdragon 200 is built to support China Mobile's proprietary TD-SCDMA network.

If Qualcomm addresses China Mobile's 3G issues, it will be able to tap the world's largest smartphone market. Till now, China Mobile has been able to switch just over 17% of its total subscriber base to 3G. China Mobile still has a market of 600 million 2G subscribers, which would gradually be converted into 3G in the coming years.

The Chinese market is also competitive with the likes of Spreadtrum (NASDAQ: SPRD), the leading supplier of TD-SCDMA which supplies most of its products in Korea and China and MediaTek processors power more than half of the Chinese smartphone market. As discussed earlier, TD-SCDMA is the 3G standard used by China Mobile, Spreadtrum being a major provider to the largest telecom operator of the world has strengthened the company's base. The company supplies its products to local Chinese firms such as Huawei and ZTE, thus catering to a major chunk of the low-end of the Chinese market.

The 4G Dominance

The 4G/LTE market is also expanding as major networks, especially in the developed countries such Japan, South Korea and the U.S., realize that the 4G network is more efficient and has enhanced data-carrying capacity compared to 3G. Till last year, Qualcomm shipped 86% of the total 47 million LTE-capable chipsets, which has risen to 97% in first quarter of 2013. The company dominates the market because while competitors are bringing their first LTE basebands, Qualcomm with its LTE-Advanced - a next-gen LTE technology chipsets is in its third-generation already.

Going forward, Qualcomm will be able to maintain its market lead with its multi-mode compatibility and integration with app processors it is going to ahead of competition. The company's recently launched RF360 chipset has solved the trouble of LTE fragmentation, which permits smartphone manufacturers to come up with just a single version of a handset for every LTE market. Further, LTE integration with Qualcomm's Snapdragon processors will help handset makers to develop more power-efficient smartphones without affecting the designs.

In Short

Qualcomm still is a major player in the high-end smartphone market and should continue benefiting from it. It also realizes the importance of the Chinese market and thus trying to come up with chipsets that are as per the market's requirement. Moreover, the company stands to gain from the 2G to 3G and 3G to 4G transition with its dominance in both 3G and 4G market. I believe there is a lot still left in the company to deliver and investors to gain from it.

Source: Qualcomm Is Still Good For The Long Run