Corrected. Qualcomm will collect a full 3G royalty on 4G phones that have 3G capability. The original version of this story mistakenly said the rate would be a mix of 4G and 3G rates. NEW YORK ( TheStreet) -- Qualcomm ( QCOM) bulls have gotten pretty jazzed while awaiting the wireless shop's earnings and outlook that hit after the bell Wednesday. The excitement around Qualcomm is a simple three-part story: The surging sales of smartphones in the fourth quarter, the big supply win for Apple's ( AAPL) CDMA ( Verizon ( VZ)) iPhone and the huge opportunity to supply 4G chips to the iPhone 5. While the rosy scenario helped lift Qualcomm shares to a two-year high a week ago, concerns about Qualcomm's outlook have since tempered the enthusiasm a bit this week. The risks to Qualcomm's success also come in threes. Qualcomm's Snapdragon processor for mobile devices faces rising competition from Samsung's Hummingbird and Nvidia ( NVDA) Tegra chips. Long-time partner Motorola ( MMI) opted to use its own 4G chip in its Xoom tablet. And royalty rates from Qualcomm's patent licensing business are decreasing. For the December quarter, analysts expect Qualcomm to post adjusted earnings of 72 cents a share, up a dime from year-ago levels, according to Yahoo! Finance. And sales are expected to be $3.2 billion, a sweet 20% year-over-year increase. Calling for a classic beat and raise performance tonight, Charter Equity Research analyst Ed Snyder said Qualcomm's is in a very strong position. "The lack of a strong competitor in 3G baseband has handed Qualcomm a large and growing share of the smartphone business," Snyder wrote in a research note Friday. But on the chip side of Qualcomm's business, some analysts remain cautious. Qualcomm enjoys a dominance of the 3G wireless chip market, but the tables turn significantly in 4G. Qualcomm's royalty rate in LTE or 4G is 3.25%, well down from 5% in 3G. But as long as 4G phones are sold with 3G capability, Qualcomm will continue to collect the higher rate. The upshot: the smartphone boom could one day turn into a bust for Qualcomm -- but not anytime soon. --Written by Scott Moritz in New York. >To contact this writer, click here: Scott Moritz, or email: firstname.lastname@example.org. To follow Scott on Twitter, go to http://twitter.com/MoritzDispatch. >To send a tip, email: email@example.com.