The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( Trefis) -- China, the world's largest mobile market by subscriber base, saw a 1.23 % increase in mobile subscribers February to close in on the billion subscriber mark. The three national telcom carriers -- China Mobile ( CHL), China Unicom ( CHU) and China Telecom -- continue to see healthy 3-G adoption growth rates.
China's smartphone market is blossoming, and is expected to overtake the U.S. by the year-end to be the world's largest smartphone market by volume, according to IDC's latest market figures. IDC expects smartphone shipments in China to increase 52% this year to around 137 million units, giving it a 20.7% market share by the end of the year. This will be driven by subsides given by carriers on smartphones as they look to transition their huge 2G base to 3G for the higher ARPU levels that 3G drives. With 3G poised to see an explosion in demand in emerging markets such as China , we expect Qualcomm to be at the forefront of this transition.g Second, we expect increased royalty revenues from 3G handset makers. Qualcomm is one of the largest holders of 3G patents. CDMA (Code Division Multiple Access), a wireless 3G technology that has become a world standard for the wireless communications industry was solely developed by Qualcomm. This has allowed the company to charge a royalty from handset vendors for every mobile device sold that incorporates its technology. Further, Qualcomm also licenses out its 3G technology to other chipset manufacturers that wish to sell CDMA-based chipsets to mobile manufacturers. Growth in cell phones supporting 3G technology will bring in more revenues from license fees. The licensing division is Qualcomm's most profitable division and contributes around 37% to its overall value. However, royalty revenue per 3G phone sold in emerging markets will be lower as it is a fixed percentage of the ASP of the phones sold. 3G mobile phones in emerging markets are priced much cheaper than the ones sold in developed markets. Click here to find out how a company's products impact its stock price at Trefis. Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.