Qualcomm Is in Prime Position to Benefit From Ongoing 5G Proliferation

We expect Qualcomm’s licensing business, the driver of the firm’s narrow moat rating, to see solid growth, due to the ramp of 5G networks in the coming years. However, government investigations into the business model have increased the possibility of negative effects on royalty revenue, reflected in our negative moat trend rating, even in light of the company's 2019 settlement with Apple and 2020 settlement with Huawei. Nonetheless, Qualcomm has been able to withstand these inquiries and maintain adequate royalty rates, and we think this will continue over time.