QUALCOMM Incorporated (QCOM)

The first half of the business is Snapdragon processors and modems for phones, plus growing automotive and internet-of-things lines. Here the company depends on smartphone replacement cycles and on the decisions of large handset makers: one customer moving to an in-house modem visibly changes the outlook.

The second half is licensing. Patents on cellular standards earn a royalty on close to every smartphone sold worldwide, whoever made the chip inside. That revenue is small in volume but extremely high-margin and therefore supplies a large share of profit; it is also a recurring subject of litigation and antitrust proceedings.

The strategic risk is customer vertical integration: large handset makers develop their own modems to stop paying for someone else's. The company's answer is diversification into automotive and into Arm-based personal computers. Qualcomm pays a dividend and buys back stock.