Mobile-chip giant Qualcomm (Nasdaq: QCOM) posted fiscal third-quarter digits recently, and shares promptly rallied despite technically missing Street estimates. What gives?

The basics
Total revenue grew 28% over last year to $4.63 billion, with net income of $1.2 billion, or $0.69 per share. On an adjusted basis, the bottom line came in at $1.5 billion, or $0.85 per share. The company generated $658 million in free cash flow.

MSM chip shipments rose 18% to 141 million units, which, while below the company's expectations, is still healthy overall. Total reported device sales, which affect Qualcomm's licensing revenues, rose 31% to $47.8 billion. That translated into a ballpark of 206 million to 211 million 3G and 4G device shipments, carrying an average selling price estimated between $226 and $232.

The breakdown
Qualcomm's CDMA technologies segment, or QCT, continues to be both the bulk of sales and enjoy the most growth. QCT revenue grew 31% to $2.9 billion. This is Qualcomm's primary chip business, comprising 62% of sales. The licensing business was still no laggard, growing 27% to $1.6 billion.

Continued supply constraints related to 28-nanometer production are still holding Qualcomm back, as demand for those chips is very strong but there simply aren't enough to go around. The latest generation of Snapdragon mobile processors fits into this category, as its S4 chipset is in numerous prominent smartphones that were recently launched.

This includes Samsung's flagship Galaxy S III, which is notable because Samsung typically uses its own Exynos processors, which are now up to quad-core, in its smartphones wherever possible. HTC's One X also sports a Snapdragon S4. This speaks to the appeal of Qualcomm's strength in integration, as these chips boast integrated 4G LTE. The international variants of both the Galaxy S III and One X carry different processors -- Samsung's Exynos and NVIDIA's (Nasdaq: NVDA) Tegra 3, respectively -- but LTE is becoming increasingly important in the U.S., where LTE availability and adoption is the highest.

Qualcomm's discrete LTE modems are now on their third generation, while most rivals are still working on their first. The newest of these is expected to be featured in Apple's (Nasdaq: AAPL) sixth-generation iPhone later this year, after Apple switched to Qualcomm as its exclusive baseband supplier a few years ago.

The difference
Ambitious rival NVIDIA continues to gain traction with its Tegra mobile chips, but interestingly this is coming more on the tablet side of things, while Qualcomm is mostly holding down the fort in smartphones. Google's (Nasdaq: GOOG) Nexus 7, without a doubt the most important Android tablet to be launched since Amazon.com's Kindle Fire late last year, carries a quad-core Tegra 3. Even Amazon's follow-up Kindle Fire 2 is rumored to sport a Tegra 3.

This can be attributed to the different values emphasized in each segment. In a smartphone that needs LTE connectivity with physical space constraints, a Snapdragon is just what the doctor ordered. In a Wi-Fi-only tablet with more room inside that's more concerned with gaming graphics, that's where NVIDIA fits the bill.

Instead, Qualcomm is hoping to make a big tablet splash with Microsoft (Nasdaq: MSFT) Windows RT tablets later this year. On the conference call, COO Steve Mollenkopf was quick to point out that Qualcomm is the only chipmaker that will support both Windows on PCs and smartphones. The company continues to be the sole supported chipset of Windows Phone, and that includes the next major version, Windows Phone 8.

The problem
To help cope with supply constraints, Mollenkopf acknowledged that the company is bringing on additional sources for 28-nanometer supply and is actually heaving four sources onboard. That coincides with prior reports that Qualcomm was tapping United Microelectronics, Samsung, and others for supply, in addition to main flame Taiwan Semiconductor Manufacturing.

Still, the company doesn't expect that it will really see supply match demand until next year. This is the part where Intel cackles with glee as the last remaining chipmaker with its own chip foundries.

Still got it
Qualcomm had to reduce its full-year guidance in device shipments, revenues, and profits. Device shipments are now expected to be between 875 million and 935 million. Revenue should be in the range of $18.7 billion to $19.1 billion, with earnings per share of $3.41 to $3.47. Even with those downward revisions, Qualcomm's overall business remains as strong as ever.

As an iPhone supplier, Qualcomm has benefited from Apple's rise to the top. The good news for both companies is that it's not over yet. Sign up for The Motley Fool's brand new premium Apple research service to read more.