ITC bans Qualcomm chips

A US trade agency yesterday banned imports of future advanced mobile phone models using Qualcomm chips, potentially hurting the…

A US trade agency yesterday banned imports of future advanced mobile phone models using Qualcomm chips, potentially hurting the country's biggest wireless services.

The International Trade Commission's (ITC) ban, which is being appealed, exempts models already being sold.

The ITC said the Qualcomm chips infringed a patent owned by Broadcom.

Qualcomm and Verizon Wireless, the second largest US mobile service provider, said they planned to ask the Bush administration to invalidate the order, and Qualcomm said it would seek an emergency stay from the US Federal Circuit Court of Appeals, which specializes in patent cases.

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Shares of Qualcomm rose as much as 2.4 per cent after the news as some investors had feared an even tougher ban that would include existing as well as future phones.

Paul Jacobs, chief executive of Qualcomm, said the ITC had overstepped its authority with a ban that he said would stop the sale of "tens of millions" of phones in the future.

Besides Qualcomm, the ban on new phone models with its chips would hurt Sprint Nextel, the third biggest mobile provider, as well as Verizon Wireless. The carriers depend on having the latest phones to keep customers and win new ones.

Oppenheimer analyst Lawrence Harris said the ban would hurt Samsung Electronics and LG Electronics, both big users of Qualcomm chips. Sales at Motorola, the leading mobile phone maker for the US market, could also be reduced, he said.

For example, the ban may prevent phone makers from importing advanced new phone models in time to compete with the iPhone, Apple's widely anticipated first mobile phone, expected to go on sale at AT&T on June 29th.

Investors may not understand the full implications of the decision, according to Stifel Nicolaus analyst Cody Acree.

"It's a bigger deal than the market is making it out to be," he said.

"We think it's a significant hit to Qualcomm and the carriers," Mr Acree added.