Thursday, June 7, 2007

U.S. Bans Some Cellphones in Patent Case

WASHINGTON, June 7 (AP) — A federal agency has banned imports of new cellphones made with Qualcomm semiconductors because the chips violate a patent held by Broadcom.

The International Trade Commission said today that the import ban would not apply to mobile phone models that were imported on or before June 7.

The ruling is a blow to Qualcomm, to wireless handset makers like Motorola and Samsung, and to service providers like Verizon Wireless, SprintNextel and AT&T.

All three service providers sell phones that rely on Qualcomm chips for access to their high-speed data networks, and 80 percent of the phones sold by Verizon use Qualcomm’s technology. Analysts say the decision could also result in higher prices for cellphone users as companies pass along the costs of switching to the new technology.

”This is unwelcome news to Qualcomm and its wireless carrier customers,” said Rebecca Arbogast, an analyst at investment bank Stifel, Nicolaus & Company. Mobile phone models are updated rapidly, she said, meaning that the exception for current models could last only a limited time.

The precise financial impact of the limited ban is unclear. But a J.P. Morgan Securities analyst, Ehud Gelblum, last month estimated that a total ban would have affected up to 80 million phones, costing the company some $1.6 billion in revenue in its next fiscal year, which begins Oct. 1.