Qualcomm Chips Banned in New U.S. Phones

By Susan Decker and Peter J. Brennan
Bloomberg News
Friday, June 8, 2007

New cellphones sold in the United States will not be allowed to use chips from Qualcomm, after a trade agency found the products infringe a patent owned by rival Broadcom.

Semiconductors made by Qualcomm, a maker of chips for cellphones, can continue to be sold in handsets already on the market, the U.S. International Trade Commission said yesterday. The decision must be reviewed by President Bush and U.S. Trade Representative Susan Schwab.

The trade commission, in a 4 to 2 vote, said it will order customs officials to block imports of some handsets using Qualcomm chips that provide high-speed Internet access on cellphones. The company also will be banned from bringing the semiconductors into the United States for testing, the commission said in a statement.

The commission found that while excluding all phones would have hurt the U.S. economy, "the exemption for previously imported models sufficiently ameliorates this impact," it said.

"It appears minor to Qualcomm rather than anything that would really hurt it in the market," said Michael Cohen, an analyst at Pacific American Securities, who owns shares of San Diego-based Qualcomm. "This doesn't affect phones already in the marketplace." Broadcom is based in Irvine, Calif.

The four biggest phone-service providers -- AT&T, Verizon Wireless, Sprint Nextel and T-Mobile -- and handset manufacturers told the commission that a ban would hurt billions of dollars of investments and future profit.

In December, the commission upheld an administrative law judge's finding of infringement. Yesterday's decision dealt with the remedy.


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