June 8, 2007 8:27 pm

LG petitions US over Qualcomm

LG, the South Korean handset maker, is asking the US courts to suspend a ban on imports of its high-end mobile phones that could damage its US business.

LG is joining Qualcomm, the chipmaker, and telecoms operators AT&T and T-Mobile in petitioning the courts to suspend Thursday’s ruling by the US International Trade Commission to ban imports of third-generation mobile phones that contain chips by Qualcomm. The chips were deemed by the ITC to violate a patent held by rival Broadcom.

LG relies heavily on the sale of Qualcomm-based phones into the North American market and is seen as one of the biggest losers from the ban. “The biggest hit will be on LG, which has the biggest exposure to the US CDMA market,” said Richard Windsor, analyst at Nomura.

Samsung, another key Qualcomm customer, is also likely to be hit. Motorola could also suffer as key future products, such as the new version of the Razr phone, are based on Qualcomm chips.

US mobile phone operators Verizon Wireless, Sprint and AT&T will also be hard hit by the ban. Although the ban does not cover products currently on the market, it will stop the telecoms companies offering new high-end products to customers.

The ban could, however, be a boost for Nokia and Sony Ericsson, whose mobile handsets do not use Qualcomm chips. Nokia has recently struggled in the US market, with sales of phones in the region falling 42.5 per cent in the first quarter of this year, compared with the same period in 2006.

“This is definitely an opportunity that Nokia could use to its advantage,” said Geoff Blaber, analyst at CCS Insight.

Texas Instruments, whose chips compete with Qualcomm’s, could also see a pick-up in sales. Apple’s iPhone, which is due to be launched at the end of this month, also does not use the disputed chips, and could also benefit from Samsung and LG’s misfortune. High-end phones from the two Korean groups were seen as key competitors to the Apple phone, which could now enjoy a clearer run.

The ITC order becomes final after 60 days, during which time it is reviewed by the Bush administration and can be vetoed by the president, although there are few precedents for this.

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