Qualcomm warns of injunction setback

Qualcomm, the leading chipset supplier for mobile phones, warned on Wednesday its customers would suffer from court injunctions obtained by rival Broadcom.

A federal judge in California ruled on Monday that Qualcomm should no longer sell chipsets for third-generation WCDMA phones that infringed a Broadcom patent for high-resolution video encoding.

The injunction, with immediate effect, could affect handset-makers such as LG Electronics and Samsung, which import phones with Qualcomm chips, as well as Motorola, its main US customer.

Qualcomm on Wednesday announced the availability of new WCDMA chipsets designed to comply with the ruling. It said it expected they would appear in handsets before the end of the first calendar quarter.

Sanjay Jha, chief operating officer, told an analyst conference call that new customers had already started working with the products so would suffer minimal impact from the injunction.

But he added: “Clearly, there is a short-term impact on existing customers from this transition.”

Paul Jacobs, chief executive, said: “Other companies are going to use this court order to gain some competitive advantage, but this is not going to distract us...I’m confident we’ll overcome this latest challenge.”

Qualcomm could seek a stay of the injunction and, failing that, appeal. The judge also issued injunctions regarding chipsets he said infringed two other Broadcom patents. But he allowed them to continue to be sold until January 31 2009, provided that Qualcomm paid royalties to its rival.

Richard Windsor, communication equipment analyst with Nomura, said the rulings were substantially more severe than expected and estimates for Qualcomm were likely to fall.

Separately, Sprint Nextel said on Wednesday it does not expect any delay to its plan to launch QChat, a walkie-talkie cell phone service, despite a court ruling against QChat developer Qualcomm, reports Reuters.

”We’re pleased the judge did not issue an immediate injunction on the patent related to QChat technology and we do not anticipate any interruption and delay in QChat deployment due to this dispute,” Matthew Sullivan, Sprint spokesman, said.

”We’re still assessing the impact but at this time we think all our handset providers will be covered by the sunset provision,” Mr Sullivan said.

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