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US fallout from Qualcomm chip ban

South Korean handset manufacturers LG Electronics and Samsung are understood to be lobbying for a suspension on the International Trade Commission’s (ITC) ban of 3G phones using Qualcomm chips.

The ban came into force on Friday after the ITC found Qualcomm guilty of infringing patents held by rival Broadcom.

Both LG and Samsung are expected to be hardest hit as they supply the bulk of CDMA-based 3G handsets in the US. However, Motorola could also suffer, while Nokia, Sony Ericsson and Texas Instruments, which use rival chips, are expected to benefit.

US mobile operators are also fearful of the ban and are also understood to be petitioning for a suspension.

However, industry analyst iSuppli has predicted that the Qualcomm chip bar will have only a minor impact on the global mobile phone market. The firm estimates that, if upheld, around 4.2 million EV-DO and WCDMA handset shipments will be affected this year. This translates into 4.4 per cent of North American shipments in the second half and 3.2 per cent of 3G handset shipments worldwide.

And while affected vendors may be concerned about the effects they might experience, iSuppli analyst Tina Teng said that only 11 handset models will be impacted this year, accounting for only 0.9 per cent of new handset models launched in 2007.

The analyst firm conceded that Samsung, LG and Motorola will be affected but argued that shipment volumes globally will not suffer should the ban remain in place.

“The effect of the ban will not be reduced shipments – but rather lower Average Selling Prices (ASPs), as wireless carriers are forced to push aging models that have lower price points, rather than more expensive latest-model EV-DO and WCDMA mobile phones,” said iSuppli.

The ITC order becomes final after 60 days but in the time it can be vetoed by the president.


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