SAN DIEGO, CA – On Wednesday, the Wall Street Journal reported that Qualcomm (NASDAQ:QCOM) and HTC (TW:2498) are reworking the chipset in the company’s flagship phone, the HTC One, to avoid a U.S. ban on imports.
According to report, a U.S. International Trade Commission (ITC) judge issued a preliminary ruling that HTC infringed on two Nokia (NYSE:NOK) patents that enhance transmission and reception of phone calls. Qualcomm is connected as Nokia claims that he chip covered by the patents was made by Qualcomm.
Listed in the case were older HTC model, but the HTC One and other new models using the same technology could be banned if the ITC decided to uphold it ruling when it meets in January. For their part, Nokia believes the HTC One does violate their patents.
Qualcomm could not be reached for comment on the ITC’s decision; however, there is a risk that customers could be affected if the HTC models are found to have violated Nokia’s patents.
The ruling was a setback for HTC, who has been losing market share in the global smartphone patent wars. Not only has Nokia filed suit against HTC in several countries, but HTC has sued Apple (NASDAQ:AAPL) which has in turn sued Google (NASDAQ:GOOG). A full ban would be extremely tough on HTC and its suppliers as the U.S. market accounts for 20 percent of unit shipments. In 2010, HTC was the number maker of Android smartphones, but they have struggled to keep pace with Samsung (KS:005930).
Since the patent disputes are hardware based, Qualcomm could face massive losses if HTC loses their appeal. Share of Qualcomm where trading down nearly .6 percent on early trading on Wednesday, in an apparent reaction to the news. While shares are up nearly 11 percent year-to-date, the potential import ban could force some investors to remain on the sidelines until there is more clarity. With the mobile market, still expanding the fallout from the import ban could also affect Qualcomm’s competitiveness in the sector as handset maker’s shift away from the chipmaker.