Apple's iPhone to benefit from US import ban on mobile chips

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The Independent Online

Apple's forthcoming iPhone has been given an unexpected competitive edge, after US regulators blocked the importation of a number of rival mobile phones.

The maker of the iPod was yesterday being seen as one of the few winners from a ruling by the International Trade Commission which arose out of a patent dispute between makers of microchips used in tens of millions of handsets.

Qualcomm, whose technology is used extensively by Samsung and LG Electronics in their US products, has been found to infringe the patents of rival Broadcom. Qualcomm chips are used for 3G phone services such as video calls and music downloads.

The eagerly awaited Apple iPhone, which goes on sale in the US on 29 June, does not use a Qualcomm chip, whereas rival phones being developed by Samsung and Motorola do. The ITC ruling does not apply to models already on the market in the US, but no new designs will be allowed in from now on.

Qualcomm said the ruling was bad for consumers, since it would limit choice and push up the price of handsets, and the company wants the Bush administration to veto it. If the ruling is left to stand, Qualcomm's chief executive, Paul Jacobs, promised to challenge it through the courts. "We believe the commission has overstepped its statutory boundaries and has not afforded due process to manufacturers and operators," he said.

His call is already being supported by the US telecoms companies with the most handsets that use Qualcomm chips, namely Sprint and Verizon, which is 50 per cent-owned by the UK's Vodafone.

"The ITC's decision places Verizon and Sprint at a fundamental disadvantage," said Lawrence Harris, technology analyst at Oppenheimer. "Unfortunately, the ITC ruling, if left standing, could have all kinds of unanticipated consequences."

In particular, Mr Harris told clients that he expected it would now be difficult for Verizon to launch a planned Prada-branded luxury phone, while Apple and Nokia would be able to gain market share.

Broadcom's general counsel, David Dull, said the ITC had kept to "the letter and the spirit" of its rules on protecting American companies from unfair trade practices. "We are gratified to know that the results of our investments and hard work will be protected from infringers like Qualcomm."

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