Handset makers like Motorola (MOT) need their Qualcomm (QCOM) chipsets to launch new phones. And cell carriers like AT&T (T) need the new phones to sell 3G services.
By not settling with Broadcom (BRCM) over the issue of whether QCOM has infringed on IP, the company has turned the US cell phone industry on its head. And, that could get worse.
LG, the South Korean handset maker, is petitioning US courts to overturn the ITC’s ban on importing handsets which contain Qualcomm’s next generation chips into the US. The FT quoted one analyst: “The biggest hit will be on LG, which has the biggest exposure to the US CDMA market,” said Richard Windsor, analyst at Nomura.
Motorola’s (MOT) attempt to recover from its handset disaster could also be hurt. The stock is near its 52-week low. The new RAZR2 phone, designed for 3G networks using the Qualcomm chipset. As TheStreet.com points out: "Among the new phones affected if the ban is upheld is the very important Razr 2 phone that is expected to be the flagship of Motorola’s handset resurgence."
But Motorola’s chief rival, world handset leader Nokia (NOK) has no such problems. It is in an IP and licensing struggle of its own with Qualcomm, and as The Associated Press pointed out: "Nokia Corp., the world’s largest handset maker, would be almost unscathed."
That would appear to leave only two winners, Broadcom, which can negotiate licensing fees from Qualcomm to use its IP, and Nokia, which has little need for the Qualcomm products.
That leaves a lot of losers.
Douglas A. McIntyre can be reached at [email protected]. He does not own securites in companies that he writes about.
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