China court bans sale of some iPhone models in Qualcomm patent dispute

China accounts for about 18 % of iPhone shipments

Qualcomm said it won a ruling in China against Apple that bans the sale of some iPhone models in that country.

The Fuzhou Intermediate People’s Court ruled that Apple is infringing two Qualcomm patents and issued injunctions against the sale of the iPhone 6S, iPhone 6S Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X, the San Diego, California-based chipmaker said in a statement Monday. The most recent models introduced in September, the iPhone XS, XR and XS Max, are not covered by the ban.

The ruling could potentially affect iPhone sales in the world’s biggest market for smartphones, where the company generates about a fifth of its revenue, and comes at time when demand for Apple’s most important product is slowing.

The two US companies are locked in a worldwide dispute over licensing fees that Qualcomm charges for use of technology that the chipmaker says underpins all modern phone systems. Apple has argued that its former supplier unfairly leverages its position as the biggest supplier of chips for smartphones to force payment of the fees. Qualcomm has countered that Apple is using its intellectual property without paying for it and the legal cases are aimed at forcing it to lower licensing charges.

“Apple continues to benefit from our intellectual property while refusing to compensate us,” Don Rosenberg, executive vice president and general counsel at Qualcomm, said in a statement.

“These court orders are further confirmation of the strength of Qualcomm’s vast patent portfolio.”

Apple shares fell 1.7 per cent in New York while Qualcomm rose 3.1 per cent. Major suppliers of components for the iPhone, including Skyworks Solutions, and Qorvo fell.

The patents are related to adjusting and reformatting the size and appearance of photographs and managing applications using a touch screen, Qualcomm said. They are just two of a number of patents Qualcomm is using against Apple in disputes in several countries.

“Qualcomm’s effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world,” Apple said in a statement. “All iPhone models remain available for our customers in China.”

Aaron Rakers, an analyst at Wells Fargo Securities, said he doesn’t think Apple will be much affected by the ruling, since it doesn’t cover the most recent phones, which come pre-loaded with the current operating system, iOS 12, and that doesn’t violate the patents in question. Still, Rakers said Apple faces risks from the developing trade war between the U S and China.

China accounts for about 18 per cent of iPhone shipments, Rakers said, citing data from IDC.