By Kim Tae-gyu
Staff Reporter
A U.S. ban on imports of third-generation handsets has caught local cellular phone makers off guard, including Samsung Electronics and LG Electronics.
The International Trade Commission (ITC), the U.S. trade agency, Thursday blocked imports of some cellular phone models sporting Qualcomm chips with the exception of ones that have been shipped to the country before June 7.
The decision was made after years of legal disputes on patent violations _ Qualcomm allegedly infringed on a patent owned by Broadcom used to extend battery life.
The ban, which covers Qualcomm's code division multiple access (CDMA) and wideband CDMA (W-CDMA) chips, is expected to wreak havoc on the country's handset vendors, which depend mainly on Qualcomm chipsets for 3G phones.
CDMA, one of the two main platforms to enable wireless telephony services, is the brainchild of Qualcomm. The company also has some source technology for the next-generation W-CDMA.
In this climate, Samsung Electronics, the world's third-largest cell phone producer, and No. 5 player LG Electronics are taking action to avoid adverse effects.
``We plan to ask the U.S. Federal Court to suspend the ban so that we will be able to keep shipping Qualcomm chip-embedded 3G phones,'' LG spokesman Cho Joong-kwon said.
Samsung seems to be adopting a different strategy of sidestepping the ITC measure through cooperating with Qualcomm, which develops chips without resorting to the Broadcom technology at issue.
``Qualcomm developed an alternative chip, which has nothing to do with the Broadcom technology in question. We are ready to use it at any time,'' Samsung spokesman Yeom Cheol-jin said.
When contacted, Qualcomm officials refused to confirm the existence of the new chipsets, which don't incorporate the Broadcom technology.
Experts said Samsung and LG will bear the brunt of the ruling but most of them predicted the worst-case scenario of a long-standing import ban will not materialize.
``To be sure, this is bad news for Samsung and LG. But things are expected to be addressed in the near future because the ITC order involves the interests of U.S. citizens,'' said Greg Roh, an economist at Korea Investment and Securities.
``In addition, U.S. wireless operators as well as Qualcomm will not sit idly by as the ITC enforces the measure. The case may be solved soon,'' he said.
San Diego-headquartered Qualcomm swore it will appeal the ITC order together with powerful U.S. mobile carriers, which will be affected by the embargo.
``Qualcomm and the U.S. wireless industry will seek an emergency stay from the Federal Circuit Court of Appeals and a presidential veto of the ITC's ruling on several grounds,'' Qualcomm said in a statement.
The Federal Circuit Court specializes in patent cases and the U.S. law entitles the White House to invalidate an ITC order within 60 days if it believes it would be bad public policy.
Korea's cellular phone exports to the U.S. peaked in 2004 at $6.83 billion but fell to $4.86 billion in 2005 and $3.87 billion last year.
But exports were showing signs of a recovery and are forecast to reach $4.77 billion this year _ they stood at $1.59 billion during the first four months of 2007.