The gloom and doom in the news about a recent ITC-sanctioned ban on Qualcomm's (NASDAQ:QCOM) next-generation chipsets may leave Fools with images of stalled manufacturing lines and boxes of dusty inventory in overstuffed warehouses. But the legal recourse that Broadcom (NASDAQ:BRCM) won for Qualcomm's patent infringement hasn't stopped companies from churning out cool new products based on Qualcomm's chips.
Yesterday, Taiwan's High Tech Computer, or HTC, said that it will launch 10 different smartphones and personal digital assistants (PDAs) that include the latest Qualcomm chips before years' end. This includes bringing the Microsoft (NASDAQ:MSFT) Windows-based HTC Touch model -- already available in Europe and Asia -- to the United States, where it's being positioned to rival the Apple (NASDAQ:AAPL) iPhone.
But with a product ban in effect, barring the importation of these devices into the U.S., just how will HTC's iPhone-killer make it to the shelves? A few options are possible. Verizon Wireless already struck a license deal with Broadcom directly to keep its supply chain wide open for the holidays and beyond. Sprint Nextel (NYSE:S) is said to be exploring software workarounds with Qualcomm for the infringed patents as well. And a third unnamed carrier is rumored to have cemented a license with Broadcom.
With these mitigations for the product ban, Qualcomm may see little actual impact in terms of product flow for its customers in the near term. There will definitely be other significant -- but possibly less measurable -- consequences to Qualcomm, however. While HTC's CEO announced his pleasure with a close strategic relationship with Qualcomm, other device manufacturers will likely be looking harder at alternative suppliers.
The world largest cell-phone maker, Nokia (NYSE:NOK), recently announced its exit from the chip business and a revamp of its chipset supply chain, favoring alternate suppliers such as ST Microelectronics and Broadcom. The move reduces the Finnish giant's reliance on market leader Texas Instruments (NYSE:TXN) and completely bypasses Qualcomm's offerings, which is no surprise, given the legal skirmish still bubbling between the two.
But even with increased pressure from the ban, the work put into mitigating its effect and getting products to the U.S. means that American gadget lovers can keep their dreams of the latest whizbang mobile devices alive. In the longer term, though, Qualcomm needs to resolve the core legal issues before other large device makers decide to jump ship.
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