Yahoo Finance Apple hit by Chinese sales ban on older iPhones, Qualcomm says
Apple has suffered a new blow in China after a court banned the sale of certain iPhones amid a patent spat with the microchip company Qualcomm.
The Fuzhou Intermediate People’s Court has granted two injunctions against Apple subsidiaries in China, ordering the company to cease imports and and sales of iPhones from 2015’s iPhone 6s to last year’s iPhone X, Qualcomm said. This year’s iPhone XS and XR phones would not be affected.
Apple played down the ruling, saying it only applied to phones that were running older versions of its software and that as a result all of its iPhone models would remain on sale. However, shares in the company fell and analysts said the decision could spell more trouble for the company in China amid a mounting trade war.
Qualcomm, which designs mobile phone network technology and microprocessors, has been locked in an escalating legal battle with Apple since the iPhone maker refused to pay royalties to Qualcomm last year.
The two companies are suing each other in multiple courts around the world, seeking billions in damages. Apple claims that Qualcomm is illegally demanding manufacturers pay excessive royalties for use of its network technology, while Qualcomm accuses Apple of violating patents.
The Chinese ruling, which was made two weeks ago, relates to two Qualcomm patents about how photos can be edited on a phone. It is not believed to apply to the latest version of iOS, the iPhone’s operating system, so Apple may continue to sell older phones provided they have been updated to the latest version of its software.
Don Rosenberg, Qualcomm’s general counsel, said: “We deeply value our relationships with customers, rarely resorting to the courts for assistance, but we also have an abiding belief in the need to protect intellectual property rights.
“Apple continues to benefit from our intellectual property while refusing to compensate us. These court orders are further confirmation of the strength of Qualcomm’s vast patent portfolio.”
An Apple spokesman said: “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. All iPhone models remain available for our customers in China.”
Apple’s shares fell in early trading, declining by around 2pc and falling below the price at the start of the year. Shares in Apple’s component suppliers also fell.
Daniel Ives, an analyst at Wedbush Securities, said the ruling may unnerve investors, who are looking for Chinese iPhone owners as an important source of sales in the next year.
“In a nutshell, with China being a linchpin of growth for Apple around iPhone sales any further dent in the armor at this juncture is not what Apple or investors wanted to see,” he said.
The decision against one of America’s most important technology companies comes amid rising tensions between the US and China. Apple is seen as being particularly vulnerable to a trade war between the two countries.
