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VIA opens new dimension in Apple patent wars

Knock-out iPhone 5 launch even more necessary as Apple comes under pressure in tablets and lawsuits

By CAROLINE GABRIEL

Published: 26 September, 2011

READ MORE: Patents/IPR | Tablet

Even as the world endures the longest build-up period in wireless for the next iPhone(s), Apple is showing a few signs of vulnerability. On the patent side, it has been slapped with another lawsuit, from HTC bedfellow VIA Technologies, while Samsung is taking the gloves off in its legal defense too. And although the iPad continues to have no serious rivals in the tablet space, the fledgling segment is under pressure overall, and Apple is reported to be cutting orders to its iPad suppliers.

According to a research note from JP Morgan Chase, several of Apple's supply chain members have indicated that iPad orders for the fourth quarter have been cut by 25%. The move would be a surprise, given the lack of a real 'iPad killer' on the horizon for the holiday period, and the JPMorgan analysts said it would be the first such reduction they have seen.

Suppliers which would be hit would include the main manufacturing partner Hon Hai Precision Industry of Taiwan. It will have made an estimated 17m units for Apple in the third quarter, and that could drop to 13m in Q4. However, it seems the reductions may be geared to reducing post-Christmas inventory - JPMorgan Apple watcher Mark Moskowitz has not cut his projections of 10.9m to 12m sales of iPads across the third and fourth quarters.

Other storm clouds are looming from Taiwan, in the shape of VIA's lawsuit, which accuses Apple of violating three of its microprocessor related patents. This indicates a coalition building up against Apple's attempts to derail Android through a series of lawsuits against handset makers, notably HTC, Motorola Mobility and Samsung.

HTC appeared at the outset to be the weak member of the herd, with a far smaller patent position than its peers, but it has invested in its own IPR over the past year - notably in graphics firm S3, which recently won a preliminary judgement in a patent case against Apple, and which was part of VIA itself. It has also revealed several powerful allies - Google has transferred several key patents to HTC to help it fight its case in the US International Trade Commission, and now close partner VIA has joined the fray.

VIA is not backing HTC directly, but it is hard not to see a connection, given that the two firms share a common holding company, WTI Investment International, which is controlled by their mutual chairwoman, Cher Wang. VIA is also different from most of Apple's other battles because the company is a chip supplier, and is not fighting over software or user interface patents - areas in which Apple is hugely strong. But because Apple now designs its own chips, it has opened itself up to VIA, at a time when the iPhone maker's silicon activities are becoming more critical and more sensitive (Apple needs to distance itself from Samsung, which co-designed the original Apple processors and manufactures them).

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