Motorola Faces Chip Ban

Motorola's MOT recovery looks a little more challenging after its 3G chip supplier Qualcomm QCOM gets hit with an import ban.

Already late to the third-generation wireless phone race, Motorola can only hope Qualcomm wins its pending appeal of the U.S. International Trade Commission decision Thursday. The ITC decided to enforce a ruling that found Qualcomm had infringed on a Broadcom BRCM patent, and imposed a ban on imports of Qualcomm's 3G products.

The ruling allows imports of existing phones using the infringing chips, but it will prevent any imports of new phones that use Qualcomm 3G chips. Among the new phones affected if the ban is upheld is the very important Razr 2 phone that is expected to be the flagship of Motorola's handset resurgence.

Some observers say the ban adds more worry to the woes already hanging over Motorola. The timing of a 3G hiccup certainly isn't good. Investors had begun to view Motorola as a once stumbling wireless tech titan that was finally getting ready to regain its stride.

"Motorola appears cheap, but we believe it could take a year to substantially improve the company's handset portfolio," writes Jefferies analyst Bill Choi in a research note Friday titled, "The Grinch Who Stole Christmas Phones."

Choi and other industry analysts say the Qualcomm chip ban comes at a tricky time in the mobile phone calendar.