ITC Nixes Actions Semi's Chips

The U.S. International Trade Commission ruled that system-on-chip controllers for portable digital music players made by Actions Semiconductor(ACTS Quote - Cramer on ACTS - Stock Picks) infringe two of SigmaTel's(SGTL Quote - Cramer on SGTL - Stock Picks) patents.

Late Friday, the Commission reconfirmed an initial determination in March that both SigmaTel's patents were valid and infringed, and ordered that those Actions-manufactured chips not be imported into the U.S..

Earlier Friday, Zhuhai, Guangdong, China-based Actions said that it would not sell those products in the U.S. that are implicated in the patent-infringement suit with SigmaTel, a maker of chips for audio and multimedia.

"We respect the ITC's thorough process in evaluating our case and have already taken all appropriate measures to ensure the products in question are no longer imported to the U.S. market,'' Nan-Horng Yeh, Actions CEO, said in a statement.

Shares of Action dropped 5.5%, or 49 cents, to $8.41 in recent after-hours trade.

In addition, Actions said that the chips under review by the Commission represent a "non-material portion of Actions' overall revenue mix" and that "less than 10% of its products sold in the global market are shipped to the U.S."

SigmaTel CEO Ron Edgerton said in a statement that the company was "delighted that the International Trade Commission has issued a ruling" in its favor.

"The ITC's exclusion order prohibiting importation of infringing MP3 players containing Actions chips vindicates the position we have held since January 2005 and protects our intellectual property," he said.

Shares of Austin, Texas-based SigmaTel were recently up 18 cents, or 3.9% after hours to $4.78.