Qualcomm Inc. (QCOM - Get Report) , which is locked in a series of patent disputes with Apple, said the Fuzhou Intermediate People's Court order bans the sale of iPhone 6, iPhone6 S, iPhone 7, iPhone 7-plus, and iPhone 8 and iPhone X models models in China and order four China-based Apple subsidiaries to cease infringing on Qualcomm patents.
"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," Apple said in a statement. "All iPhone models remain available for our customers in China."
Apple is reportedly arguing that the patent issues only apply to iPhones that shipped with operating systems prior to the current iOS12; therefore, it claims that all its phones being sold currently in China do not violate the patent.
Apple shares were rising 0.6% after trading lower for most of Monday's session. Qualcomm shares were up 2.7%
Wedbush analyst Daniel Ives said in a note on Monday morning that the impact of the ruling should be fairly limited, but that the news comes out an inopportune time for Apple, with concerns about slowing iPhone sales in general and about the brewing trade war between the U.S. and China.
"While the headlines are concerning regarding this latest China court ruling we believe the models involved are related to 10%-15% of sales potentially impacted in the region related to older versions," Ives wrote. "According to Apple's statement there should be no disruption to the models Chinese consumers can purchase, although this remains up in the air given the mixed messages and reports coming out of China this morning."
Ives added that "we continue to believe today's news is more noise than a fundamental impact, although it will add to the black clouds over Cupertino until investors hear from the company in January."
Apple opted to dump Qualcomm chips from its new iPhone suite amid a long-running legal dispute over patents and imports, one of which is currently being argued before the U.S. International Trade Commission.
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Qualcomm is also suffering from a wane in global smartphone demand, which is affecting first quarter shipments of its Snapdragon MSM chips. Qualcomm sees MSM units deliveries of around 185 million units, a figure that missed most analysts' forecasts.
"In fiscal 2019, we expect relatively flat global handset average selling prices and low to mid-single-digit percentage handset sales growth year over year, with strength coming from the emerging regions, providing solid end market trends for (Qualcomm's licensing business) once the licensing disputes are resolved," CFO George Davis told investors last month.
"The combined impact of Apple instructing their contract manufacturers to stop paying their contracted royalty payments and Apple's decision to use a competitor's modem for their latest device has had a significant impact to our financial performance," CEO Steven Mollenkopf said at the time. "Notably, over 50% of the expected fiscal 2019 headwind related to Apple is reflected in our first fiscal quarter guidance and impacts our QCT business. As we progress through the year, this will become less impactful to our quarterly results."