STMicro Ordered by Dutch Court to Stop Microphone Sales to HTC

STMicroelectronics NV was ordered by a Dutch court to stop supplying HTC Corp. with microphones used in smartphones after Nokia Oyj complained the chipmaker broke an exclusivity agreement. HTC shares fell.

“This product that was made especially for Nokia couldn’t be supplied to others,” the Amsterdam District Court said yesterday in a preliminary injunction ruling.

STMicroelectronics has to stick to a year-long exclusivity deal, the court said. STMicroelectronics will have to pay Nokia 50,000 euros ($63,000) for each microphone it sells to other parties, with a maximum of 1 million euros. The ban will be lifted on March 1, 2014 or after arbitration proceedings in Helsinki are completed.

“Nokia filed this action after it discovered these components in the HTC One” model, Mark Durrant, a spokesman for Nokia, said in an e-mail. “In its marketing materials, HTC claims that its HDR microphone is a key feature for the HTC One, but it is Nokia technology, developed exclusively for use in Nokia products.”

In an e-mailed statement, STMicroelectronics said it intends to appeal the court decision, adding that the company is ready to “propose alternative solutions.”

HTC shares fell 3.3 percent to close at NT$268 in Taipei, the biggest drop since March 13, on volume 50 percent higher than the 90-day moving average. The Taoyuan, Taiwan-based company said it is disappointed by the decision and doesn’t expect any immediate impact on handset sales.

“We are consulting with STM and will decide whether it is necessary to explore alternative solutions in due course,” HTC said in an e-mailed statement. Unveiled in February, the HTC One has already been delayed by about one month because of a shortage of camera components developed specifically for the handset.

Before it's here, it's on the Bloomberg Terminal.