Cai Yan

EE Times

(09/19/2006 9:23 AM EDT)

SHANGHAI, China — Fabless chip designer Actions Semiconductor Co. Ltd. claims the loss of a patent infringement case to SigmaTel Inc. won`t significantly hinder its growing business in the U.S. MP3 chip market.

The U.S. International Trade Commission (ITC) confirmed last Friday (Sept. 15) that Actions infringed two SigmaTel patents. The infringing players containing Actions 207X, 208X and 209X chips will be banned from the U.S.

Despite the setback, Actions showed the feistiness that has helped its rapid rise here. ``Although we lost the lawsuit, we still won the market,`` said Rebecca Zhou, a spokeswoman, claiming that the company`s global market in MP3 players share has reached 50 percent, up from 20 percent in 2003.

Currently, less than 10 percent of Actions` chips go into MP3 players bound for the U.S. Actions said Tuesday (Sept. 19) it has already advised about a dozen U.S. clients to use its recently released Series 7500 products. Actions said it designed around features such as power management that the ITC said infringed SigmaTel (Austin, Texas) patents.

Zhou acknowledged that the case has taught Actions to exercise more caution when developing future products to avoid patent disputes. It is also trying to trip up SigmaTel in China with a lawsuit filed last week that claims SigmaTel has infringed some of its patents.

SigmaTel is expanding its presence in the Chinese market, where sales of MP3 player sales are booming. But it faces a difficult task in a region where there are more low-cost rivals and where patent enforcement remains uneven at best.