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Chipmakers hire lawyers for revenue boost in crisis

WASHINGTON (Bloomberg) - Chip companies are turning to armies of patent lawyers to bolster revenue amid the worst market for semi-conductors since 2001.

Qimonda AG, LSI Corp. and Spansion Inc. are among the chip companies using the US International Trade Commission in Washington to try and block imports of rival products or garner patent royalties. The government agency has started investigating 42 intellectual-property complaints this year, the most since 1983.

"Lawyers are expensive, particularly patent lawyers in Silicon Valley, but it's a great area to get money," said Hans Mosesmann, a semi-conductor analyst for Raymond James & Associates in New York. "You're going to see more litigation and more aggressive maneuvering."

Chipmakers, already reeling from plunging prices caused by overproduction, now face falling demand. Chip sales slid 4.4 percent this year, and will slump 16 percent in 2009, the first back-to-back decline on record, according to research firm Gartner Inc. in Stamford, Connecticut.

Qimonda, LSI and Spansion, which make chips for mobile phones and computers, brought cases to the ITC because the agency typically completes investigations in half the time of a US court and has the power to stop imports at the US border. That is an incentive for companies to sign patent licensing agreements, increasing the patent owner's revenue.

"Jerry Sanders, the founder of AMD, used to say, 'Real men own fabs,'" said Craig Berger, an analyst at Friedman Billings Ramsey & Co., referring to the chip-fabrication plants run by Advanced Micro Devices Inc.

"That's kind of changed. Now it's, 'Real men have huge armies of lawyers.'"

Spansion could bring in "hundreds of millions of dollars a year" in licensing revenue from patents, CEO Bertrand Cambou said.