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Next-gen iPhones to spurn Audience noise-canceling tech

Audience CEO Peter Santos tells Reuters that that the company came to the realization as it examined the "normal course of business."

A look at Audience technology.
A look at Audience technology. Audience

Audience, a company that has delivered noise-canceling technology to Apple's iPhones since 2008, thinks it might be left out of the fun in the iPhone 5.

Speaking to Reuters in an interview published last night, the company's CEO Peter Santos said that "the normal course of business led us to believe that our technology is not likely to be enabled in Apple's next-generation mobile phone." Santos didn't say what the "course of business" was. He also broke the news to the company's shareholders.

Apple and Audience's partnership was revealed earlier this year when the company filed paperwork for an initial public offering. In the iPhone 4, Apple included a dedicated Audience chip, but in the iPhone 4S, it integrated the company's "EarSmart" technology directly into the A5 processor.

Apple has reportedly been increasing the number of people that handle audio technology in its mobile products. According to Reuters, Audience believes that could be the reason its technology will likely not make its way to the iPhone 5. That device is expected to be unveiled next week at a special Apple press conference.

Noise-cancellation technology has become a hot-button issue for Apple after the company was slapped with a lawsuit by California-based company, Noise Free Wireless. That firm alleged that Apple was violating its patents and charged the iPhone maker with breach of contract and trade secret theft.

Apple has not publicly commented on that lawsuit.

As for Audience? The company's shares are down a whopping 58 percent to $8 following news of the iPhone omission.

But that's not all. After this story was published, the law offices of Howard G. Smith announced that it was investigating on behalf of shareholders the possibility of Audience violating federal securities laws. The law firm was somewhat coy in its discussion on the investigation, but it said that it'll look into "allegations that certain statements issued by the Company between May 10, 2012 and September 6, 2012, regarding Audience's business, operations and financial condition were false and misleading."

The investigation appears to center on whether Audience had knowledge of Apple not using its noise-canceling technology in the next iPhone at any point over the last several months. According to Howard G. Smith, 37 percent of Audience's total revenue comes from Apple's licensing fees.

CNET has contacted Audience for comment on the investigation. We will update this story when we have more information.

Update 9:02 a.m. PT to include mention of the Howard G. Smith investigation.