Qualcomm discovers faulty chip

The company confirmed the problems alluded to earlier Thursday by phone maker Audiovox. Chief Executive Philip Christopher said some of its new phones required software modifications to correct a problem created by the Qualcomm chips inside.

"Qualcomm acknowledges that a potential error could occur in a small portion of the early shipment of its CDMA2000 1X chipsets," Qualcomm said in a statement. CDMA2000 1X cell phones are capable of downloading information at speeds similar to a dial-up Internet connection.

A company representative said the error was corrected and that Qualcomm has begun shipping large volumes of the chips again. Qualcomm did not release details about what was wrong with the earlier chips.

Christopher made the disclosure during a conference call with analysts Thursday. He was asked when the company's 9155 GPX handset, which has a global position service built into it, would be ready for the market. He said carriers hadn't approved the phone yet because of a problem with Qualcomm chips inside.

Christopher said that 1 million Audiovox phones had the chips inside, but he did not know what percentage might be faulty. He added that other phone manufacturers were having trouble with the chips as well, but declined to name them.

The chips are part of Qualcomm's "next generation" offerings for wireless devices that use the cell phone standard code division multiple access, or CDMA. The two chips are the MSM5100 and the MSM5105.

Audiovox, which is making future phones such as the Thera, told analysts during a conference call Thursday that it had experienced a sharp drop in sales.

One of the reasons was that wireless carriers weren't approving as quickly as expected the new cell phones with Qualcomm's chips inside, according to an Audiovox representative.