After Apple (AAPL) sued Qualcomm (QCOM) over allegations that the chip maker charges unreasonable royalty rates, research firms Nomura and CLSA downgraded the shares, with Nomura warning that the lawsuit could delay Qualcomm's proposed takeover of NXP Semiconductors (NXPI), while JPMorgan believes that the lawsuit could have a "severe" impact on Qualcomm's profits.

APPLE SUIT: News broke shortly before Friday's session close that the iPhone giant has filed suit against Qualcomm over "unreasonable" licensing terms. In response, Qualcomm general counsel Don Rosenberg issued the following statement Friday regarding Apple's legal complaint against the company: "While we are still in the process of reviewing the complaint in detail, it is quite clear that Apple's claims are baseless. Apple has intentionally mischaracterized our agreements and negotiations, as well as the enormity and value of the technology we have invented, contributed and shared with all mobile device makers through our licensing program. Apple has been actively encouraging regulatory attacks on Qualcomm's business in various jurisdictions around the world, as reflected in the recent KFTC decision and FTC complaint, by misrepresenting facts and withholding information. We welcome the opportunity to have these meritless claims heard in court where we will be entitled to full discovery of Apple's practices and a robust examination of the merits." Meanwhile, FTC Commissioner Maureen Ohlhausen tweeted a link this morning to her dissenting statement in the matter of Qualcomm, in which she stated in part: "[In] the Commission's 2-1 decision to sue Qualcomm, I face an extraordinary situation: an enforcement action based on a flawed legal theory (including a standalone Section 5 count) that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide. These extreme circumstances compel me to voice my objections."

DOWNGRADES: CLSA analyst Chris Caso downgraded Qualcomm two notches to Underperform from Buy. Although it's difficult to ascertain the merits of Apple's lawsuit, the litigation poses "enormous risk" to Qualcomm's business model, warned the analyst. Moreover, given Apple's record as "a fierce litigator," the lawsuit probably won't be resolved soon, he stated. Caso cut his price target on Qualcomm to $65 from $80. Nomura analyst Romit Shah downgraded Quacomm to Neutral from Buy. Contending that the lawsuits that have been filed against the chip maker recently have been tougher than anticipated, Shah warned that regulators may delay Qualcomm's takeover of NXP Semiconductors. As a result, there is increased uncertainty as to when Qualcomm will obtain the significant benefits from the deal, including increased profits and diversification, according to Shah, who lowered the firm's price target on the name to $70 from $80.

"SEVERE" IMPACT: Apple's lawsuit against Qualcomm could have a "severe impact" on Qualcomm's earnings, warned JPMorgan analyst Rod Hall. Specifically, if Apple stops paying royalties to Qualcomm until the case is resolved, the chip maker's earnings could plummet 32.5%, according to Hall, who kept a $70 price target and a Neutral rating on the shares.

WHAT'S NOTABLE: Apple's lawsuit is "very positive" for Intel (INTC), according to Timothy Arcuri, an analyst at research firm Cowen. In the wake of the deteriorating relationship between Apple and Qualcomm, Intel could obtain more business from Apple, the analyst stated. Additionally, Apple could design its own integrated AP/baseband chip and have Intel manufacture it, Arcuri believes. If a border adjustment tax on imported raw materials is imposed, such a move would become more attractive for Apple, wrote the analyst.

PRICE ACTION: In early trading, Qualcomm sank 14% to $53.92, while Intel slid 0.7% to $36.69 and Apple rose 0.3% to $120.33.