HTC's share price dropped to its lowest since January after the firm was found to have infringed two Apple patents by a US judge at the International Trade Commission (ITC) and could face an import ban.
Shares in the Taiwanese manufacturer dropped by four per cent, despite the company saying that it will appeal against the decision and offer to buy back approximately 20 million shares.
HTC insisted in a statement that it does not violate any Apple patents, and believes that it can be successful on appeal.
"We are highly confident we have a strong case for the ITC appeals process and are fully prepared to defend ourselves using all means possible," said Grace Lei, HTC general counsel.
"We strongly believe we have alternative solutions in place for the issues raised by Apple. We look forward to resolving this case so we can continue creating the most innovative mobile experiences for consumers."
Florian Mueller, a software patent specialist, told V3.co.uk that a successful appeal is a long shot, and that the ITC ruling could actually mark the beginning of the end of the firm's Android-based products.
"Apple does not appear to be willing to grant a licence to HTC. I believe HTC can only reach an agreement with Apple if it owns patents to which Apple needs a licence," he said.
"HTC is in the process of acquiring S3 Graphics, a company that owns patents the ITC judge believes Apple is infringing. If Apple needs any of S3's patents, HTC would be a in a good position to negotiate a cross-licensing agreement with Apple, though HTC would likely be the net payer."
Francisco Jeronimo, research manager for European mobile devices at IDC, suggested that an out-of-court settlement is the most likely outcome.
"HTC looks like it's going to take a big financial hit as it will have to pay a licensing fee for every Android device sold to date," he said.
"The firm is either going to have to increase the price of devices or cut margins to help pay any licensing fees. HTC may even have to change the specification of mid-tier devices so it can remain competitive."
Any proposed import ban would be disastrous, and could derail the firm's growing momentum. HTC had a 17 per cent market share in the US during the first quarter, second to Apple's 29 per cent, according to IDC figures.
HTC is also growing in western Europe and, although it currently has only the fifth largest market share at 12 per cent, this is expected to increase considerably over the coming year, Jeronimo added.
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