A blockbuster ruling has knocked the wind out of Qualcomm, the world's largest provider of mobile phone technology.

The stock plunged as much as 12 percent Wednesday after a Federal judge ruled Qualcomm "strangled competition" by using its dominance to force phone makers to buy only Qualcomm chips or to extract higher licensing fees, or both.

The judge Tuesday ordered Qualcomm to renegotiate licensing deals at reasonable prices, without threatening to cut off supplies.

This ruling could force Qualcomm to completely change the way it does business, since it's nearly impossible to find a phone in the world that doesn't contain Qualcomm's technology.

Reuters Breakingviews columnist Rob Cyran: SOUNDBITE (ENGLISH) REUTERS BREAKINGVIEWS COLUMNIST ROB CYRAN, SAYING: "The reason why investors freaked out today is because Qualcomm makes most of its profits from licensing patents, not from producing chips, and the ruling today basically could destroy Qualcomm's business model by saying: 'hey, companies have to be able to license out these patents on fairer terms, also you can't charge on the entire device.'

So what that means is Qualcomm is going to be earning a lot less royalties and therefore a lot less profit." Qualcomm asked the judge to put the ruling on hold as it immediately seeks an appeal to the case brought by the Federal Trade Commission.

The sting from this legal setback comes after a major victory last month.

Qualcomm and Apple settled their long-running patent dispute with Apple agreeing to ditch its antitrust complaint and once again buy Qualcomm chips.

But with Tuesday's ruling there's ow a new risk for Qualcomm just as the mobile world is spending big on next generation wireless technology, known as 5G.

Qualcomm benefitted handsomely during the 4G upgrade.

How many dollars end up in Qualcomm's pocket this time around - is now being called into question.