These must be the recent thoughts of Qualcomm bosses, after they learned what’s coming from their partner, Arm Holding.
Arm, a UK-based company (owned by Japan’s SoftBank), designs the CPU cores used in roughly 95% of the world’s smartphones. In addition to its CPU technology, Arm also develops the Mali line of graphics processing units (GPUs).
And what’s coming is that Arm Holdings has terminated a long-standing licensing agreement with Qualcomm, marking a major escalation in their ongoing legal battle over chip technology.
Arm issued Qualcomm a 60-day notice to end the architectural license, which allows the US firm to design its own chips using Arm’s intellectual property. This development threatens to disrupt the smartphone and computer markets, as both companies are influential players in the semiconductor industry, reads a report by Bloomberg.
At the heart of the clash is Qualcomm’s 2021 buyout of Nuvia, a chip design startup that Arm says crosses the line of their licensing agreement. Qualcomm insists the original agreement covers Nuvia’s activities, but Arm disagrees, accusing Qualcomm of breaching the terms by incorporating Nuvia’s technology into its products without renegotiating the contract.
A spokesperson from Qualcomm talked to the Samsung-oriented site SamMobile:
This is more of the same from ARM – more unfounded threats designed to strongarm a longtime partner, interfere with our performance-leading CPUs, and increase royalty rates regardless of the broad rights under our architecture license. With a trial fast approaching in December, Arm’s desperate ploy appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed. Arm’s anticompetitive conduct will not be tolerated.
They’re accusing Qualcomm of sneaking Nuvia’s tech into their products without bothering to renegotiate. If Arm pulls the plug on the license, Qualcomm might have to stop making the chips that earn a huge chunk of their $39 billion revenue – or get hit with some serious legal heat.The conflict is set to be resolved in court, with both parties headed for a trial in December. The legal tension has already affected stock prices, with Qualcomm shares dropping 5% and Arm’s declining 1.1% following the announcement.
So, Arm argues that the disputed designs were created before Qualcomm’s acquisition of Nuvia and should be destroyed unless Qualcomm obtains new permissions.
Infographic for the Snapdragon 8 Elite application processor. | Image credit-Qualcomm
Analysts believe Arm’s cancellation of the license could be a tactical move to gain leverage before the upcoming trial. Some expect the dispute will ultimately be resolved through a renegotiated agreement, potentially at a higher cost to Qualcomm for using Arm’s architecture.
Arm, which has increasingly moved toward offering full chip designs under the leadership of CEO Rene Haas, aims to secure more revenue from its technological contributions. This approach places Arm in direct competition with Qualcomm, which, under CEO Cristiano Amon, has been shifting towards developing its own chip technology.
Despite these strategic shifts, Qualcomm remains reliant on Arm’s instruction set for its chips, even as it seeks to reduce that dependency. Should the license termination proceed, Qualcomm may still be able to use Arm’s standard designs but would face significant setbacks, including delays and wasted development efforts.
The companies’ diverging business strategies come after years of close collaboration that helped drive the smartphone industry forward. Now, both are looking to expand into new areas, including AI and computing, which has led to heightened competition between them. The outcome of this dispute could have long-term implications for their future cooperation and the broader tech industry.