Qualcomm and Arm's License Battle Finally Kicks In: What May Happen?
2min read Arm and Qualcomm's bitter legal feud over chip design licensing is heading to trial on Monday in Delaware, marking a high-stakes battle that will illuminate how two of the world's biggest chip companies — and former allies — turned against each other over a $1.4 billion start-up acquisition.
The trial, expected to last about a week, will feature testimony from Arm chief executive Rene Haas, Qualcomm chief executive Cristiano Amon, and Nuvia founder Gerard Williams, who is now a senior engineer at Qualcomm. The jury was selected on Friday, and each side has been granted about 11 hours to make their case.
At the core of the dispute is Qualcomm's acquisition of Santa Clara-based chip designer Nuvia in 2021. Nuvia had a chip architecture license from Arm, and Qualcomm, one of Arm's biggest customers, has its own license for Arm's architecture used to design chips. Arm, backed by SoftBank, alleges that Qualcomm failed to secure the required consent to transfer Nuvia's license after the acquisition and is now using Arm's intellectual property without permission. Qualcomm counters that its existing license with Arm is sufficient.
This legal battle marks the first time in Arm's 34-year history that it has taken such a drastic step to protect its intellectual property. Arm has described the lawsuit as a last-resort move, bringing its confidential licensing arrangements into the public courtroom. Qualcomm, familiar with intellectual property disputes, decries Arm's move as an attempt to squeeze out higher royalty rates and interfere with its product roadmap.
Nuvia technology has been used in Qualcomm's Snapdragon processors for PCs, phones, and cars. Qualcomm's new smartphone processors, launched this year, have been adopted by companies such as Samsung, and its PC chips count Microsoft and Dell among their customers. Rather than seeking monetary damages, Arm is asking the court to order Qualcomm to destroy products found to infringe on its intellectual property. In October, Arm formally notified Qualcomm that it would terminate its architecture license if Qualcomm did not address the alleged breach.
Such an extreme measure would have a major impact on Qualcomm, which relies on Arm's architecture for most of its new products. However, it would also cost Arm an important customer at a time when it is seeking to broaden its ecosystem, especially after a successful IPO last year and the rising enthusiasm for artificial intelligence.
Qualcomm has countersued Arm over the move, and a 60-day notice period triggered by Arm — requiring Qualcomm to address its concerns or face the loss of its license — will expire around the same time the trial is expected to end.
If Arm convinces the jury of its case, it will then fall to Federal Judge Maryellen Noreika to decide what remedies to impose. An appeal by the losing side is also likely. Analysts like Stacy Rasgon from Bernstein suggest that a settlement would be in both companies' best interests, as they need each other.
Regardless of whether Qualcomm or Arm wins this battle, the outcome will have negative consequences, potentially leading to a lack of cooperation among chipmakers and hindering their ability to strengthen their competitive advantages. For Arm, it is crucial to assert more control over its products and emphasize its role in the AI era, leveraging its AI edge as a new milestone. However, for the semiconductor sector, this legal fight signals a prolonged and challenging period ahead.
