British chip powerhouse Arm wants to cancel its license agreement with Qualcomm, one of its biggest customers. Arm has issued a so-called ‘sixty-day notice,’ meaning that after that period, Qualcomm will no longer have the right to make chips based on this architecture. If this is more than a threat, it has potentially major implications for the smartphone industry and the emerging market for PCs running on Arm architecture.
Qualcomm’s chips are in most Android phones and PCs too nowadays, such as the first line of Copilot+ PCs introduced this year. Consequently, the company sells hundreds of millions of processors a year and generates revenues of about 39 billion dollars (36 billion euros).
If Arm decides to truly revoke the license, Qualcomm may have to stop selling many of its products or risk paying huge damages. Arm’s notice gives Qualcomm eight weeks to resolve the situation before the first company pulls the plug.
Purchase of Nuvia is the source of the dispute
This all stems from a long-running legal dispute between the two companies. Qualcomm acquired startup Nuvia in 2021 and took over its Arm licensing agreement. Arm claims Qualcomm failed to renegotiate the contract terms after that purchase, while Qualcomm insists the existing agreement covers Nuvia’s operations. Consequently, Arm sued Qualcomm for breach of contract and trademark infringement.
Nuvia’s processor designs are precisely the ones Qualcomm has incorporated into its chipsets for AI-powered laptops. The company also plans to use them in its new Snapdragon smartphone chips. Arm claims, however, that Qualcomm violated its license agreement with the British company by trying to use Nuvia’s designs without further agreements. It also demands the destruction of Nuvia designs that predate the acquisition.
Throwing money away
If Arm actually terminates the license agreement, Qualcomm loses the ability to use Arm’s instruction sets for its own chips, requiring the company to enter into new, separate licenses. That would take time, but more importantly, it would also mean that Qualcomm’s work on this architecture after acquiring Nuvia is largely a waste of money. Not to mention, Nuvia’s designs were a major reason for acquiring this party in the first place. A Qualcomm spokesperson claims that Arm is now ruthlessly trying to strongarm its way through the dispute, Bloomberg reported.
The former close partners, incidentally, have also partly become competitors. Arm, under the leadership of CEO Rene Haas, has begun to focus on providing complete chip designs, stepping on Qualcomm’s toes. Meanwhile, Qualcomm’s CEO Cristiano Amon is increasingly prioritizing its own designs, but the company still leans heavily on Arm’s technology. A final breakup is still unlikely for that reason.
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