As the tussle between Arm Holdings and Qualcomm escalates, Arm Holdings has served Qualcomm a 2-month ultimatum before it terminates its architectural licensing agreement with Qualcomm, amid an ongoing legal confrontation between the both. 

What’s the Issue? 

The issue revolves around Qualcomm acquiring Nuvia, a chip design startup founded by Apple Chip designers, in 2021 for $1.4 Billion. Arm Holdings claims that succeeding in the acquisition, Qualcomm failed to renegotiate a new license after the acquisition while Qualcomm claims to have authority through its existing license that covers the activities of the company, nuvia, that it had acquired. 

More, recently Qualcomm has announced its plan to bring Oryon, Nuvia’s design, into its bestseller Snapdragon chips for smartphones. Arm also claims to have already canceled the license for the chips planned to be used in Microsoft Copilot + laptops which is originally the technical decadent of Nuvia’s chip.   

Qualcomm’s Response 

Qualcomm has called it a bullying behavior wherein Arm is trying to strong-arm a longtime partner. It also termed Arm’s 2-month notice as an unfounded threat aimed at interfering with the performance-leading CPUs of Qualcomm in a bid to increase the royalty rates irrespective of the board rights it has for the architectural license. 

Legal Standoff 

Arm Holdings sued Qualcomm in 2022 for failing to renegotiate a new license after it acquired Nuvia in 2021. The trials are scheduled to begin in federal court in Delaware in December this year. Arm argues that licenses granted to Nuvia can’t be transferred to Qualcomm, without permission. 

Earlier negotiations between Qualcomm and Arm Holdings for the renewal of Nuvia’s licenses failed to reach any decisive conclusion, hence licenses were terminated in  February 2023. 

Qualcomm’s Busines 

Today smartphone industry is rampant with the applications of Qualcomm’s Chips built on the architectural design from Arm Holdings making both intricately tied to serve the market. Qualcomm’s major business comes from its Qualcomm CDMA Technologies (QCT)  division making up to $30.4 Billion in revenues whereas Licensing and strategic initiatives bring $5 Billion and $28 million, respectively.   

Prospects 

If Arm Holdings continues with the license termination, it would bring Qualcomm to a route of dearth making it incapable of product development. The resulting paradigm would be disastrous for the company and hence the industry as a whole as it would halt the product development momentum as Qualcomm’s processor empowers major smartphone brands. 

What do experts say? 

Analysts and experts are hopeful that by sidelining all the disputes, the companies will be able to settle before the trial begins.