The lawsuit between Arm and Qualcomm began this week, with the companies having their first court battles. As expected, Arm reportedly accused Qualcomm of breaching its contract by releasing Snapdragon chip blueprints to compete with their own customers. Reuters.
The dispute began with Qualcomm’s $1.4 billion acquisition of Nuvia in 2021 and continued development of custom Armv8.2-based cores that are now used in Snapdragon X processors. Arm argued that Qualcomm violated the agreement by failing to renegotiate the terms after acquiring Nuvia because the designs were subject to Nuvia’s higher patent rates.
As a remedy, Arm requires the destruction of all Nuvia designs developed prior to the merger. Qualcomm, however, argued that Nuvia’s design was fully covered by its Architecture License Agreement (ALA). This disparity in royalties reportedly resulted in an estimated $50 million in lost annual revenue for Arm, a significant amount of money for the company.
Qualcomm debate Arm’s move is motivated by a plan to compete with customers, to which it now provides CPU computing subsystems client and Data center processors and other use cases. In court, Qualcomm submitted internal Arm documents showing that the company was considering designing its own chips, which would make it a major competitor to its own customers, including Qualcomm. Arm CEO René Haas refuted these claims, saying that while Arm is exploring various business opportunities, it currently has no intention of selling actual hardware such as processors.
Haas also defended letters Arm sent to dozens of Qualcomm customers, including Samsung, which uses Qualcomm-designed processors in its smartphones and PCs, warning them of the potential consequences of the dispute. Qualcomm’s lawyers called the letters misleading, claiming they were intended to damage Qualcomm’s relationships with its customers. Haas insists the letters are necessary to resolve questions about the influence of industrial partners on the lawsuit.
Arm licenses its CPU and GPU cores and instruction set architecture to hundreds of customers around the world. Allowing Qualcomm to sidestep higher royalty rates could undermine its business model, which is why it must act aggressively. Haas called the situation unprecedented and stressed that the company is focused on protecting its long-term business interests.
Bernstein analyst Stacy Rasgon said Qualcomm currently pays Arm about $300 million a year. Therefore, it is crucial for Arm to ensure that Qualcomm adheres to its licensing policies. If other CPU designers follow Qualcomm’s lead, Arm’s business could be seriously harmed.