Legal teams on both sides are readying themselves for battle as ARM has given a 60-day notice to Qualcomm over a licensing disagreement. Bloomberg reports that ARM has given notice to Qualcomm that its licensing agreement will canceled in two months. The notice has been sent as the two long-time partners are in the midst of a disagreement that is heading to the courts regarding Qualcomm’s purchase of Nuvia, a company formed by ex-Apple employees who helped develop the first M1 processor. Qualcomm claims this latest move is nothing more than a tactic that is unfounded and intended to disrupt the current legal process.
Per Qualcomm (via Bloomberg):
- It “appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless,” the spokesperson said in an emailed statement. “We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed.”
A breach-of-contract claim has been made by ARM against Qualcomm for its purchase of Nuvia, who is also an ARM licensee. Nuvia’s chip designs have been integral to Qualcomm’s recent Snapdragon X processors which have added AI features and are included in Microsoft’s Surface laptops/tablets and other manufacturer’s products that are seeking to harness consumer revenue in the growing AI market. Given the importance of the Snapdragon X Elite processors to Qualcomm, it’s unlikely the mobile chip manufacturer is going to give up without a fight. According to Bloomberg’s analysts, the crux of the disagreement may come down to royalties specifically relating to Nuvia’s agreement with ARM and its custom chip designs which would result in a negotiated deal between ARM and Qualcomm.
Per report:
-  “Our Thesis: Arm’s suit against Qualcomm likely ends in a negotiated license, granting the chipmaker rights to customize Arm architecture, but at higher royalty rate than Nuvia had been paying.”
ARM vs Qualcomm
The two companies are expected to begin their court proceedings on December 16 and it’s said that Qualcomm has already filed a countersuit. However, since both have benefited from previous partnerships for many years there is a possibility that neither proceedings may run the course but there’s still another side to the current circumstances.
Arm was purchased in 2016 by Softbank and went public last year. Its current CEO Rene Haas is reportedly working towards a strategy where ARM focuses on chip designs that are more finalized and can head directly to manufacturing thus potentially giving ARM higher revenue streams. While this may seem good on paper it differs from ARM’s other agreements which focus on licensing its chip designs to chip manufacturers like Qualcomm who then create their own designs based on ARM’s. Furthermore, Qualcomm CEO Cristiano Amon appears to have a strategy aimed at cutting costs by having in-house designs made, which Nuvia seems to be a major part of. These two strategies could lead to a more competitive than cooperative relationship between the two and may ultimately be played out in court.