[News] Qualcomm Wins Legal Battle Against Arm Over Chip Design License Dispute

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According to TechNews, citing Bloomberg, on December 20th, Qualcomm won the trial in a dispute with Arm Holdings, as the jury ruled that Qualcomm did not breach the terms of the agreement encompassing Arm’s chip products obtained in a USD 1.4 billion acquisition of Nuvia. This allows Qualcomm to integrate Nuvia’s technology into its designs without paying additional licensing fees to Arm.

The jury explicitly stated that Qualcomm’s custom processors, particularly their application in Microsoft PCs, comply with existing licensing agreements. The report notes that this outcome will aid Qualcomm’s push into the AI PC market.

However, the jury could not reach a consensus on whether Nuvia violated its licensing agreement with Arm, leaving the door open for potential shifts in the ongoing litigation between Qualcomm and Arm, as mentioned by the report.

Core Issue of the Lawsuit

The report highlights that the central issue of this case revolves around Qualcomm’s  acquisition of the chip startup Nuvia in 2021 and whether the architecture license and resulting custom designs acquired through its purchase of Nuvia can be transferred or utilized by Qualcomm.

Arm claims that Qualcomm did not renegotiate the licensing terms after acquiring Nuvia, thereby violating the agreement and has demanded Qualcomm to destroy all Nuvia designs developed before the acquisition.

As noted by the report, Arm stated that Qualcomm paid significantly higher royalties compared to Nuvia, arguing that allowing Qualcomm to pay lower fees would undermine its business model. The report indicated that the discrepancy in licensing fees caused an estimated annual revenue loss of USD 50 million for Arm.

Broader Implications for Arm’s Business Model

The TechNews report points out that this legal battle highlights a fundamental issue in Arm’s business model: the scope and limitations of its technology licensing. Arm licenses its computing architecture to customers while also selling ready-made core designs. However, customers like Apple and Qualcomm develop their own custom cores based on Arm’s architecture.

Clash in Court: Where Are the Boundaries of the Licensing Agreement?

The report from TechNews mentions that Nuvia obtained two non-transferable licenses from Arm: a Technology License Agreement (TLA) for redesigning existing cores and an Architecture License Agreement (ALA) for designing custom cores. Arm emphasized that these licenses were granted for Nuvia to develop data center products and could not be transferred without Arm’s approval.

However, as Nuvia’s focus was always on custom cores, the team developed their cores from scratch, using minimal or no Arm IP, which leads to differing interpretations between Qualcomm and Arm of whether these cores utilize Arm’s technology.

In court, Arm demanded that Nuvia founder and Qualcomm Senior Vice President of Engineering, Gerard Williams III, acknowledge that all outcomes of Nuvia’s works are “derivative works” under Arm’s licensing agreements, as the report notes.

Meanwhile, the report indicates that Qualcomm’s legal team instructed Williams to detail the innovative aspects of Nuvia’s designs and the minimal role Arm’s TLA played in the development process.

According to report, when asked about the extent of Arm technology used in Nuvia’s final designs, Gerard Williams III stated it was “about 1% or less.” The Snapdragon X series PC chip cores were almost entirely custom, using minimal Arm technology.

The report notes that Arm Instruction Set Architecture (ISA) license holders can design proprietary architectures from scratch, provided they execute Arm instructions correctly. Nuvia engineers independently designed the cores, which did not incorporate Arm’s designs. Therefore, while Nuvia’s cores are based on the Armv8 architecture, beyond the instruction set and basic specifications, they have little in common with “Arm-designed” technology.

Ongoing Tensions Between Qualcomm and Arm

In addition to the licensing dispute, Qualcomm has accused Arm of seeking to compete with its customers, as TechNews notes. Qualcomm presented a document prepared by Arm CEO René Haas for the Arm board, suggesting that Arm had considered designing its own chips rather than merely being a technology provider, potentially competing with clients like Qualcomm. According to the report, Haas denied these claims, asserting that while Arm explores various business opportunities, it does not manufacture chips and has never entered that industry.

As noted in the TechNews report, this is not the first conflict between Qualcomm and Arm. In 2020, NVIDIA announced a USD 40 billion plan to acquire Arm, drawing opposition from several semiconductor companies, including Qualcomm. These companies feared that NVIDIA might prioritize its own use of Arm technology and restrict competitors’ access. Despite NVIDIA’s assurances of maintaining open access to Arm’s designs, regulators sided with the opposition, and the acquisition was ultimately abandoned due to widespread resistance.

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(Photo credit: Qualcomm)