A battle between two tech giants has been launched, as major IP supplier Arm Holdings is terminating its architectural license agreement with Qualcomm, the world’s top mobile chipmaker. The move may be regarded as a counter measure by Arm to the emerging trend of custom silicon designs, as companies like Apple, Qualcomm and MediaTek take sides.

According to a report by The Register, Arm has been the leading architecture provider for mobile chips since modern smartphones emerged, with its Cortex processors powering nearly every mobile device. However, as Apple and Qualcomm move toward custom silicon designs, Arm’s dominance seems increasingly under pressure.

Qualcomm’s Acquisition of Nuvia Reportedly Sidesteps Royalty Increase

It is worth noting that the recent lawsuit between Arm and Qualcomm may arise from technologies acquired by Qualcomm from Nuvia, a startup founded by former Apple chip engineers, which Qualcomm purchased for USD 1.4 billion in 2021.

According an industry insider familiar with the situation, originally, Arm charged royalties based on chip price, typically around 5% to 7% of the price tag. This structure reportedly applied to customers directly using Arm’s CPU IP or those licensing the instruction set/architecture, with the instruction set licensing generally being slightly lower.

Nevertheless, around two years ago, Arm attempted to significantly increase royalties by implementing a new licensing agreement for its highest-tier mobile CPU IP, changing the structure from 7% to a flat fee of USD 20 per chip, which would be quite a boon for the company, the source explained.

Qualcomm, by acquiring Nuvia, a company focused on Arm server and PC CPUs with an instruction set architecture licensed by the world’s leading semiconductor IP supplier, allows it to leverage this team’s CPU base for high-end mobile applications, therefore sidestepping Arm’s strategy (potentially paying only 5% of the chip price under their agreement), the source noted.

Arm’s Pre-built Cortex Designs Face Challenges from Custom Silicon Designs

To put things in context, Qualcomm’s acquisition of Nuvia indicates its efforts to develop custom Snapdragon cores and reduce dependence on Arm’s pre-built Cortex designs, which is now the main approach adopted by several tech giants.

For instance, according to the report by The Register, the Oryon CPU cores featured in Qualcomm’s latest Snapdragon X Elite are based on Arm’s v8.7-A ISA, which are similar to earlier designs prior to Nuvia’s integration into Qualcomm However, this strategy allows Qualcomm to create cores tailored to its specific requirements, making it capable of competing directly with Apple’s M-series and challenge Intel and AMD in the notebook sector, the report notes.

On the other hand, Apple is leading the way in custom chips, as it has shifted from the traditional licensing model to create proprietary designs. Earlier in May, Apple announced M4, which is built using second-generation 3-nm technology. A report by Wccftech also suggests that the Cupertino tech giant is preparing for the next-gen chipset, M5, which is said to be launched next year.

According to the analysis by The Register, Apple’s strategy for custom silicon stands in contrast to Arm’s, which offers a broad ecosystem based on its Instruction Set Architecture (ISA). In contrast, Apple manages both its hardware and software ecosystems using its signature iEverything approach.

Nevertheless, it would be hasty to underestimate Arm’s impact. The Register highlights that MediaTek recently revealed that it is maintaining the Armv9 architecture for its new Dimensity 9400 chips, indicating that Arm’s Cortex-X4 and A720 cores are still competitive.

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• [News] Arm Holdings Reportedly Cancels Qualcomm Chip Design License
  
• [News] Taiwanese Chipmaker MediaTek Likely to Benefit Most from Arm-Qualcomm Licensing Dispute

(Photo credit: Qualcomm)

Following Qualcomm’s recent launch of Snapdragon 8 Elite, it was confronted by Arm Holdings to terminate its architectural license agreement with Qualcomm, which permitted the U.S. chip giant to use Arm’s intellectual property for chip design, according to Bloomberg. According to the reports by MoneyDJ and Commercial Times, Taiwan-based smartphone IC designer MediaTek may turn out to be the main beneficiary amid the dispute.

According to media reports, Arm has issued a mandatory 60-day notice to Qualcomm regarding the cancellation of the licensing agreement, which previously enabled the latter to develop its own chips based on Arm’s proprietary standards.

Citing sources familiar with the industry, the report by MoneyDJ notes that the move implies the strained relationship between a major IP supplier and a leading mobile chip firm. If the licensing agreement does break up, it would be detrimental to both parties. Therefore, Arm’s act seems rather to be a “push for peace through conflict,” the source observes.

According to sources cited by the Commercial Times, it is likely that the two parties would eventually reach a reconciliation, as Arm’s ultimate goal might be securing a share of the profits from the Snapdragon series chips. While the AI PC ecosystem led by Arm architecture is still in its nascent stage, the company can only garner more licensing fees if Qualcomm actively promotes its WoA (Windows on Arm) products, the report suggests.

According to Commercial Times, MediaTek will likely benefit as brand manufacturers prefer chip suppliers with no litigation concerns and who also offer competitive pricing.

MediaTek’s upcoming launch of a Windows on Arm (WoA) solution will further strengthen its collaboration between Arm and Taiwanese manufacturers, the report notes. A previous report by Wccftech notes that MediaTek has teamed up with NVIDIA to develop a custom chip to confront Qualcomm’s Snapdragon X Elite series, which will be manufactured using TSMC’s 3nm node, based on ARM architecture.

On the other hand, institutional investors cited by MoneyDJ also believe that the ongoing lawsuit between Arm and Qualcomm could benefit MediaTek, helping the Taiwanese chip giant further expand its market share in the flagship smartphone segment. It is also worth noting that MediaTek’s newly-launched Dimensity 9400 reportedly offers higher price-performance ratio compared to Qualcomm’s Snapdragon 8 Elite, according to MoneyDJ.

According to a report by Wccftech, MediaTek’s Dimensity 9400, built with TSMC’s N3E node, may be priced at around USD 155 per chipset, reportedly 20% higher than that of the Dimensity 9300. Also built with TSMC’s N3E node, Qualcomm’s Snapdragon 8 Elite is expected to be priced at around USD 180, with an ASP increase of about 15%, according to analyst Ming-Chi Kuo.

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• [News] Arm Holdings Reportedly Cancels Qualcomm Chip Design License
  
• [News] Qualcomm Rumored to Decide Its Next Move Regarding Potential Intel Acquisition after US Election

(Photo credit: MediaTek)

Arm Holdings Plc is terminating its architectural license agreement with Qualcomm Inc., which permitted Qualcomm to use Arm’s intellectual property for chip design, Bloomberg reported on Tuesday.

According to the report, Arm has issued a mandatory 60-day notice to Qualcomm regarding the cancellation of the licensing agreement. This contract previously enabled Qualcomm to develop its own chips based on Arm’s proprietary standards.

Arm declined to comment on the situation, while Qualcomm did not respond to a request for comment from Reuters outside of regular business hours.

This announcement coincides with an ongoing legal battle between the two tech companies, which is slated to begin in federal court in Delaware this December.

The British firm, majority-owned by Japan’s SoftBank Group, filed a lawsuit against Qualcomm in 2022 for allegedly failing to negotiate a new licensing agreement after acquiring a new company.

The lawsuit centers on technology acquired by Qualcomm from Nuvia, a startup founded by former Apple chip engineers, which Qualcomm purchased for $1.4 billion in 2021. Qualcomm aimed to leverage Nuvia’s technology to compete with Apple by developing chips that could rival the Apple M-series processors and challenge the desktop market dominated by Intel and AMD.

While the acquisition was initially seen as routine, Arm claims that Qualcomm’s use of Nuvia’s designs violates the licensing agreement. The licenses granted to Nuvia were specifically intended for a startup and could not be directly used by Qualcomm without Arm’s approval.

Arm has previously emphasized that, ‘Arm is filing this claim to protect Arm, our partners, and the unparalleled ecosystem we have built together. Arm and its partners have invested billions of dollars to create industry-leading intellectual property. Because Qualcomm attempted to transfer Nuvia licenses without Arm’s consent, which is a standard restriction under Arm’s license agreements, Nuvia’s licenses were terminated in March 2022. Before and after that date, Arm made multiple good faith efforts to seek a resolution. In contrast, Qualcomm has breached the terms of the Arm license agreement by continuing development under the terminated licenses. Arm was left with no choice but to bring this claim against Qualcomm and Nuvia to protect our IP, our business, and to ensure customers are able to access valid Arm-based products.’

(Photo credit: Arm)

The wild journey of Intel has yet to end, as tech giants have been approaching the company for potential acquisitions. In addition to Qualcomm, UK-based Arm is also said to inquire the possibility of acquiring the struggling chipmaker’s product division, according to the latest report by Bloomberg.

However, the report notes that Arm was informed by Intel that the division is not for sale, according to a source familiar with the situation.

Around mid-September, Intel settled down plans for restructuring after the board meeting, and revealed schemes to transform its foundry business into an independent unit with its own board. The strategy will allow its foundry business to explore independent sources of funding.

In April, Intel disclosed the financials for the foundry business for the first time, with an operating loss of USD 7 billion in 2023, a previous report by CNBC stated.

Arm, according to Bloomberg, showed little interest in Intel’s manufacturing operations. Instead, it reportedly expressed the intention to acquire Intel’s product division, which sells chips for PCs, servers, and networking equipment, though the request was turned down afterwards.

The move did make sense. With an 88% stake owned by SoftBank, Arm generates a significant portion of its revenue from selling chip designs to smartphone-related clients, including Qualcomm, Samsung and Amazon.

According to Bloomberg, Arm CEO Rene Haas targets to gain a foothold in various applications, such as personal computers and servers, in which Intel still takes a lead. A report by Reuters in June notes that Haas aims to capture 50% of PC market in five years.

If the company were to partner with Intel, it would reportedly enhance its market reach, while accelerate the shift toward selling more of its own products, Bloomberg observes.

Unlike Intel, which remains a bystander in the AI boom, Arm is considered to be a main beneficiary of the wave. After being acquired by Japan’s SoftBank in 2016 in a USD 32 billion deal, it went public in September, 2023, on Nasdaq, with a market valuation around USD 54 billion. A year after, its stock price has nearly tripled, with a market value exceeding USD 150 billion.

Representatives for both Arm and Intel declined to comment, Bloomberg notes.

On the other hand, another report by Financial Times, cited by MoneyDJ, reveals that Intel and the U.S. government are on track to finalize the USD 8.5 billion subsidy in direct funding under the CHIPS Act by the end of this year.

According to the reports, the two parties are working to complete the technical negotiations that have been ongoing for several months, while Intel is also undertaking large-scale cost-cutting measures. An insider familiar with Intel indicated that it wouldn’t be surprising if the negotiation results were announced around the upcoming presidential election.

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(Photo credit: ARM)

Apple’s 2024 fall event officially took place earlier, highlighting the launch of the new iPhone 16 series, along with other products like the Apple Watch Series 10 and AirPods 4. According to CEO Tim Cook, the next generation of iPhone has been designed for Apple Intelligence, marking the beginning of an exciting new era.

Apple and global tech companies are in a race to integrate AI into their products, with smartphones anticipated to be one of the key competitive arenas.

Apple’s AI software, Apple Intelligence, is set to enhance Siri and improve functionalities like object recognition and identification through the phone’s camera, per sources cited in a report from Reuters.

A test version of Apple Intelligence will launch next month for U.S. English users, with other localized English versions set to follow in December. Additional language versions, including Chinese, French, Japanese, and Spanish, are anticipated for next year. It is worth noting that Apple has not yet announced an AI partner in China for the iPhone 16 series.

Apple stated that improvements, including enhancements to Siri, will be phased in over time but did not provide a timeline for moving beyond the test phase.

Notably, Apple’s event occurred just hours before Huawei’s launch of a tri-fold phone, highlighting the competitive challenge Apple faces.

In contrast, Huawei’s website revealed on Monday that it had already received over 3 million pre-orders for its Z-shaped tri-fold phone before its official release.

This underscores Huawei’s ability to withstand U.S. sanctions and bolsters its competitive position against Apple in China, where consumers are enthusiastic about AI features and willing to pay a premium for them, according to a Reuters report.

• iPhone16

The iPhone 16 features a 6.1-inch display, while the iPhone 16 Plus has a 6.7-inch screen. Both models are equipped with the A18 chip built on TSMC’s advanced 3nm process, which reportedly offers a 30% boost in CPU performance compared to the A16 chip used in iPhone 15. Additionally, they come with increased battery capacity and enhanced cooling capabilities.

Moreover, the latest iPhone chips are based on the newest Arm architecture, which includes specialized features aimed at accelerating AI applications.

Notably, Apple has introduced an “Action Button” on the iPhone 16 and iPhone 16 Plus, which supports various functions like camera, flashlight, Focus mode, translation, magnifier, and voice memos.

The higher-end iPhone 16 Pro and 16 Pro Max are crafted from titanium and come with enhanced AI features, including suggestions for optimizing photo shoots and advanced audio-editing tools designed for professional video production.

Still, a previous report from Bloomberg has also addressed concerns over the slow rollout with its AI platform, which may put iPhone 16 “Supercycle” in doubt.

• New Apple Watches and Airpods

Apple also unveiled new Watches and AirPods with health-focused capabilities, as well as hardware-design improvements.

Apple highlighted the Watch’s ability to discover longer-term health conditions such as sleep apnea as well as detecting and responding to emergencies such as a fall.

For the new AirPods, there are two versions: a standard model and a version with active noise cancellation. As part of the AirPods update, Apple’s introduced hearing-aid features are under review by U.S. regulators.

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• [News] iPhone 16 “Supercycle” in Doubt? Concerns Rise Over Slow Rollout with its AI Platform
• [News] Fuelled by AI Features, Apple’s iPhone 16 Shipments Reportedly to Increase by 10%

(Photo credit: Apple)