According to a report by Bloomberg, chip architecture company Arm Holdings PLC is taking steps to terminate its licensing agreement with Qualcomm Inc. by sending a 60-day cancellation notice. This move could potentially impact Qualcomm’s ability to sell Arm-based chips, including its smartphone chips and the new Snapdragon chips used in the Copilot+ PC lineup.
The dispute between the two companies dates back several years to Qualcomm’s acquisition of chip design company Nuvia in 2021. The disagreement revolves around Nuvia’s licensing agreements with Arm and whether Qualcomm’s acquisition of these licenses breached the terms of agreement set by Arm. While Arm is seeking to renegotiate the licensing terms due to the change in ownership of Nuvia, Qualcomm maintains that renegotiation is unnecessary.
The cancellation notice requires Qualcomm to halt the development of Arm-based Nuvia chips and destroy all existing stock, presenting a significant demand. A Qualcomm spokesperson described Arm’s actions as an attempt to pressure their longstanding partner. It’s possible that the cancellation is a tactic to exert influence in the ongoing legal battle between the two companies.
Despite the current conflict, Qualcomm and Arm have had a long-standing partnership, with Qualcomm securing its first Arm license over 25 years ago in 1998. Qualcomm, with an annual revenue close to $40 billion, heavily relies on chips built on Arm standards, which power a majority of Android phones and the recently announced Snapdragon 8 Elite for future Android devices.
Qualcomm’s foray into laptop processors has also been successful, with Snapdragon X Elite chips driving a range of Copilot+ PCs running Windows-on-Arm. A permanent rift between the two companies could have significant repercussions, given their intertwined history and impact on the tech industry.
While Qualcomm’s shares have already dropped by 5% following the Bloomberg report, the company’s response to the cancellation notice and licensing renegotiations remains to be seen in the coming weeks.
