The trial between Arm and Qualcomm has begun: the head of Arm admitted that the company is not going to produce its own chips

In August 2022, the British holding Arm accused Qualcomm of violating the licensing agreements of this developer of processor architectures as a result of the acquisition of the second of the Nuvia startup companies. Hearings in the case began yesterday, and the head of Arm managed to assure the court that the British developer has no ambitions to independently enter the processor market.

Image Source: Arm

In 2021, Qualcomm acquired startup Nuvia, which was also an Arm client, for $1.4 billion. According to representatives of the latter, Qualcomm should have entered into new licensing agreements regarding Nuvia’s developments, but the American chip developer neglected this opportunity. Now Arm not only accuses Qualcomm of violating licensing rules, but also demands that it stop using Nuvia’s designs, which formed the basis for the Snapdragon X family of processors for PCs. In fact, if the court sides with Arm, Qualcomm may lose the right to sell these processors.

Initially, the dispute between Arm and Qualcomm arose from discrepancies in the terms of licensing the former’s technologies to Nuvia and Qualcomm, respectively, since the former paid Arm more than the latter. After the merger, Qualcomm paid licensing fees at its own, lower rates, which did not suit Arm. As the materials presented in court showed, Nuvia’s royalty rates were many times higher than those set for Qualcomm. Arm holding estimates its losses from this discrepancy at $50 million. Third-party analysts believe that Qualcomm overall pays Arm about $300 million a year.

Essentially, at the center of the dispute is the amount of royalties that Qualcomm should pay. However, the claims go much further: Arm threatens to revoke Qualcomm’s current license and demand the destruction of all devices with processors that use Nuvia’s developments. Analysts hope that the companies will agree to a settlement, since the lawsuit could deal a blow to the business of both of them.

Qualcomm representatives in court tried to explain Arm’s motives as a desire to limit the expansion of the company, which Arm considers a potential competitor. Qualcomm lawyers presented the court with a draft document that was allegedly intended for the Arm board of directors and was prepared by the company’s CEO Rene Haas. In this document, Arm was proposed to develop its own ready-made chips to bring them to the market under this brand. Haas denied preparing such a strategy in court. He said that Arm does not create chips and has never been involved in this business, but is always evaluating different strategies.

Answering a question about letters sent to large Arm clients such as Samsung, which mentioned a demand to ban Qualcomm from using Nuvia developments, the head of Arm explained that the holding had reasons to engage in such activities, since counter requests came not only from clients and partners, but and from the management of Arm itself. On Tuesday, the parties to the dispute will present the court with arguments presented by their key witnesses, and the court intends to begin discussing the verdict on Thursday.