Arm Holdings Plc has officially cancelled its architectural license agreement with Qualcomm Inc., a move that could have far-reaching implications for the semiconductor industry. The UK-based company provided Qualcomm with a mandatory 60-day notice of cancellation, as reported in documents reviewed by Bloomberg.
This cancellation marks a significant shift in their partnership, threatening to disrupt the smartphone and personal computer markets. Qualcomm, a major player in the chip manufacturing space, relies heavily on Arm’s technology for the production of processors used in countless Android devices. With this termination, Qualcomm may face the daunting task of ceasing production of its key products or risk incurring substantial damages, significantly impacting its estimated $39 billion revenue.
Investors reacted swiftly to the news, with Qualcomm’s shares plummeting nearly 3% and Arm’s shares dropping over 6.4%. These movements reflect growing concerns about the potential fallout from this contentious split between two influential giants in the semiconductor arena.
The legal feud traces back to 2022 when Arm sued Qualcomm for breach of contract and trademark infringement. Arm claims that Qualcomm’s recent acquisition of the chip-design startup Nuvia, coupled with its failure to renegotiate terms, violates their original licensing agreement. Qualcomm counters that its existing licenses cover Nuvia’s activities, arguing that Arm’s actions represent an unfounded attempt to disrupt the legal process and impose higher royalty rates.
In a statement, Arm emphasized that the decision to cancel the license was necessary to safeguard the “unparalleled ecosystem” it has built with its partners over the last three decades. Conversely, Qualcomm accused Arm of engaging in “anticompetitive conduct” and stated it would contest the termination vigorously in court.
With a trial set for December, both companies are preparing for a contentious legal showdown. Arm asserts it is ready to defend its position, expressing confidence that the court will rule in its favor. As the deadline approaches, the stakes are high for both firms, with the potential to reshape the competitive landscape of the semiconductor industry.
For further details, read the full article on Bloomberg: Arm to Cancel Qualcomm Chip Design License in Escalation of Feud.