Arm May Cancel Qualcomm’s Chip Design License

According to a report from Bloomberg, Arm Holdings PLC has decided to end its licensing agreement with Qualcomm Inc., issuing a 60-day notice for cancellation. Should this termination proceed, Qualcomm may have to halt the sale of its Arm-based chips, which constitute a significant portion of its smartphone offerings and the new Snapdragon chips utilized in its Copilot+ PC series.

The ongoing feud between the two companies dates back several years, beginning in 2021 when Qualcomm acquired the chip design firm Nuvia, founded by former Apple developers of the M1 chip. The core of the conflict revolves around the licensing agreements that Nuvia had with Arm and whether Qualcomm’s acquisition infringed on Arm’s conditions. Arm is seeking to revise the licensing terms now that Nuvia has switched ownership, while Qualcomm contends that renegotiation is not warranted.

The cancellation notice includes demands for Qualcomm to stop the development of Arm-based Nuvia chips and to destroy any remaining stock. This request is quite drastic, with a Qualcomm representative telling Bloomberg that Arm is attempting to “strong-arm a longtime partner.” This action may be seen as a strategic move to sway the legal battle between the two firms.

Throughout their long-standing relationship, Qualcomm and Arm have collaborated for over 25 years, with Qualcomm first licensing Arm technology in 1998. Currently, Qualcomm generates nearly $40 billion in annual revenue, heavily reliant on chips developed using Arm architecture.

These chips are integral to most current Android smartphones, and the newly unveiled Snapdragon 8 Elite is expected to power an upcoming generation of Android devices. Qualcomm’s growth in the laptop processor market has also seen success, with the Snapdragon X Elite chips now being utilized in a variety of Copilot+ PCs running Windows on Arm. Therefore, the implications of a definitive split between the two companies could be significant.

Qualcomm could face severe consequences if it disregards the cancellation notification and maintains its current stance against Arm’s licensure renegotiation demands. The company’s stock has already seen a 5% drop following the Bloomberg article. It remains to be seen how Qualcomm will respond in the coming weeks.