Arm has reportedly canceled a licensing agreement with Qualcomm that gives the company the ability to design chips on the Arm chip standard, according to a new report from Bloomberg.
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The specific licensing agreement is called the architecture license agreement (ALA), and it’s a key component of an ongoing legal battle between the two tech giants. Reports indicate that Arm’s cancelation of the agreement could significantly impact Qualcomm’s business, especially considering the recent expansion the company has made into AI-powered laptops and if Arm forces Qualcomm to halt all development of chips based on its architecture. Bloomberg’s report states Arm issued a 60-day notice to Qualcomm as legally required.
The legal battle between Arm and Qualcomm began when Arm accused Qualcomm and Nuvia of violating licensing agreements and infringing on its trademark after Qualcomm acquired Nuvia in 2021. Arm alleges the violation occurred when Qualcomm didn’t renegotiate its agreements with Arm after it took over Nuvia and that Nuvia designs created before the merger should have been destroyed. However, Qualcomm argues that its existing agreement with Arm covers any developments made by Nuvia.
Qualcomm’s existing agreement dates back to 2019 when Arm granted two licenses to the company, the “Technology License Agreement (TLA)” and the “Architecture License Agreement (ALA)”. One agreement was to modify existing cores on a chip, and the other was to design custom cores based on Arm’s architecture. Under the 2019 agreement, Qualcomm agreed to the condition that Nuvia would develop datacenter chips, and these would be non-transferable unless under Arm’s approval. Notably, Qualcomm didn’t get Arm’s approval when it acquired the company in 2021, which caused Arm to dissolve its agreements with it in 2022.
Furthermore, Qualcomm believes its existing ALA agreement covers its subsidiary, Nuvia, and a reflection of that confidence is the production of new processors based on Nuvia’s Phoenix (Oryon) cores), which Arm believes infringes on its trademark.
So, what happens now? Qualcomm and Arm are preparing to step into a legal trial together and get to the bottom of the claims from both companies. Unsurprisingly, Qualcomm has filed a countersuit against Arm, stating it has acted within its rights.
In the event Qualcomm loses to Arm, the company would demand that Qualcomm halt all production of any chip design the court finds in violation of Arm’s trademark. This would undoubtedly cause a major disruption in the market that will likely lead to price increases, delays, and possibly even shortages. At the very least, it would be an incredibly big blow to Qualcomm considering how much of the company’s revenue is reliant on Arm-based technologies.
“This is more of the same from ARM — more unfounded threats designed to strong-arm a longtime partner, interfere with our performance-leading CPUs and increase royalty rates regardless of the broad rights under our architecture license. With a trial fast approaching in December, Arm’s desperate ploy appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed. Arm’s anticompetitive conduct will not be tolerated,” read Qualcomm’s response