Arm vs. Qualcomm: High-Stakes Trial Over AI Chip Licensing Begins

Arm's pledges to retry Qualcomm suit following mistrial

The victory may be short lived as the chip designer gears up for second round Analysis Qualcomm's push into the PC arena is safe, at least for the moment, after a jury found its mobile processor designs had not violated Arm Holdings' licenses as the British chip designer had claimed. The decision came after five days of deliberations, marking the end of a more than two-year legal battle between Arm and one of its largest customers over allegations Qualcomm had breached the terms of its licenses when it acquired Nuvia back in 2021 for $1.4 billion. The jury decided in Qualcomm's favor with regard to two questions regarding the terms of its licenses with Arm: the case ultimately ended in a mistrial after the jury failed to resolve one of three questions set before them. Those questions boiled down to the following issues: The jury found in Qualcomm's favor on questions two and three, but was unable to reach consensus regarding whether Nuvia had breached its ALA with Arm. "We are pleased with today's decision. The jury has vindicated Qualcomm's right to innovate and affirmed that all the Qualcomm products at issue in the case are protected by Qualcomm's contract with ARM," Qualcomm said in a statement following the verdict. "We will continue to develop performance-leading, world-class products that benefit consumers worldwide, with our incredible Oryon ARM-compliant custom CPUs." These products include Qualcomm's Snapdragon X-Elite and X-Plus processors now found in a variety of AI PCs, as well as its Snapdragon 8 Elite smartphone chips. The designs were central to the case, with Arm arguing that the licenses granted to Nuvia to design an Arm-based server processor, couldn't be transferred to Qualcomm without its permission. However, the bigger issue related to Qualcomm's Nuvia-derived Oryon cores came down to how the royalty payments collected by Arm under the deal. Nuvia was apparently subject to a higher royalty rate than Qualcomm's mobile system on chip (SoC) designs. The issue came when Qualcomm attempted to use Nuvia's tech at that lower rate. The jury's findings regarding Qualcomm's actions mark a victory for the mobile chip giant's PC ambitions. Had the jury leaned in Arm's favor, the trial could have significantly impacted Qualcomm's PC push, sending it back to the drawing board on SoC designs or forcing it to renegotiate less favorable royalty rates with Arm. The latter could have resulted in more expensive products, making them less competitive with x86-based AI PCs from Intel and AMD. Introduced in May, Qualcomm's Snapdragon X-Elite and X-Plus, while not its first foray into the PC market, were among its most competitive, at the time boasting performance 2x higher in multithreaded workloads compared to Intel's 10-core Raptor Lake 1355U and 12-core 1360P processors. What's more, the chips were the first parts on the market to meet Microsoft's lofty 40 TOPS Copilot+ benchmark for AI PCs. Only chips with neural processing units capable of meeting this bar would get access to Microsoft's growing number of local AI features, including its controversial Recall feature. However, the exclusive nature of Qualcomm's X-series chips was rather short lived. Within months of the X-Elite's launch, both AMD and Intel introduced powerful new SoCs of their own, with NPUs qualifying them for the Copilot+ PC brand. This put Qualcomm in a vulnerable market position, with the future of these chips in the jury's hands. Arm had already made moves to derail Qualcomm's Oryon-based chips. In October, Arm reportedly moved to cancel Qualcomm's architecture licenses in an apparent bid to stall its latest generation of products based on those designs. While it seems Qualcomm's custom core designs are safe for now, with only two of three questions decided, the story isn't over yet. "We are disappointed that the jury was unable to reach consensus across the claims. We intend to seek a retrial due to the jury's deadlock," the chip designer said in a statement, received by El Reg following the conclusion of the trial. "From the outset, our top priority has been to protect Arm's IP and the unparalleled ecosystem we have built with our valued partners over more than 30 years. As always, we are committed to fostering innovation in our rapidly evolving market and serving our partners while advancing the future of computing." The fact is that Qualcomm, one of Arm's largest customers, is still heavily dependent on the IP house's technology. As such, finding an equitable resolution is in both party's long term interests. Further complicating the matter, Qualcomm's success in competing with Intel and AMD in the PC is a double-edged sword for Arm. For better or worse, Qualcomm's X-chips serve as Arm's ambassador to the AI PC space and show the architecture is viable in more than mobile and server applications. On the other hand, Qualcomm's X-series chips don't necessarily represent the best Arm has to offer. The Oryon core is based on an older ARMv8 design, which lacks, among other things, AI centric features found in modern ARMv9 designs, like those used in Apple's M4 SoCs. Perhaps, the most concerning challenge for Arm and why it seems bent on retrying the case is the precedent it sets. If Qualcomm can get away with acquiring chip technologies from Nuvia without renegotiating architecture licenses, what's to stop someone else from doing the same? And so, while this chapter of the Arm vs. Qualcomm saga may be over, it seems the story is far from over. ®

Arm-Qualcomm trial kicks off this week over licensing rights and chip tech

In context: Arm canceled Qualcomm's license in October after years of intellectual property clashes. The company announced that, following a 60-day notice period, Qualcomm would no longer be allowed to produce its own chips based on Arm's technology. The decision was a shocking escalation that heightened tensions between the two companies. However, both sides mysteriously went silent afterward - until now. As the deadline approaches, there are finally new developments. The legal showdown between chip giants Qualcomm and Arm is unfolding this week in a Delaware courtroom. The jury trial began Monday with opening arguments, and each side is allocated approximately 11 hours to present their case by Friday. Key witnesses expected to testify include Arm CEO Rene Haas, Qualcomm CEO Cristiano Amon, and Qualcomm Vice President Gerard Williams - founder of Nuvia, the AI chip startup Qualcomm acquired in 2021 for $1.4 billion. Also see: Arm vs Qualcomm: mutually assured destruction At the heart of the dispute is whether Qualcomm's existing agreements with Arm extend to Nuvia's chip designs post-acquisition. These designs serve as the foundation for Qualcomm's new AI processors for PCs, unveiled earlier this year. Microsoft and PC manufacturers are betting that these energy-efficient chips will enable Windows devices to compete more effectively against Apple's M-series processors, potentially reclaiming market share in the laptop space. Arm claims that Qualcomm's acquisition of Nuvia brought with it licensing terms distinct from Qualcomm's existing agreements, requiring renegotiation to use Nuvia's chip designs. Qualcomm, however, contends that the technology behind its custom AI chips falls under its current licensing rights from Arm, negating the need for a new deal. Rather than monetary damages, Arm is pursuing a far more drastic measure - it wants Qualcomm to destroy the Nuvia-based chip designs entirely. Although the licensing fees Qualcomm pays to Arm are relatively small for a $176 billion company, the trial's outcome could have profound implications. A victory for Arm could not only jeopardize Qualcomm's ambitions in the PC market but also disrupt its smartphone processor business. That's because the disputed Nuvia technology forms the foundation of Qualcomm's Oryon CPU cores, which power the company's latest Snapdragon processors for laptops, smartphones, and even automotive applications. Analysts suggest that the license cancellation may be a strategic move by Arm to pressure Qualcomm into resolving the dispute through negotiation rather than litigation. However, if Arm proceeds with the cancellation - a scenario considered unlikely - it could trigger significant consequences for both companies due to their deeply intertwined business relationship.

Arm vs Qualcomm trial begins over AI chip licensing By Investing.com

A high-stakes trial between Arm Ltd and Qualcomm Inc (NASDAQ:QCOM) commenced this Monday in a Delaware court, potentially impacting the future of artificial intelligence computing. The legal dispute centers on a contractual disagreement regarding Qualcomm's use of Arm's intellectual property and Qualcomm's acquisition of chip startup Nuvia in 2021 for $1.4 billion. The jury trial, which started with opening arguments, is scheduled to continue until Friday. Each party has been allotted roughly 11 hours to present their case, following the jury selection last Friday. Key figures expected to testify include Arm's CEO Rene Haas, Qualcomm's CEO Cristiano Amon, and Nuvia founder Gerard Williams, who also served as a senior executive in Apple (NASDAQ:AAPL)'s chip division and is now a vice president at Qualcomm. At the heart of the litigation is Qualcomm's licensing agreement with Arm for intellectual property usage and the implications of its purchase of Nuvia, which was established by former Apple chip engineers, including Williams. Qualcomm's recent launch of new low-powered AI PC chips, which are anticipated to support Microsoft (NASDAQ:MSFT) and others in reclaiming market share from Apple's laptops, utilized Nuvia's designs. Both Nuvia and Qualcomm held licenses with Arm, yet under different financial terms. Arm has insisted that for Qualcomm to use the Nuvia-based designs, the licensing terms must be renegotiated. Qualcomm maintains that its existing license rights encompass all custom-designed central processing units (CPUs) and has expressed confidence that these rights will be upheld by the court. In an unusual move, Arm has not sought monetary damages but has demanded that Qualcomm be compelled to destroy all Nuvia designs. Analyst Stacy Rasgon from Bernstein reported that Qualcomm pays approximately $300 million annually in fees to Arm. Arm, headquartered in the United Kingdom (TADAWUL:4280), is a subsidiary of SoftBank (TYO:9984) Group, which took the company public in the United States in 2023.