Qualcomm wins landmark trial against Arm in chip license dispute

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What just happened? Qualcomm has emerged victorious in a high-stakes trial against Arm Holdings over a disputed chip technology license. The case, which unfolded in federal court in Delaware, centered on Qualcomm’s $1.4 billion acquisition of startup Nuvia in 2021 and the subsequent use of Arm’s chip architecture.

Friday’s jury’s verdict found that Qualcomm did not violate the terms of its agreement with Arm when incorporating the acquired technology into its chips without paying a higher licensing rate. This decision has significant implications as Arm’s chip designs and instruction sets are fundamental to many of the world’s largest tech companies.

However, Qualcomm did not win on all counts. While the jury concluded that Qualcomm had not breached the licensing terms, they could not reach a consensus on whether Nuvia, the acquired startup, had violated its license agreement with Arm. Federal Judge Maryellen Noreika indicated that lawyers could have this unresolved issue retried later.

Qualcomm hailed the verdict as a vindication of its right to innovate, stating that the jury had affirmed that the company’s contract with Arm protects all Qualcomm products listed in the case. The decision allows Qualcomm to continue selling chips that incorporate Nuvia’s technology, which is crucial for its expansion into the AI market, as it aims to develop laptop chips capable of handling advanced tasks such as chatbots and image generators. Qualcomm is looking to compete directly with other tech giants like Nvidia, AMD, and MediaTek, which are also planning to produce Arm-based processors for similar applications.

At the heart of the legal battle was a disagreement over royalty rates. Nuvia had initially agreed to pay higher rates for Arm’s technology than Qualcomm. When Qualcomm acquired Nuvia, it integrated the startup’s technology into chips under its lower-rate license agreement with Arm. This move prompted Arm to claim that Qualcomm was required to renegotiate its Nuvia agreement post-acquisition.

While Qualcomm celebrates its victory, Arm said it intends to seek a retrial. There is still the unresolved issue of the transferability of chip design licenses during acquisitions, a common occurrence in the fast-paced semiconductor industry. A retrial could further clarify the boundaries of licensing agreements and their applicability when companies are acquired, potentially setting important precedents for future deals in the industry. However, until that happens, companies that develop and use Arm-based technologies will have to tread carefully.