Arm Holdings to revoke Qualcomm chip design license, source says; Shares fell 3%

Chip firm Arm is canceling an architectural license agreement that allows Qualcomm to use its intellectual property to design chips, a person familiar with the matter said, amid an ongoing legal battle between the two companies.

Shares of Qualcomm fell about 3% on Wednesday, while Arm was down about 6%.

Arm has given Qualcomm a mandatory 60-day notice to revoke a license that allows Qualcomm to design its own chips based on Arm’s computing architecture, said the person, who requested anonymity.

Bloomberg News was the first to report the development.

The UK-based arm, which is majority-owned by Japan’s SoftBank Group, sued Qualcomm in 2022 for failing to negotiate a new license after acquiring Nuvia.

Arm had previously said that the design Qualcomm was planning for Microsoft’s Copilot+ laptops was a direct technical descendant of Nuvia’s chips, and that it had revoked the license for these chips.

“This is more of the same from ARM — more baseless threats designed to strengthen a longtime partner, interfere with our performance-leading CPUs, and increase royalty rates without regard to broader rights under our architecture license,” a Qualcomm spokesperson said in an email. statement

“With the trial fast approaching in December, Arm’s desperate move appears to be an attempt to disrupt the legal process, and its termination suit is completely without merit. We are confident that Qualcomm’s rights under its contract with Arm will be upheld. Arm’s anticompetitive conduct will continue to be tolerated.” won’t come.”

A legal battle between the two tech giants is set to begin in federal court in Delaware in December.

Hand’s victory in the lawsuit could force about 20 of its partners, including Qualcomm and Microsoft, to halt shipments of the new laptops. It will inevitably open up one of Qualcomm’s biggest strategic acquisitions in recent years.

Despite the public battle between the two companies, which rely on each other for revenue and profits, some investors and analysts believe they will reach a settlement before trial.

“If the 60-day cancellation notice is implemented, Qualcomm could, in theory, be severely limited in terms of what it can sell, given the importance of the ARM architecture in its chipsets, and would lose a portion of ARM royalty revenue,” AJ Bell Investments said. Director Russ Mold said.