Arm Holdings is canceling a license that allowed longtime partner Qualcomm to use Arm intellectual property to design chips, escalating a legal dispute over vital smartphone technology.
Arm, based in the UK, has given Qualcomm a mandated 60-day notice of the cancellation of their so-called architectural license agreement, according to a document seen by Bloomberg. The contract allows Qualcomm to create its own chips based on standards owned by Arm.

The showdown threatens to roil the smartphone and personal computer markets, as well as disrupting the finances and operations of two of the most influential companies in the semiconductor industry.

Qualcomm sells hundreds of millions of processors annually — technology used in the majority of Android smartphones. If the cancellation takes effect, the company might have to stop selling products that account for much of its roughly $39 billion (roughly Rs. 3,27,890 crore) in revenue, or face claims for massive damages.

The move ratchets up a legal fight that began when Arm sued San Diego-based Qualcomm — one of its biggest customers — for breach of contract and trademark infringement in 2022. With the cancellation notice, Arm is giving the US company an eight-week period to remedy the dispute. 

Representatives for Arm declined to comment. A Qualcomm spokesperson said the British company was trying to “strong-arm a longtime partner.”

It “appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless,” the spokesperson said in an emailed statement. “We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed.” 

The two are headed to a trial to resolve the breach-of-contract claim by Arm and a countersuit by Qualcomm. The disagreement centers on Qualcomm’s 2021 acquisition of another Arm licensee and a failure — according to Arm — to renegotiate contract terms. Qualcomm argues that its existing agreement covers the activities of the company that it purchased, the chip-design startup Nuvia.

Nuvia’s work on microprocessor design has become central to new personal computer chips that Qualcomm sells to companies such as HP and Microsoft. The processors are the key component to a new line of artificial intelligence-focused laptops dubbed AI PCs. Earlier this week, Qualcomm announced plans to bring Nuvia’s design — called Oryon — to its more widely used Snapdragon chips for smartphones. 

Arm says that move is a breach of Qualcomm’s license and is demanding that the company destroy Nuvia designs that were created before the Nuvia acquisition. They can’t be transferred to Qualcomm without permission, according to the original suit filed by Arm in the US District Court in Delaware. Nuvia’s licenses were terminated in February 2023 after negotiations failed to reach a resolution.

Like many others in the chip industry, Qualcomm relies on an instruction set from Cambridge, England-based Arm, a company that has created much of the underlying technology for mobile electronics. An instruction set is the basic computer code that chips use to run software such as operating systems.

If Arm follows through with the license termination, Qualcomm would be prevented from doing its own designs using Arm’s instruction set. It would still be able to license Arm’s blueprints under separate product agreements, but that path would cause significant delays and force the company to waste work that’s already been done. 

Prior to the dispute, the two companies were close partners that helped advance the smartphone industry. Now, under newer leadership, both of them are pursuing strategies that increasingly make them competitors. 

Under Chief Executive Officer Rene Haas, Arm has shifted to offering more complete designs — ones that companies can take directly to contract manufacturers. Haas believes that his company, still majority owned by Japan’s SoftBank Group Corp., should be rewarded more for the engineering work it does. That shift encroaches on the business of Arm’s traditional customers, like Qualcomm, who use Arm’s technology in their own final chip designs. 

Meanwhile, under CEO Cristiano Amon, Qualcomm is moving away from using Arm designs and is prioritising its own work, something that potentially makes it a less lucrative customer for Arm. He’s also expanding into new areas, most notably computing, where Arm is making its own push. But the two companies’ technologies remain intertwined, and Qualcomm isn’t yet in a position to make a clean break from Arm.

Arm was acquired in 2016 by SoftBank, and part of it was sold to the public in an offering in September of last year. The Japanese company still owns more than 80 percent of the Arm.

Arm has two types of customers: companies that use its designs as the basis for their chips and ones that create their own semiconductors and only license the Arm instruction set.

Qualcomm is no stranger to licensing disputes. The company gets a large chunk of its profit from selling the rights to its own technology — a key part of mobile wireless communications. Its customers include Samsung Electronics and Apple, the two biggest smartphone makers.

Qualcomm emerged victorious in 2019 from a wide-ranging legal fight with Apple. It also won a court decision on appeal against the US Federal Trade Commission, which alleged that the company was using predatory licensing activities.

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(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

Qualcomm is working on the second generation of its Snapdragon X Elite processors for Windows computers, according to a report. The Arm-based chips are reportedly being developed under the codename ‘Project Glymur’ — a departure from its typical naming scheme. While the company’s plans for new versions of its midrange Snapdragon X Plus processors are currently under wraps, it is also said to be working on a new octa core desktop processor that could be the most affordable model in its existing lineup.

WinFuture reports that Qualcomm is working on new chipsets with the model number SC8480XP under the codename Project Glymur. It was spotted in the company’s international import-export databases and hints at the upcoming arrival of these processors, according to the publication.

The upcoming chips would reportedly be released with an updated Snapdragon X2 Elite branding. Qualcomm’s first-generation chips were all released with the model number SC8380XP, with up to 12 CPU cores with a peak clock speed of up to 4.3GHz.

The chipmaker trialled the first test platforms of the next-generation chipset in July and August. However, details specifications of the processors, such as the number of cores or peak clock speeds, is currently unknown. WinFuture also points out that Glymur is the first non-Hawaiian codename for a chipset from Qualcomm.

Meanwhile, Qualcomm is also reportedly working on a new first-generation Snapdragon X Plus chip — the X1P-24-100. This will be the most affordable processor in the company’s Snapdragon X series and sit under the octa core X1P-42-100, which offers the weakest performance in the lineup, according to the publication.

Arm Holdings approached Intel about potentially buying the ailing chipmaker’s product division, only to be told that the business isn’t for sale, according to a person with direct knowledge of the matter.

In the high-level inquiry, Arm didn’t express interest in Intel’s manufacturing operations, said the person, who asked not to be identified because the discussions were private. Intel has two main units: a product group that sells chips for personal computers, servers and networking equipment, and another that operates its factories.

Representatives for Arm and Intel declined to comment.

Intel, once the world’s largest chipmaker, has become the target of takeover speculation since a rapid deterioration of its business this year. The company delivered a disastrous earnings report last month — sending its shares on their worst rout in decades — and is slashing 15,000 jobs to save money. It’s also scaling back factory expansion plans and halting its long-cherished dividend.

As part of its turnaround efforts, Intel is separating the chip product division from its manufacturing operations. The move is aimed at attracting outside customers and investors, but it also lays the groundwork for the company to be split up — something Intel has considered, Bloomberg reported last month.

Arm, which is majority-owned by SoftBank Group Corp., makes much of its revenue selling chip designs for smartphones. But Chief Executive Officer Rene Haas has sought to broaden its reach outside of that industry. That’s included a push into personal computers and servers, where its chip designs are going up against Intel’s. Though Intel doesn’t have the technological edge it once held, the Santa Clara, California-based company remains dominant in those markets. 

Combining with Intel would help Arm’s reach and kick-start a move toward selling more of its own products. The company currently licenses technology and designs to customers, who then turn them into complete components. Its client list includes the biggest names in technology, such as Amazon.com, Qualcomm, and Samsung Electronics.

Under Haas, the company has moved more in the direction of offering fully formed products — potentially putting it in competition with its licensees.

Arm, based in Cambridge, England, only has a fraction of the revenue of Intel. But its valuation has soared since an initial public offering last year and now stands at more than $156 billion (roughly Rs. 13,05,862 crore). Investors see the company as a beneficiary of the AI spending boom, especially as it moves further into data center chips. Arm also has the backing of Japan’s SoftBank, which owns an 88 percent stake, potentially giving the company additional financial clout.

Intel, in contrast, has lost more than half its value this year and has a current market capitalization of $102.3 billion (roughly Rs. 8,56,344 crore). But the company has other options to consider. Apollo Global Management Inc. offered to make an investment in the company, Bloomberg reported this week. The firm indicated in recent days that it would be willing to put in as much as $5 billion, marking a vote of confidence for CEO Pat Gelsinger.

Intel also plans to sell part of its stake in semiconductor maker Altera Corp. to private equity investors. That business, which the chipmaker bought in 2015, was separated from Intel’s operations last year with the goal of taking it public. And speculation of a Qualcomm takeover boosted Intel shares in the past week.

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(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)