What you need to know
- A new report suggests that Arm Holdings PLC is ending its contract with Qualcomm Inc. which allows the firm to build chip designs based on Arm technology.
- The cancelation notice lasts for only 60 days, and escalates an on-going dispute between the UK-based chip architecture giant Arm and US-based chip maker Qualcomm for processors that are in everything from TVs, to smartphones, to Microsoft’s new Copilot+ PCs.
- If the cancelation goes through, it could upend the smartphone industry, given that Snapdragon processors power the vast majority of Android-based smartphones and tablets, and as well as emerging Arm-based Windows PCs like the Surface Pro 11.
- Qualcomm and Arm have been in a legal dispute for a couple of years now, and this is the latest escalation in a battle that shows no signs of slowing down.
Oh boy, I didn’t have this one on my bingo card to write up at 3AM.
UK-based chip architecture giant Arm Holdings PLC is sensationally killing its licensing agreement with Qualcomm Inc in the United States, according to a report from Bloomberg. It’s the latest escalation in a legal feud that has dogged both companies for the past couple of years, which started when Qualcomm acquired chip design startup Nuvia back in 2021. Arm has alleged that the acquisition amounts to a breach of contract as well as trademark infringement, given that Nuvia had an existing agreement with Arm for chips based on its patented technology. Arm’s position is that Qualcomm acquired their Nuvia licenses, violating Arm’s terms of agreement. Qualcomm has counter-sued, arguing that Arm’s terms and conditions do not require renegotiation.
Thus far, Qualcomm and Arm have been negotiating over the use of Arm’s processor architecture in designs of processors like the Snapdragon X Elite, which powers Microsoft’s range of Copilot+ PCs and other Windows on Arm laptops. Arm’s technology is particularly crucial in energy-efficient computing device designs, including devices like smartphones, tablets, and even televisions. More traditional x86 processors have gradually fallen out of favor owing to their energy requirements, which is why Microsoft has begun exploring developing Windows for Arm-based devices over the past few years. The Surface Pro 11 is part of that effort, although this latest dispute could have dire ramifications for the entire program. Copilot+ PCs are a relatively nascent market, however. This license dispute has potentially huge ramifications for global smartphone market, given that the vast majority of Android phones are based on Qualcomm chips.
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The partnership between Qualcomm and Arm revolutionized the entire world
Qualcomm and Arm were once best buddies who worked arm-in-arm (sorry) to curate a cultural shift in computing that has impacted literally every aspect of human life. Almost everything has compute in it these days, and manufacturers are more than ever turning to Arm to boost their energy efficiency. Snapdragon processors were at the forefront of that for a long time, but times are changing.
Arm canceled Nuvia’s contracts already as mentioned, and has demanded that Qualcomm cease and desist developing Nuvia chips based on Arm’s technology, while also demanding the destruction of all of its existing stock. So far, it doesn’t seem like Qualcomm has complied, pending its counter-suit which argues that it hasn’t breached the original contracts.
There are billions at stake in this latest dispute, given that Qualcomm’s near $40 billion annual revenue comes almost entirely from chips built on Arm standards. Qualcomm announced the latest Snapdragon 8 Elite just recently, and while it is packed full of Oryon cores instead of Arm’s Cortex offering, those are still Arm-based under the hood. The Snapdragon 8 Elite is expected to appear in next year’s devices like the Samsung Galaxy 25, as well as next-gen offerings from OnePlus and others that typically opt for Qualcomm options. For Arm to completely kill Qualcomm’s license to build chips on these designs will potentially rock the smartphone industry. Qualcomm is no stranger to litigation of this type, and it may be bullish enough to think it can muddle through regardless.
The semiconductor industry remains incredibly volatile for a variety of reasons. The tech industry’s frenzy to be at the forefront of the AI craze has led to a gold rush of sorts for all types of chips. Manufacturers of all shapes and sizes, including Microsoft, have explored building their own chips and products to that end. Arm has historically only licensed its instruction sets to chip makers, but has begun pursuing the creation of full designs to offer manufacturers directly, potentially competing directly with companies like Qualcomm. Qualcomm has its own Oryon platform with Nuvia that it’s gradually developing, which at least for now, still relies heavily on Arm licenses.
The old guard x86 champs over at Intel and AMD have a ton of issues of their own to deal with, but the competition from Arm has forced them to increasingly put its focus on energy efficiency in recent years. Intel’s new Panther Lake chips continue to focus on efficiency, and Intel and AMD are increasingly working together to bolster x86 and fend off the challenge from the Arm-based army (sorry).
What happens next may require the input of a legal expert, rather than an insomniac games writer who just happened to be awake when this news was breaking. It’ll be interesting to see how the markets react when they open up tomorrow, that’s for sure.
