Qualcomm may lose ARM's design license it used to make Snapdragon SoCs

Qualcomm’s long-standing relationship with ARM Holdings has hit a major snag, as ARM has issued a notice to terminate a critical licence agreement with the US-based chipmaker.

This development could seriously disrupt Qualcomm’s ability to design its own Snapdragon processors, threatening to shake up the smartphone and personal computing industries.

The licence in question, known as an architectural licence, allows Qualcomm to use ARM’s intellectual property to create custom chips that meet ARM’s technical standards.

If the cancellation takes effect after the mandated 60-day notice, Qualcomm may have to stop selling key products that generate a significant portion of its US$39 billion revenue or face costly damages. This dispute has the potential to unsettle the broader semiconductor market, given Qualcomm’s pivotal role in powering most Android smartphones.

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This escalating conflict stems from a lawsuit filed by ARM against Qualcomm in 2022, alleging breach of contract and trademark infringement. The disagreement is linked to Qualcomm’s acquisition of Nuvia, a chip design start-up that also held an ARM licence.

ARM claims Qualcomm should have renegotiated the terms after the buyout and argues that Nuvia’s designs cannot be transferred to Qualcomm without permission. Qualcomm, however, insists that its existing agreement covers Nuvia’s activities.

The battle is now headed to court, with ARM demanding that Qualcomm destroy Nuvia’s pre-acquisition designs. ARM terminated Nuvia’s licences in February 2023 after failed negotiations.

Qualcomm has countered by integrating Nuvia’s Oryon microprocessor technology into its Snapdragon line, including chips aimed at new AI-focused laptops in partnership with companies like HP and Microsoft.

Losing ARM’s architectural licence would be a significant blow to Qualcomm, as it relies heavily on ARM’s instruction set, the fundamental code needed for chips to run software and operating systems. While Qualcomm could still licence individual chip designs from ARM under different agreements, this route would lead to production delays and waste years of development.

The dispute also reflects deeper tensions as both companies pursue new strategies. ARM, under CEO Rene Haas, is focusing on offering complete chip designs to manufacturers, a shift that makes it a direct competitor to traditional partners like Qualcomm.

At the same time, Qualcomm, led by CEO Cristiano Amon, is moving toward designing more of its own chips to reduce dependence on ARM, particularly in emerging areas like personal computing.

This fallout is a significant shift for two companies that once played a crucial role in shaping the modern smartphone landscape. While Qualcomm has experience in handling tough legal battles, including victories against Apple and the US Federal Trade Commission, the outcome of this dispute with ARM could have far-reaching consequences for both companies and the semiconductor industry at large.