Chip design company ARM plans to cancel a key technology licensing agreement, no longer allowing its long-term partner and chip giant Qualcomm to use ARM's intellectual property to design chips.
On October 22nd local time, according to foreign media reports, ARM has given Qualcomm a 60 day notice to cancel its architecture license agreement. This means that Qualcomm will not be able to develop its own chips based on the standards owned by ARM. Most Android smartphones use Qualcomm's technology, and if the agreement is cancelled, Qualcomm may need to stop selling products that account for a large portion of its revenue, facing huge losses.
Although Qualcomm can continue to obtain usage authorization for ARM architecture under different product agreement frameworks after ARM cancels the license agreement, this will result in serious product delays and force Qualcomm to abandon some of the completed work results. Meanwhile, the long-standing cooperative relationship between the two parties will also come to an end.
ARM declined to comment on this matter. Qualcomm issued a statement stating that ARM's actions were "a desperate trick": "Prior to the upcoming court hearing in December, ARM's desperate trick seems to be an attempt to interfere with the legal process, and its demand to terminate the license agreement is unfounded. We are confident that the rights covered by the Qualcomm ARM agreement will be confirmed by the court. ARM's anti competitive behavior will not be tolerated
It is worth noting that this is not the first time the two companies have had a dispute, and their grievances can be traced back to 2021. In December of this year, the two companies will also officially go to court.
In 2021, as one of ARM's main customers, Qualcomm announced the acquisition of Nuvia, a two-year-old chip design company, for $1.4 billion. Nuvia's chip design also uses technology from ARM, which has sparked dissatisfaction from ARM. In August 2022, ARM filed a lawsuit against Qualcomm and Nuvia in Delaware court, accusing them of violating ARM's licensing agreement and demanding a ban on the sale of Qualcomm's related products.
Subsequently, Qualcomm filed a counterclaim, claiming that the company had not engaged in any illegal activities and that ARM had no right to demand the destruction of processor chips built using Nuvia's intellectual property. The Delaware Court of Chancery in the United States will hold a hearing on this lawsuit at the end of 2024.
Previously, although neither Qualcomm nor ARM changed their positions, it was widely believed that the two sides could eventually reach a settlement. However, with the news of the cancellation of the license agreement spreading, this controversy has also intensified.
The analysis points out that the core issue of the dispute between ARM and Qualcomm lies in the differences in technology and business strategies between the two sides. ARM focuses on low-power and high-efficiency architecture design, and in recent years has gradually shifted its focus to the field of AI (artificial intelligence) processing. Driven by the huge growth potential brought by the AI concept, ARM's (Nasdaq: ARM) stock price has more than doubled since the beginning of this year, exceeding $150 per share, and its market value has rapidly expanded to nearly $160 billion.
Qualcomm, on the other hand, is focused on promoting its CPU architecture. At this week's 2024 Snapdragon Summit, Qualcomm applied its self-developed Oryon CPU designed by Nuvia to smartphone platforms for the first time, releasing the flagship mobile platform Qualcomm Snapdragon 8 Ultimate Edition, reducing the company's reliance on ARM public architecture. Qualcomm (Nasdaq: QCOM) closed at $173.18 per share on the 22nd, up 2.47%, with a total market value of $192.9 billion.
Once the partnership between ARM and Qualcomm collapses, it will not only have a direct impact on the two companies themselves, but may also have serious consequences for the entire semiconductor industry chain and end users. For ARM, canceling the license to Qualcomm will result in the loss of an important partner, and the company may need to seek other potential partners to fill the gap. For Qualcomm, finding an alternative solution to the ARM architecture will be a daunting task and will result in additional cost expenditures.