David Byrne, Life During Wartime

Arm Yanks Qualcomm’s Architecture License as Dispute Festers

We go to the mattresses.

Bloomberg reports Arm is yanking Qualcomm’s architecture license in their unresolved dispute arising from Qualcomm’s acquisition of Nuvia, which developed the Oryon CPUs in the newest Snapdragon PC and smartphone processors. The two companies have been battling since 2022. The license cancellation comes days before the two head to trial and days after Qualcomm deposed Masa Son, the prominent head of SoftBank, which owns the majority of Arm. It also comes as Qualcomm is launching the initial Oryon-based smartphone chip and months after the company shipped the first successful Arm-compatible, Oryon-based processor for Windows PCs.

Well, How Did I Get Here?

The Qualcomm-Arm architecture license agreement (ALA) dates back more than 10 years, although the chipmaker has mostly licensed Arm designs since then. Seeking to return to developing its own CPUs, Qualcomm acquired Nuvia, a startup with its own ALA.

Before an acquisition closes, the acquiring company goes through the target’s contracts and notifies the counterparties of the pending deal. In 2021, when Qualcomm notified Arm of its intent to take over Nuvia, Arm asked for a one-time fee and for Qualcomm to pay Nuvia’s higher royalty rate. Asserting it was covered by its earlier ALA but with the matter still in dispute, Qualcomm refused and continued Oryon development.

Nuclear Option

In the run up to its 2023 public offering, Arm was keen to boost its royalties but also would’ve benefited from settling disputes. Qualcomm was also in a better position to halt Oryon development. It could fall back to licensing Arm Cortex CPUs or throw its weight behind RISC-V, delaying its renewed push into PCs and upheaving smartphones, the foundation of Arm’s business.

Nonetheless, the parties didn’t settle. Arm is public, Qualcomm is in a disadvantageous position because it has Oryon-based chips in the market, and Windows’s Arm compatibility has leapt forward. Halting the new Snapdragons’ sales would disrupt Qualcomm and its customers.

To adapt, smartphone customers could either continue using Snapdragon models employing Cortex CPUs or adopt the MediaTek Dimensity 9400 for their flagship devices. Computer customers seemingly don’t have easy Arm-compatible options; therefore, Arm appears to be acting against its own interests. However, there’s a chance that competitive Arm-compatible PC processors will soon be available from companies such as AMD, MediaTek, Nvidia, or Samsung. In that case, from Arm’s perspective, Qualcomm is expendable.

Bottom Line

With 15% of its revenue coming from licensing, Qualcomm is no stranger to the business and has battled and prevailed against bigger adversaries than Arm. Because its patents are essential to 5G and other technologies, it’s accustomed to settling disputes in less than amicable terms. In this case, Arm is the licensor of an important—but nonessential—technology. Therefore, while it wants more money, Arm also can’t afford to scare other licensees or OEMs from employing its instruction set.

Nonetheless, Arm blocked the smooth transfer of Nuvia technology to Qualcomm and has again escalated the dispute, appearing capricious, unreliable, and greedy. In the coming months, the release of new Arm PCs employing non-Qualcomm chips and MediaTek-based flagships from erstwhile stalwart Qualcomm customers would reveal Arm had a strong hand when it made this recent move. Otherwise, Qualcomm will call the company’s bluff.


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