Chip titans in legal clash: Arm and Qualcomm in court

In a highly anticipated legal confrontation, chip giants Arm and Qualcomm will face off in Delaware this week. The proceedings promise deep insights into the broken alliance of the former partners, who have become estranged over the $1.4 billion acquisition of a startup. At the center of the dispute is Qualcomm's takeover of California-based chip designer Nuvia in 2021. Arm, supported by SoftBank, accuses Qualcomm of failing to obtain the necessary approvals for the transfer of Nuvia's license, thus unlawfully using Arm technology. Qualcomm argues that its existing license with Arm is sufficient. For the first time in its 34-year corporate history, Arm has sued one of its largest clients to protect its intellectual property. This public dispute reveals previously secret licensing agreements. Qualcomm, on the other hand, is experienced in IP disputes, such as the spectacular one with Apple, which was settled in 2019. Instead of seeking financial compensation, Arm demands the destruction of the allegedly infringing products. A termination of the license looms if Qualcomm does not respond to the allegations. This could lead to mutual losses: for Qualcomm, the loss of Arm's architecture, and for Arm, the loss of a significant customer. Qualcomm has filed a counterclaim. An ultimatum from Arm to address the concerns expires alongside the trial's conclusion. Nuvia was co-founded by Gerard Williams, a former top designer for Apple chips, who will also appear as a witness. Should Arm win the case, it will be up to Judge Maryellen Noreika to determine appropriate measures. An appeal by the losing party seems likely. Bernstein analyst Stacy Rasgon assesses the escalation skeptically and considers a settlement sensible since both companies rely on each other.