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Arm is the company inside every phone you can buy today. It designed the processor architecture that companies like Qualcomm, Apple, Google, and MediaTek use to build chips, as well as the processors from companies like Nvidia that power the AI future. They’re a pretty big deal. That’s why Nvidia tried to use its deep pockets to buy Arm outright in a deal that was thankfully blocked by the FTC.
They also gave Qualcomm a 60-day notice to stop making those chips. Yes, the company that powers a large portion of phones and tablets around the globe has to stop making the main product it sells. Maybe.
Of course, each side is quick to say why they are on the right, and the other side isn’t. Qualcomm says in a statement:
This is more of the same from ARM – more unfounded threats designed to strongarm a longtime partner, interfere with our performance-leading CPUs, and increase royalty rates regardless of the broad rights under our architecture license. With a trial fast approaching in December, Arm’s desperate ploy appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed. Arm’s anticompetitive conduct will not be tolerated.
And Arm’s statement:
Following Qualcomm’s repeated material breaches of Arm’s license agreement, Arm is left with no choice but to take formal action requiring Qualcomm to remedy its breach or face termination of the agreement. This is necessary to protect the unparalleled ecosystem that Arm and its highly valued partners have built over more than 30 years. Arm is fully prepared for the trial in December and remains confident that the Court will find in Arm’s favor.
Let’s be real for a minute — this won’t happen. The two companies will reach a last-minute agreement that allows Qualcomm to keep making chips because Qualcomm is dead if they’re forced to stop making money. This is Arm playing hardball with Qualcomm because it thinks Qualcomm was playing fast and loose with the terms of a contract.
How did we get to this point? In 2021 Qualcomm spent $1.4 billion to buy Nuvia, a company that designed and built high-powered Arm chips for servers. The acquisition itself was a little touch and go because Nuvia’s founder was a chip designer for Apple and was under an agreement that the company would not build chips that compete with Apple products.
There was a problem though. Nuvia had a license from Arm to use the company’s architecture and original designs, which Arm says was not transferrable. Qualcomm claimed differently and integrated Nuvia’s work into its own chips without renegotiating a new contract. It sounds really dumb to us, but Arm says Qualcomm wasn’t legally allowed to use the ideas it paid for because they were based on ideas of another company. This is the type of thing that allows lawyers to exist.
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