The AI Chip Licensing Battle Begins: Arm vs. Qualcomm

The high-stakes lawsuit between Arm Ltd and Qualcomm Inc began this Monday in a Delaware court, with the potential to impact the future of artificial intelligence computing. The legal dispute focuses on Qualcomm's use of Arm's intellectual property and a contractual disagreement regarding Qualcomm's $1.4 billion acquisition of the chip startup Nuvia in 2021.

The jury trial, which started with opening arguments, is set to continue until Friday. Following jury selection last Friday, both sides were given approximately 11 hours to present their cases.

Key figures expected to testify include Arm's CEO Rene Haas, Qualcomm's CEO Cristiano Amon, and Gerard Williams, the founder of Nuvia, who is currently serving as a vice president at Qualcomm and previously held a senior position in Apple's chip division.

At the heart of the case is the licensing agreement concerning Qualcomm's use of Arm’s intellectual property and the implications of purchasing Nuvia, which was founded by former Apple chip engineers, including Williams. Qualcomm's recently launched new low-power AI PC chips, which are expected to help Microsoft and others regain market share from Apple's laptops, utilized Nuvia's designs.

Both Nuvia and Qualcomm had licensing agreements with Arm under different financial terms. Arm insisted that the licensing conditions need to be renegotiated for Qualcomm to use Nuvia-based designs. Qualcomm argues that its existing licensing rights cover all custom-designed central processing units (CPUs) and expressed confidence that these rights will be upheld by the court.

In an unusual move, Arm did not seek monetary compensation but requested that Qualcomm be forced to destroy all Nuvia designs. Analyst Stacy Rasgon from Bernstein reported that Qualcomm pays Arm approximately $300 million annually.

UK-based Arm is a subsidiary of SoftBank Group, which went public in the U.S. in 2023.