ARM, the semiconductor design company that licenses its architecture to chipmakers, has terminated its chip design license with Qualcomm. Bloomberg News claims that ARM has sent Qualcomm a 60-day notice. However, it remains to be seen how Qualcomm will respond to this notice. If Qualcomm cannot resolve issues within the 60-day notice period, it will have to stop selling its products.
The surprising move has shocked the whole tech industry as It could have far-reaching implications. It also threatens the future of Qualcomm’s highly anticipated Snapdragon X Elite chip and its Oryon CPU cores. Qualcomm recently launched its next-generation Oryon cores that claim to outperform Intel’s Lunar Lake chip. So. Qualcomm calls the notice “more unfounded threats” and aims to resolve the issue in December trials.
Qualcomm reportedly makes around $39 billion annual revenue from chips built on Arm architecture. It also recently introduced the Snapdragon 8 Elite which will power so many smartphones. If ARM wants Qualcomm to stop selling ARM-based chips, it will affect so many other companies.
ARM is the go-to company for licensing its architecture to chipmakers, who use it to develop a wide range of processors. According to reports, ARM granted Nuvia two licenses in 2019: the Technology License Agreement and the Architecture License Agreement. These licenses were for developing data center-grade products and were non-transferable without ARM’s approval.
The dispute between Qualcomm and ARM began in 2022 after Qualcomm acquired Nuvia in 2021 without seeking ARM’s approval for the existing licenses. As a result, ARM terminated Nuvia’s licenses in 2022, claiming that the rights to these licenses did not transfer with the acquisition. Qualcomm, however, insists that the license transfer was valid and continued building new chips based on Nuvia’s designs. Now, ARM is demanding that Qualcomm destroy the Nuvia designs created before the acquisition.
If Arm succeeds in canceling Qualcomm’s license, it will disrupt Qualcomm’s plan to compete with Intel and AMD in the high-performance PC market. Not just the PC market, it will also affect the smartphone market and several other companies that use Qualcomm’s chips.
Qualcomm recently introduced the Snapdragon 8 Elite which uses second-generation Qualcomm Oryon CPU. Several smartphone brands have also confirmed to launch smartphones powered by Snapdragon 8 Elite. So, the dispute between ARM and Qualcomm has become a matter of concern for several other companies.
It is also important to note that Qualcomm also sells Snapdragon chips to various automobile companies including Honda, Hyundai, Mercedes-Benz, MBW, Volkswagen, and Volvo.
This incident will also affect the future of Copilot+ PCs because most of these devices are powered by Snapdragon X Elite chips. The Copilot+ PCs are supposed to revolutionize AI-driven computing and are tied to Qualcomm’s ability to deliver cutting-edge Arm-based processors. Now Microsoft will look at AMD and Intel for upcoming Copilot+ PCs.
It is important to note that Qualcomm needs that ARM license to keep selling its chips and ARM earns a big chunk of revenue from Qualcomm. Destroying their partnership seems a foolish decision. Most probably both companies will agree on a settlement out of court. If the issue goes to court, next year will be very difficult for the tech industry.
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