Qualcomm fends off lawsuit by Arm for violating chip design license

(Bloomberg) — Qualcomm Inc. has prevailed in court against Arm Holdings Plc’s claim that the company violated a license for chip technology that the world’s largest maker of mobile phone processors acquired when it bought a startup in 2021.

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A federal court jury in Delaware concluded Friday that Qualcomm did not violate the terms of an agreement covering Arm’s chip products, acquired as part of a $1.4 billion purchase of Nuvia Inc., by Qualcomm integrated the technology into its chips without paying a higher license fee. Jurors could not agree on whether Nuvia violated the license, and U.S. District Judge Maryellen Noreika said the matter could be retried at a later date.

Qualcomm is one of Arm’s largest customers and a longtime partner, but the companies have become increasingly at odds as they have become competitors in the computer processor industry. The dispute is important because many of the world’s largest technology companies rely on a chip architecture licensed by Arm and integrated into Qualcomm products, ranging from computers to cars.

Qualcomm rose about 2.6% in late trading Friday, while Arm fell about 2%.

“The jury affirmed Qualcomm’s right to innovate and confirmed that all Qualcomm products at issue in this case are protected by Qualcomm’s contract with Arm,” Qualcomm said in a statement.

Arm had no immediate comment.

Arm claimed its Nuvia agreement should have been renegotiated after Qualcomm bought the startup and demanded the San Diego-based company destroy the designs it received as part of the acquisition. Qualcomm – which is relying on Nuvia’s technology to break into the computer processor market – argued to jurors that it had a separate general license for Arm innovations that covered its work.

UK-based Arm, which is majority owned by Japan’s SoftBank Group Corp. is located, sells chip designs and licenses a so-called instruction set – code used by software to communicate with processors. Qualcomm is the largest chip supplier to cellphone makers such as Samsung Electronics Co.

The chief executives of both companies testified in the weeklong trial, which was filed in Delaware because Qualcomm is based in the state, which is home to nearly 70% of Fortune 500 companies. The Delaware federal court is also a U.S. center for patent infringement and licensing disputes.

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