Key facts
- Qualcomm is suing Arm Holdings, alleging breach of contract and improper leak of information.
- Qualcomm seeks to avoid paying royalties to Arm for up to five years, potentially worth billions.
- Qualcomm claims Arm's actions damaged a chip deal with Meta Platforms by $170 million.
- Arm is seeking an 18,500% increase in royalty rates for its chip architecture.
- A judge is deciding whether to limit Qualcomm's potential damages.
Qualcomm and Arm Holdings have begun a trial in Delaware, with Qualcomm accusing the chip technology firm of withholding essential chip testing tools and leaking a notification of a potential license termination to the media. Qualcomm alleges that Arm's actions damaged discussions for a chip deal with Meta Platforms, costing Qualcomm $170 million.
In its lawsuit, Qualcomm, a major customer of Arm, is seeking to cease paying royalties for up to five years, a move that could amount to billions of dollars in lost revenue for Arm. Qualcomm's attorney argued that Arm's alleged leak of a breach notice to Bloomberg News caused Meta to become concerned about Qualcomm's licensing status.
Arm's legal team countered that Meta's shift towards AI eyeglasses and away from virtual reality headsets, rather than Arm's actions, led to adjustments in financial terms for Qualcomm's chips. Arm's attorney also questioned Qualcomm CEO Cristiano Amon about the fairness of a 2013 licensing deal that capped royalties per chip, arguing it is now under-priced given the increasing number of processor cores in modern chips.
Judge Maryellen Noreika is also presiding over a related bench trial to determine if Arm negotiated in good faith for the next version of its chip technology. The outcome of these trials could significantly impact Arm's revenue and Qualcomm's operational costs.