Chipmaker Qualcomm and technology firm Arm are back in court, with a five-day jury trial kicking off in Delaware. Qualcomm has accused Arm of withholding crucial chip testing tools it was contractually owed and of leaking sensitive information about a potential termination of their licensing agreement to the media, which allegedly impacted a deal with Meta.
High Stakes in Licensing Dispute
The core of Qualcomm’s lawsuit revolves around accusations that Arm breached its contract by withholding chip testing tools. Furthermore, Qualcomm alleges that Arm threatened to terminate their significant licensing agreement in 2024 and subsequently leaked this threat to the press, specifically Bloomberg. This alleged leak caused Qualcomm’s potential chip deal with Meta to be devalued by $170 million.
Qualcomm is seeking to avoid paying potentially billions of dollars in royalties to Arm for up to five years. However, a decision on this aspect of the case rests with Judge Maryellen Noreika, who is considering whether to dismiss this part of the contract claim. If the judge rules against Qualcomm on this point, the company may only be able to pursue a reduced amount in damages.
The trial also delves into whether Arm negotiated in good faith regarding next-generation chip technology with Qualcomm. The current licensing agreement between the two companies is set to run until 2033.
Allegations and Counterarguments
During the opening statements, Qualcomm’s attorney, Karen Dunn, highlighted the alleged leak to Bloomberg, stating it occurred just as Qualcomm was nearing an agreement with Meta. Arm’s lawyer, Gregg LoCascio, countered this by telling the jury that Meta independently shifted its focus to AI glasses and reduced investment in VR headsets, thus implying Arm did not cause any financial harm to Qualcomm.
Qualcomm CEO Cristiano Amon testified on Monday. During his testimony, Qualcomm’s lawyers presented a chart purportedly showing an 1,800% increase in royalty fees for Arm’s Architecture version 10 (ARMv10) compared to version 9 (ARMv9).
Under cross-examination, Arm’s lawyers questioned Amon about his desire to adhere to the pricing structure of a 2013 architecture license agreement. This agreement capped royalties at $1.88 per chip for configurations with at least five CPU cores. Arm’s counsel argued that this pricing, established during the era of smaller smartphone chips, might be significantly underpriced for modern data center chips that can contain up to 288 CPU cores.
The questioning suggested that under this structure, Qualcomm might only be paying for five cores, receiving the remaining 283 cores without additional cost. Amon responded, “I don’t think so,” when asked about this interpretation.
A History of Legal Battles
This five-day trial marks another chapter in the ongoing dispute between Arm and Qualcomm. Arm initially sued Qualcomm in 2022, alleging breach of contract. However, Qualcomm secured a significant legal victory in 2024, adding complexity to their current legal confrontation.
