Qualcomm is the company behind the chips in many of the devices we use every day, including smartphones and laptops. However, it may soon lose its license to use technology developed by its partner Arm.

Qualcomm has been locked in a long-running legal battle with Arm, the company that designs the instruction sets and components for the computer chips it licenses to companies like Qualcomm. However, Bloomberg reports that Arm is now trying to terminate its licensing agreement with Qualcomm, giving Qualcomm 60 days notice of termination before withdrawing permission to use Arm-based technology.

The source of this entire dispute is that Qualcomm acquired a third company, Nuvia, in 2021, and because Nuvia itself had a license agreement with Arm, Arm is now claiming that Qualcomm must stop developing Nuvia's technology, scrap designs created before the acquisition, and negotiate new Arm filed suit, claiming that Qualcomm had to cease development of Nuvia's technology, scrap the designs created prior to the acquisition, and negotiate new license terms. Qualcomm, on the other hand, counterclaimed that its current agreement with Arm is still in effect and business can continue as usual.

Nuvia is the source for Qualcomm's Oryon series CPUs, including the newly announced Snapdragon 8 Elite chip for next-generation Android flagship phones. It is a critical part of Qualcomm's business, which is why it is so difficult to solve this problem and why Arm has decided to make it a bigger issue.

We have received statements from both companies involved regarding this dispute. A Qualcomm spokesperson stated:

“This is more of the same from ARM, including strong-arming longtime partners, interference with our performance-leading CPUs, and threats to increase royalty rates regardless of our broad rights under our architecture license. With the December trial looming, Arm's desperate ploy to disrupt the legal process and its claims of contract termination are completely unfounded. We are confident that Qualcomm's rights under the agreement between Qualcomm and Arm will be upheld; Arm's anti-competitive conduct will not be tolerated.”

Arm, on the other hand, stated. “Qualcomm's repeated material breaches of Arm's license agreements have left Arm with no choice but to take formal action against Qualcomm to correct the breaches or face termination of the agreements. This is necessary to protect the unparalleled ecosystem that Arm and its very important partners have built over more than 30 years, and Arm is fully prepared for trial in December and is confident that the court will rule in Arm's favor.”

Many of the best phones use Qualcomm silicon, and several companies have already confirmed that they will use the new Snapdragon 8 Elite chip in their upcoming phones. But equally important are AI PC laptops powered by Qualcomm's Snapdragon X Elite, which uses the same Arm technology. This is a rapidly developing category that is causing a lot of excitement, as these laptops have for years used Intel and AMD chips (running on a different underlying technology called x86) that run hot and consume more power. If Qualcomm loses its license, computer, smartphone, and other device makers will have to quickly find replacement chips to put in their upcoming gadgets.

If the license were to be suspended, Qualcomm could enter into a separate agreement to use Arm's own full chip design. However, this would be expensive given the cost of obtaining a new license and the loss of existing developments that could no longer be used.

Arm has given Qualcomm 60 days to comply. This means that there is still time for the two parties to reach an agreement before further legal action is taken. Otherwise, there could be significant disruption to the entire technology community.