Arm is suing Qualcomm, seeking to reverse Qualcomm’s $1.4 billion Nuvia purchase

Arm is suing Qualcomm, seeking to reverse Qualcomm's $1.4 billion Nuvia purchase
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Qualcomm logo is seen during the Munich Motor Show, IAA Mobility 2021 in Munich, Germany September 8, 2021. REUTERS/Wolfgang Rattay

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SAN FRANCISCO, Aug 31 (Reuters) – Chip technology company Arm Ltd, owned by Softbank Group Corp (9984.T)said Wednesday it had sued Qualcomm Inc (QCOM.O) and chip design firm Nuvia Inc, recently acquired by Qualcomm, for violating license agreements and trademark infringement.

Arm is seeking an injunction that would require Qualcomm to destroy designs developed under Nuvia’s licensing agreements with Arm. Arm claimed his approval was required before those could be transferred to Qualcomm.

Qualcomm, which acquired Nuvia for $1.4 billion last year, said Arm has no right to interfere with Qualcomm’s or NUVIA’s innovations. “Arm’s complaint ignores the fact that Qualcomm has broad, well-established licensing rights covering its custom CPUs, and we are confident that those rights will be upheld,” said Ann Chaplin, Qualcomm’s general counsel, in a statement.

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If Arm’s efforts are successful, it would essentially undo one of Qualcomm’s biggest strategic acquisitions in recent years. Continue reading

The lawsuit marks a major breach between Qualcomm and Arm, one of Qualcomm’s key technology partners. Qualcomm has relied on Arm since it stopped developing its own custom cores. But in recent years, companies have been at odds.

Some Qualcomm employees have privately complained that Arm’s pace of innovation is slowing, causing Qualcomm’s chips to fall behind Apple’s processors in performance.

Qualcomm bought Nuvia, which was founded by former Apple chip architects, to restart its efforts at making custom computer cores that would differ from the standard ARM designs used by competitors like Taiwanese chip designer MediaTek Inc. (2454.TW).

One of Qualcomm’s first goals with Nuvia’s technology is to target Intel Corp (INTC.O)and Advanced Micro Devices Inc (AMD.O). in the PC and laptop markets they now dominate. Qualcomm acquired Nuvia shortly after Apple gave up Intel to use its own chips, also based on Arm technology, in its Mac laptops.

Apple’s move revived Mac sales, and Qualcomm CEO Cristiano Amon told Reuters he wants to use Nuvia’s Arm-based designs to do the same for the Windows-based laptop market. Arm would still make more money because Qualcomm pays him a royalty for every chip sold that uses its technology. However, it’s possible that royalties could be lower as part of Nuvia’s deal with Arm.

The agreement underscores the interdependence of the two companies, said Bob O’Donnell of TECHnalysis Research

“Qualcomm’s ability to drive its PC (and potentially server) business depends entirely on Nuvia designs, and Nuvia is the primary vehicle for Arm to enter Windows PCs. So the companies have to work really well together if they want to have a meaningful impact on the PC market,” he said.

The deal was seen as a way for Qualcomm to reduce its reliance on Arm. Historically, most of Qualcomm’s chips have used cores licensed directly from Arm, while Nuvia’s cores use Arm’s underlying architecture but are custom designs.

For Qualcomm, using more custom core designs — a move Apple has also taken — could reduce some licensing costs for Arm in the short term and make it easier to move to a competing architecture in the long term.

A source close to Arm said its licenses with Qualcomm are not in dispute and that only technology developed under Nuvia’s licenses is challenged in the lawsuit.

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Reporting by Jane Lanhee Lee and Stephen Ellis; Edited by Nick Zieminski and David Gregorio

Our standards: The Thomson Reuters Trust Policy.

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