Qualcomm’s central processors are properly licensed under an agreement with Arm Holdings, a jury found in a lawsuit in US federal court that covered some, but not all, of the mobile chip maker’s expansion into the laptop market. The uncertainty has been removed.
A week of court debates and deliberations ended in a mistrial after the jury in the trial between the two chip giants failed to resolve one of the three questions put before it. Qualcomm said the results confirmed its right to innovate, but Arm vowed to conduct a new trial.
Arm shares were down 1.8% in extended trading after the news, and Qualcomm shares were up 1.8%.
The outcome means the case could be tried again in the future – something Arm vowed to do in a statement after the verdict. Judge Maryellen Noreika, who presides over the case in US federal court in Delaware, encouraged Arm and Qualcomm to mediate their dispute.
Noreika told the parties, “I do not believe that if this case were reheard, there would be or would be a clear victory for either side.”
After deliberating more than nine hours over two days, an eight-member jury could not reach a unanimous verdict on the question of whether startup Nuvia violated the terms of its license with Arm.
But the jury found that Qualcomm — which bought Nuvia for $1.4 billion in 2021 — did not violate that license.
The jury also found that Qualcomm’s chips, which are made using Nuvia technology and are central to Qualcomm’s push into the personal computer market, were properly licensed under its own agreement with Arm, allowing Qualcomm to The way has been cleared for selling them.
“The jury has affirmed Qualcomm’s right to innovate and confirms that all Qualcomm products in the case are protected by Qualcomm’s contract with Arm,” Qualcomm said in a statement.
An Arm spokesperson said the company was “disappointed” that the jury was unable to “reach consensus” regarding the company’s claims and said the goal from the beginning has been to protect the company’s intellectual property.
For now, the result paves the way for Qualcomm to pursue “AI PCs” in laptop chips, aimed at handling tasks like chatbots and image generators. This is a market where Nvidia, Advanced Micro Devices and MediaTek are also planning to make Arm-based processors.
“My biggest concern was what would happen to the future roadmap if they (Qualcomm) no longer had access to the Nuvia (computing) cores,” said Bernstein analyst Stacey Rasgon. “At this point, that risk is very close to being off the table.”
The dispute between Arm and Qualcomm centers on what royalty rate Qualcomm should pay for each chip. Nuvia was prepared to pay higher rates than Qualcomm before Qualcomm bought the startup firm and turned its technology into chips at lower royalty rates with Arm.
Ben Bajarin, chief executive of tech consulting firm Creative Strategies, said Arm’s current growth projections are not dependent on receiving higher rates from Qualcomm as Arm chips enter the PC market.
“They haven’t focused on winning through their quarterly (earnings) calls,” Bajarin said. “So none of this changes their economic situation. It’s really just a matter of contractual logic.”
However, the test results leave open the question of where Arm’s technology begins and ends. Arm licenses its computing architecture to companies, but also sells designs for computing cores as off-the-shelf products.
Some of Arm’s more sophisticated customers, such as Apple, Qualcomm, and Nuvia, license Arm’s architecture but develop their own custom cores. During the trial this week, Arm’s lawyers insisted its architecture license terms with Nuvia give it the right to demand Nuvia destroy its custom core designs.
“This has implications for the entire industry,” Jim McGregor of Tirias Research said in an interview. “Whether you’re using a standard Arm core, or developing your own Arm core, it has been the basis for everything from electric toothbrushes to satellites.”
© Thomson Reuters 2024
