Qualcomm accuses Arm of anticompetitive conduct as its license is terminated due to 'repeated material breaches of Arm's license agreement'

(Image credit: Arm)

Shortly after the report about the cancellation of Qualcomm's Arm architecture license agreement (ALA) was published, the companies involved traded further accusations. Arm has confirmed that it decided to terminate Qualcomm's ALA to 'protect the unparalleled ecosystem,' whereas Qualcomm accused Arm of anticompetitive conduct.

"Following Qualcomm's repeated material breaches of Arm's license agreement, Arm is left with no choice but to take formal action requiring Qualcomm to remedy its breach or face termination of the agreement," a statement by Arm reads. "This is necessary to protect the unparalleled ecosystem that Arm and its highly valued partners have built over more than 30 years. Arm is fully prepared for the trial in December and remains confident that the Court will find in Arm's favor."

Arm gave Qualcomm a 60-day notice to comply with the requirements, or face termination of its Arm architecture license, which enables Qualcomm to create custom chips using Arm's instruction set architecture. If the issue is not resolved, Arm will require Qualcomm to stop selling several products, including Snapdragon X Elite processors for client PCs that contain Oryon general-purpose processor cores originally developed by Nuvia (now part of Qualcomm).

This action follows a legal dispute in which Arm accuses Qualcomm and Nuvia of breaching licensing agreements and misusing its trademark after Qualcomm acquired Nuvia in 2021. The trial is set to begin this December. Arm claims that Qualcomm failed to renegotiate the ALA terms post-acquisition and is demanding the destruction of Nuvia's pre-merger designs which are de-facto on the market already. Qualcomm, however, argues that its existing Arm architecture license already covers Nuvia's work. That said, Qualcomm accuses Arm of anti-competitive misconduct.

"This is more of the same from Arm — more unfounded threats designed to strongarm a longtime partner, interfere with our performance-leading CPUs, and increase royalty rates regardless of the broad rights under our architecture license," a statement by Qualcomm reads. "With a trial fast approaching in December, Arm's desperate ploy appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. We are confident that Qualcomm's rights under its agreement with Arm will be affirmed. Arm's anticompetitive conduct will not be tolerated."

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Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

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7 Comments Comment from the forums

nrdwka

Looks like by forcing "I want more money" stans, Arm give time time to x86 to counter arm Dev in pc space on one hand and give more reasons to turn to RISC V instead of arm architecture, on other hand...
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ezst036

I thought Qualcomm had an ARM license anyways prior to the Nuvia purchase.
Reply
ThisIsMe

ezst036 said:
I thought Qualcomm had an ARM license anyways prior to the Nuvia purchase.

It did. But, Nuvia had its own license to produce its own custom cores/CPUs. When Qualcomm finalized the purchase of Nuvia, it decided it no longer had to honor the agreement between Nuvia and ARM. Therefore, it was no longer obligated to pay for Nuvia’s license and thus stopped the payments.

So, Qualcomm claims its preexisting license agreement allows it to make whatever it wants. Meanwhile, ARM claims that Nuvia’s license agreement still applies to any of its IP, is different from Qualcomm’s license, and requires continued renewal in order to use Nuvia’s IP, or even keep its designs at all.
Reply
ezst036

ThisIsMe said:
It did. But, Nuvia had its own license to produce its own custom cores/CPUs. When Qualcomm finalized the purchase of Nuvia, it decided it no longer had to honor the agreement between Nuvia and ARM. Therefore, it was no longer obligated to pay for Nuvia’s license and thus stopped the payments.

So, Qualcomm claims its preexisting license agreement allows it to make whatever it wants. Meanwhile, ARM claims that Nuvia’s license agreement still applies to any of its IP, is different from Qualcomm’s license, and requires continued renewal in order to use Nuvia’s IP, or even keep its designs at all.
Thanks. That's what I thought.

It sounds like ARM is the one being anti-competitive here dictating against the use of specific IP. That is arrogantly bold. The irony is that some years ago when Nvidia was trying to purchase ARM this is some kind of shenanigans that people were afraid of happening.

Now ARM is doing it without even being owned by Nvidia. The end result has become the same. What this means then is if (made up example) Apple purchased Ampere then Apple could never use anything out of Ampere's ARM core designs otherwise ARM would sue them.

I will stipulate though, since these contracts are not public knowledge that I am aware of. If Qualcomm's own ARM contract specifically says they cannot use other core/design technologies then it does fall on them all along.
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DS426

Whoa, shots fired!! *heads down until the smoke clears*

I'm not a business law expert, but this seems like a rather trivial scenario. M&A's happen all the time in the U.S.

I also feel like Qualcomm has the upper hand here. Either way, both parties should be renegotiating their contracts after the acquisition of Nuvia was completed, but if that hasn't happen, it's a break-down on both sides -- not specifically Qualcomm's fault. Additionally, I'd expect that a licensing agreement would only apply to now and in the future, not retroactively. If it does apply retroactively, Arm's "partners" need to wise up and try to form more favorable terms.

All this does make it seem like Arm's motivation is greed. Probably not a good idea to be that way or seem that way as it incentives partners to jump ship to RISC-V, especially Qualcomm who has the size and resources to develop competitive products on alternative ISA's.
Reply
jlake3

ezst036 said:
If Qualcomm's own ARM contract specifically says they cannot use other core/design technologies then it does fall on them all along.
That's sort of what ARM is alleging in the lawsuit. Their claim is that Nuvia and Qualcomm's ALAs had different terms (and different royalty structures), and that Nuvia had a license to design and produce cores based on the ARM IP but not to transfer those designs to others without ARM's blessing (and rent seeking), and that Qualcomm's license covered designs "created at Qualcomm, by Qualcomm engineers and Qualcomm subsidiaries during the period while those entities were subsidiaries of Qualcomm, licensed subject to the terms of that ALA".

So Qualcomm could use other core designs, if they were developed in house. Or Qualcomm could have kept Nuvia's ALA as well as their own, and produced Oryon under the Nuvia ALA (which is believed to have much higher per-chip fees than the Qualcomm ALA because the original stated intent was datacenter). Or Qualcomm could have negotiated with ARM to change the ALA terms, which ARM would 100% use as a chance to extract money from them.

The fact you can't buy/sell/transfer core designs that compete with ARM's designs without their approval (and likely fee extraction) seems problematic, but it seems that Nuvia and Qualcomm both agreed to it, and I haven't seen any good counter-arguments from Qualcomm about why ARM's allegations are wrong or which specific allegations are false, just a general insistance they're in the right and ARM is bullying them. Maybe there's something good that's not public yet they're sitting on.
Reply
AkroZ

DS426 said:
All this does make it seem like Arm's motivation is greed. Probably not a good idea to be that way or seem that way as it incentives partners to jump ship to RISC-V, especially Qualcomm who has the size and resources to develop competitive products on alternative ISA's.
Most of their clients use Android or Windows. If it is doable to port Android to RISC-V (project started end of 2023) as Android is a Linux distribution and most applications use the Java Virtual Machine, for Windows they need to ask Microsoft to do it.
They are leader in ARM processors, all there business is on it. They can't easily change it, it will need many years, but yes Qualcomm and others clients of ARM have already started to make RISC-V products as a rescue solution. Qualcomm produce a RISC-V cpu for smartwatch.
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