Arm gives up on killing off Qualcomm's vital chip license

The British are coming, the British are coming ... to terms with their loss

Arm has given up on terminating one of its key licenses with Qualcomm, leaving the latter free to continue producing homegrown Arm-compatible chips for PCs, phones, and servers.

The Brit biz had sought to end that license in a lawsuit it brought against Qualcomm in 2022. That suit is rooted in Qualcomm's 2021 acquisition of a startup called Nuvia, which was co-founded by the brains behind Apple's custom processors and had signed an architecture license agreement (ALA) with Arm that allowed it to design its own Arm-compatible CPU cores.

Nuvia produced CPU blueprints so fine that Qualcomm, also an Arm ALA licensee, decided to buy the company and use the upstart's custom core designs in future Snapdragon system-on-chips. Those CPU designs were marketed by Qualcomm under its Oryon brand.

Arm didn’t like any of that for an array of reasons – one being that, in Arm's mind, Nuvia wasn't allowed to transfer its Arm-derived designs to Qualcomm without Arm's prior approval – and claimed in its lawsuit that Nuvia and Qualcomm were in breach of their agreements with Arm. The Softbank-owned biz went as far as seeking to end its ALA with Qualcomm – which would leave Qualy unable to develop or ship chips relevant to that license – and demanded the destruction of Nuvia CPU blueprints as well as compensation.

The matter wound up in court last year and a jury largely found in Qualcomm’s favor.

On Wednesday, Qualcomm’s latest quarterly financial report [PDF] revealed Arm had indicated on January 8, 2025 it was no longer seeking to kill off Qualcomm's ALA.

During Qualcomm’s Q1 2025 earnings conference call with Wall Street, CEO Cristiano Amon confirmed Arm “has no current plan to terminate the Qualcomm Architecture License Agreement. We're excited to continue to develop performance leading, world-class products that benefit consumers worldwide that include our incredible Oryon custom CPUs.”

Oryon features in the Snapdragon X Series and Snapdragon 8 Elite SoCs that respectively power PCs and high-end smartphones. Both products have won plaudits. The Snapdragon X Series were at one point the only processors Microsoft had certified for powering AI-crammed Windows Copilot+ PCs. Samsung will use only the 8 Elite in its flagship Galaxy S25 smartphones, after previous models shipped with either Qualcomm or its own Exynos parts.

On the other side of the fence, Arm noted in a regulatory filing [PDF] that post-trial motions had been filed on both sides to clarify the legal situation following the jury's verdicts, and a new trial may be sought.

On its own latest quarterly earnings call, which like Qualcomm’s took place on Wednesday, Arm’s CFO Jason Child was asked about the impact of the case. He said Arm’s revenue forecasts assumed the biz was "not going to prevail in that lawsuit," and that it expected to continue receiving payments from Qualcomm, which licenses various technologies from Arm and doesn't just hold an ALA.

“The primary reason for the lawsuit very much was around defending our IP and that's important," Child said. "But from a financial perspective, we had assumed that we'll continue to be receiving royalties at basically the same rates that they've been paying for in the past and will continue to pay."

Qualcomm continues to pursue another case against Arm, alleging the UK outfit didn’t honor some of its contractual obligations. Arm reckons that matter will reach the courts in the first half of 2026.

Now let’s talk money and AI

Qualcomm’s latest financial figures, which cover the three months to December 29, 2024, record $11.7 billion in revenue, an 18 percent year-on-year jump. Net income grew 15 percent to reach $3.18 billion. $10.1 billion of revenue came from chip sales, the first time Qualcomm topped $10 billion in a single quarter.

Arm’s revenue for the three months to December 31, 2024 grew 18 percent year-on-year to reach $983 million. Net income was $252 million, topping the result from the same quarter last year by $28 million (Arm’s net income bounces around a lot).

On their earnings calls, both companies were asked the question of the moment: Will DeepSeek’s apparently meager appetite for compute power be bad for business?

Neither is troubled.

More analysis: How much money does Arm make in the datacenter?

Qualcomm's big cheese was excited by the availability of small-but-powerful large language models (LLMs) that can run on-device, and said his company will ensure sure its silicon make that possible.

Arm CEO Rene Haas had a slightly different take, admitting that today’s smartphone chips were designed before LLMs appeared.

“We're in a phenomenal time in our industry where the compute demands are outpacing the silicon to serve it,” he said. “We get lots of questions about the smartphone market and the AI capabilities to harness what's going on inside there. You have to remember that these smartphones were - the chips for these smartphones were designed two, three years ago, the memory subsystem, the power, everything was predefined."

“So, to be able to fit these small language models or anything that goes inside the phone is quite a challenge given the fact that you still have to run a display, you still have to run an operating system, you still have to run apps,” he added.

Arm will try to develop products faster so device-makers have the kit they need to make on-device LLMs sing. Or draw, write, and otherwise improve apps and OSes. Allegedly. ®