Qualcomm, Arm Head Back to Court, Billions at Stake

Qualcomm and Arm Holdings returned to court today for another high-stakes legal battle, with billions of dollars in potential royalties at stake as the chipmakers fight over testing tools, licensing rights and an alleged leak that Qualcomm says hurt a potential deal with Meta Platforms.

Qualcomm, one of Arm’s largest customers, is seeking to stop paying royalties to Arm for up to five years under a contract between the companies. The payments could be worth billions of dollars.

Qualcomm has accused Arm of withholding chip-testing tools that it says were required under their agreement. It also alleges that Arm leaked to the media a 2024 threat to terminate a key license agreement, damaging negotiations for a chip deal between Qualcomm and Meta.

Arm, which is owned by Japan’s SoftBank Group, denies breaching the contract and has argued that Qualcomm cannot establish that the alleged conduct caused financial harm to its chip business. Arm has described Qualcomm’s claims about lost deals as speculative.

U.S. District Judge Maryellen Noreika is considering whether to strike the provision that would allow Qualcomm to stop paying royalties. If she does so, Qualcomm could be limited to seeking a smaller amount of damages.

Arm has also argued that Qualcomm cannot recover damages over the alleged leak of its termination letter because Qualcomm itself disclosed non-public details of antitrust investigations involving Arm to the media.

The five-day jury trial is the latest escalation in a dispute that has exposed tensions between Arm and one of its most important customers.

Arm sued Qualcomm in 2022, accusing the company of breaching its contractual obligations after Qualcomm acquired chip design company Nuvia. Qualcomm prevailed on a key issue in a 2024 trial, strengthening its position to continue using technology covered by its existing Arm licenses.

The dispute has broader implications for the semiconductor industry because Arm’s architecture is used extensively in smartphones and increasingly in other markets, including personal computers, automotive technology and data centers.

In a related bench trial, Noreika will also hear arguments over whether Arm has negotiated in good faith with Qualcomm over the next generation of Arm’s chip technology. Qualcomm’s agreement with Arm runs through 2033.

Qualcomm is a major supplier of processors for Android smartphones and has been expanding into data-center chips and other markets as it seeks to reduce its dependence on mobile devices.

Arm has for decades supplied fundamental chip-design technology to Qualcomm and other semiconductor companies, including Nvidia. But Arm has increasingly moved closer to competing with those customers by developing and licensing chips and other products of its own.

The companies’ increasingly competitive relationship has added pressure to a business model in which Arm licenses its underlying chip architecture to semiconductor companies and collects royalties when those designs are used in commercial products.

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