Qualcomm and Arm head to trial again, potential for huge damages in focus

Qualcomm and Arm Return to Court Over High-Stakes Chip Licensing Dispute

Legal Battle Between Qualcomm and Arm: Key Issues and Implications

By Tom Hals, Max A. Cherney and Stephen Nellis

Background of the Dispute

WILMINGTON, Delaware, Oct 5 (Reuters) - Chipmaker Qualcomm and chip tech firm Arm Holdings, long at loggerheads, will once again be in court on Monday with Qualcomm accusing Arm of withholding chip testing tools that were due under contract.

Qualcomm also alleges that Arm leaked to the media its 2024 threat to terminate a vital license agreement in a way that damaged discussions for a chip deal between Qualcomm and Meta Platforms.

The Lawsuit and Court Proceedings

Qualcomm's Claims and Legal Strategy

In the lawsuit brought before US federal court in Delaware, Qualcomm, one of Arm's largest customers, is seeking to quit paying royalties — potentially worth billions of dollars — to Arm for up to five years.

However, Judge Maryellen Noreika is weighing whether to throw out that term of the contract, which could mean Qualcomm would be able to seek only a smaller amount of damages.

Arm's Defense and Counterclaims

Arm, owned by Japan's SoftBank Group, has denied that it breached the contract and argued that it did not damage Qualcomm's chip deals which it described as speculative.

Arm has also countered that Qualcomm cannot seek damages for the leak of the Arm termination letter because Qualcomm leaked non-public details of antitrust probes into Arm to the media.

Impacts and Broader Context

Industry Implications

The five-day jury trial will mark yet another stage in the contentious relationship between the two firms.

Arm sued Qualcomm in 2022 alleging that Qualcomm had breached its contracts, though Qualcomm came away in 2024 with a key victory.

Future Negotiations and Technology Agreements

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

Expanding Business Strategies

Qualcomm is a major maker of chips for Android mobile phones but has expanded into other fields such as data center chips.

Arm's Role in the Chip Industry

Arm, which has for decades supplied fundamental chip design technology to Qualcomm and other chip firms such as Nvidia, has become a competitor to those customers by releasing chips of its own.

(Reporting by Tom Hals in Wilmington, Delaware and Max Cherney and Stephen Nellis in San Francisco; Editing by Edwina Gibbs)