Key Points
- Qualcomm confirmed that Arm has no plans to terminate its Architecture License Agreement (ALA).
- The legal dispute originated from Qualcomm’s acquisition of Nuvia and the use of its CPU designs.
- Arm claimed a $50 million annual loss in royalties due to Qualcomm’s failure to renegotiate Nuvia’s license.
- Although Qualcomm won the case, Arm may seek a retrial regarding Nuvia’s contractual obligations.
Qualcomm CEO Cristiano Amon confirmed during the Q1 2025 earnings call that Arm has no plans to terminate Qualcomm’s Architecture License Agreement (ALA). This statement follows Qualcomm’s legal victory over Arm in a dispute regarding custom CPU core designs acquired through Nuvia.
The legal battle began when Qualcomm purchased Nuvia and integrated its CPU designs into its Snapdragon chips, specifically the Oryon CPUs. Arm objected, arguing that Nuvia’s designs could not be transferred without prior approval. As a result, Arm terminated Qualcomm’s license and demanded that Nuvia’s blueprints be destroyed.
Arm also claimed it lost approximately $50 million annually in royalties due to Qualcomm’s failure to renegotiate Nuvia’s license after the acquisition. However, Qualcomm countered that its Oryon CPU cores contain less than 1% of Arm’s original technology, making them largely custom-built.
Despite Qualcomm’s legal win, Arm remains dissatisfied with the outcome. The jury was unable to reach a unanimous decision on whether Nuvia breached its original contract with Arm, leaving room for potential further legal action. There is a possibility that Arm may seek a retrial to clarify this unresolved issue.
From a financial perspective, Arm’s loss in court does not appear to impact its revenue forecasts. Arm CFO Jason Child stated that the company had already anticipated the outcome and assumed Qualcomm would continue paying royalties under the existing ALA and other agreements. Child emphasized that the lawsuit was primarily about protecting Arm’s intellectual property rather than financial compensation.
While Arm failed to force Qualcomm into a new licensing agreement, it still benefits from Qualcomm’s market performance. In its latest earnings report, Qualcomm announced an 18% year-over-year revenue increase and a 15% rise in net income. The company also reported capturing 10% of the U.S. Windows PC retail market for devices priced at $800 and above. Similarly, Arm experienced an 18% revenue increase during the same period, highlighting the interconnected nature of both companies despite their legal conflicts.
