Qualcomm Wins Key Legal Battle Over Arm Licensing Dispute

Qualcomm did not breach Nuvia’s license agreement with Arm Holdings, a federal jury ruled. The Delaware jury also found that Qualcomm’s custom CPUs, which it uses in Microsoft PCs, are…

By Ishika Setia

December 25, 2024

2 min read

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Qualcomm did not breach Nuvia’s license agreement with Arm Holdings, a federal jury ruled. The Delaware jury also found that Qualcomm’s custom CPUs, which it uses in Microsoft PCs, are legally licensed by virtue of its existing deal with Arm.

Qualcomm Triumphs Over Arm in Licensing Dispute, Secures Rights to Custom CPUs

Qualcomm shares climbed 2.2% in after-hours trading on Friday after the verdict, while Arm shares fell 1.8%. Ann Chaplin, Qualcomm’s General Counsel, expressed satisfaction with the outcome, stating, “The jury affirmed Qualcomm’s right to innovate and confirmed that all the products in question are protected by our agreement with Arm. We remain committed to developing world-class products with our Oryon ARM-compliant CPUs.”

The dispute stemmed from Qualcomm’s 2021 acquisition of Nuvia for $1.4 billion, and Arm’s claim that the deal aimed to cut royalties. Arm sued in 2022 and revoked Nuvia’s chip license earlier this year. Qualcomm has argued that the acquisition enabled it to integrate Nuvia’s technology into its entire product portfolio, including smartphones, laptops, and advanced driver assistance systems.

Wall Street analysts believe the jury verdict, which found in favor of Qualcomm on two of the three counts, is a big win for the chipmaker. Bernstein’s Stacy Rasgon, among other analysts, pointed to the verdict’s implications with respect to Qualcomm’s roadmap and said the decision preserves its architectural license with Arm. He said the more decisive win was regarding Qualcomm’s CPUs that utilize Nuvia designs, noting an Outperform rating on Qualcomm and a price target of $215, and an Underweight on Arm with a target of $100.

Wells Fargo analyst Aaron Rakers called the decision a key win for Qualcomm that raised the hurdle any retrial by Arm would have to meet. The decision removes uncertainties related to Qualcomm’s Snapdragon Elite X AI PC chips and Snapdragon 8 Elite SoCs, he added. Likewise, J.P. Morgan’s Samik Chatterjee said the ruling clears legal uncertainties for Qualcomm while boosting its stance in future tussles.