Arm Holdings is terminating Qualcomm's license to utilize ARM intellectual property. This action, which will be finalized in 60 days, could scrub Qualcomm's latest Snapdragon X Elite desktop chipsets from the market and derail the company's upcoming Snapdragon 8 Elite platform.
Many people feel that Qualcomm and the ARM architecture are inseparable. It's hard to talk about one without talking about the other. Yet Qualcomm and Arm Holdings—the company behind the ARM ISA—are not in good standing. They're set to appear in court this December for breach of contract and trademark infringement.
The legal battle between these parties began during Qualcomm's 2021 acquisition of Nuvia, a datacenter-grade chipset designer that was licensed to design custom ARM cores and modify Arm Holdings' intellectual property. Arm Holdings argues that the licenses held by Nuvia are non-transferrable and must be renegotiated or dissolved, while Qualcomm insists that the opposite is true.
Defiantly, and perhaps foolishly, Qualcomm developed an Oryon CPU core that could infringe on these contested licenses. And the Oryon isn't just some obscure piece of technology—it's Qualcomm's entryway to the PC market. Snapdragon X Elite chipsets that utilize the Oryon design are at the center of Microsoft's Windows on ARM rollout and Copilot+ AI marketing scheme. Investors and PC brands are salivating over this disruptive venture. The industry is tangled up in Qualcomm's gamble.
In other words, the timing of this license termination is impeccable. Qualcomm now faces intense pressure from investors and partner brands who are keen to cash in on the innovative, disruptive Snapdragon X Elite platform. The license termination notice has also interrupted Qualcomm's annual Snapdragon Summit, potentially eroding any market gains that Qualcomm made when announcing the Oryon-based Snapdragon 8 Elite mobile chipset. Qualcomm's stock price dropped 5.13% on the morning of October 23rd, and some analysts reduced their price target for the asset after Bloomberg broke news of the license termination.
Note that Arm Holdings and Qualcomm have not published a copy of the licensing termination notice. We don't know when it was sent to Qualcomm, so we don't know when the 60-day waiting period will come to an end. That said, Arm Holdings wants to renegotiate the disputed licenses—it wants more money from Qualcomm, and it wants a speedy trial, too. We can assume, at least for now, that the license termination falls sometime in December during the companies' court appearance.
To reiterate, the soon-to-be terminated licenses only pertain to chipsets that utilize Arm Holdings IP. Termination could prevent Qualcomm from manufacturing or selling Snapdragon Elite-series chipsets, assuming that Qualcomm actually complies with the decision. This could disrupt the flow of Windows on ARM laptops and delay some upcoming Android phones, though Qualcomm would still be allowed to build and sell ARM-based processors that are not based on Arm Holdings' intellectual property.
Source: Bloomberg