Last update:October 25, 2024, 12:00 PM IST

Chip firm Arm is canceling an architecture license agreement that allows Qualcomm to use its intellectual property to design chips, a person familiar with the matter said, amid an ongoing legal battle between the two companies.

Both token giants have once again returned to legal counsel.

(Reuters) – Chip firm Arm is canceling an architecture license agreement that allows Qualcomm to use its intellectual property to design chips, a person familiar with the matter said, amid an ongoing legal battle between the two companies.

Qualcomm fell about 4% on Wednesday, while Arm Holdings fell about 6.6%

Arm gave Qualcomm 60 days notice to cancel a license that allows Qualcomm to design its own chips based on Arm’s computing architecture, said the person, who requested anonymity.

Bloomberg News was the first to report the development.

UK-based Arm, which is majority-owned by Japan’s SoftBank Group, sued Qualcomm in 2022 for failing to negotiate a new license after acquiring Nuvia.

Arm previously said that the design Qualcomm was planning for Microsoft’s Copilot+ laptops was a direct technical descendant of the Nuvia chip and canceled the license for those chips.

“This is more of the same from ARM – more unsubstantiated threats designed to harden a long-standing partner, interfere with our high-performance processors, and increase royalty rates regardless of our broad license rights of architecture,” a Qualcomm spokesman said in an email. statement.

“With a trial fast approaching in December, Arm’s desperate ploy appears to be an attempt to disrupt the legal process and his request for an injunction is completely without merit. We are confident that Qualcomm’s rights under its agreement with Arm will be asserted. Arm’s anti-competitive behavior will not be tolerated”.

The legal battle between the two tech giants is scheduled to begin in federal court in Delaware in December.

An Arm victory in the litigation could force Qualcomm and its 20 or so partners, including Microsoft, to halt shipments of the new laptops. It would also essentially undo one of Qualcomm’s biggest strategic acquisitions in recent years.

“Following Qualcomm’s repeated material violations of Arm’s license agreement, Arm has no choice but to take formal action to require Qualcomm to remedy the violation or face termination of the agreement,” Arm said in a statement sent by e-mail.

“Arm is fully prepared for the December trial and remains confident that the Court will find in Arm’s favor.”

Despite the public battle between the two companies that rely on each other for revenue and profit, some investors and analysts believe they will reach a deal well ahead of trial.

“If the 60-day cancellation notice were to apply, Qualcomm could theoretically be severely limited in what it could sell, given the importance of ARM architectures to its chipsets, and ARM would lose a share of royalty income. ” said Russ Mould, chief investment officer at AJ Bell.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters)