Arm sues Qualcomm over $1.4 billion acquisition of Nuvia

With the recent acquisition of Nuvia, Qualcomm has a real chance to dramatically increase Arm’s market share in the server and Windows laptop world. Before Qualcomm can pursue Intel, the company will have to face legal action from…Arm?!

Exactly as Reuters first reported (PDF example here), Arm is suing Qualcomm over its $1.4 billion acquisition of Nuvia. Arm says Qualcomm’s purchase of Nuvia “forced Nuvia to violate its Arm licenses, resulting in the termination of those licenses, which in turn required Qualcomm and Nuvia to cease use and destroy any Arm-based technology developed under the licenses.”Undeterred, Qualcomm and Nuvia continued to work on bringing the Arm architecture to Nuvia, in violation of Arm’s rights as the creator and licensor of its technology.”As a result of the license violation, Arm is demanding that “Qualcomm and Nuvia cease use and destroy related Nuvia technology.”

Nuvia never sold a product, but it is known to have been founded by top engineers from Apple’s SoC division. Nuvia CEO (and now Senior Vice President of Qualcomm Engineering) Gerard Williams III was Apple’s chief processor architect for nearly a decade, including for the M1 SoC. The acquisition of Nuvia shows that Qualcomm has borrowed Apple’s roadmap and is trying to scale the Arm design for larger devices, typically with an x86 processor.

According to the lawsuit, both Nuvia and Qualcomm entered into an “Architecture Licensing Agreement (ALA)”, the highest (and reportedly most expensive) level of Arm licensing. Arm does not manufacture chips itself – the company’s entire business model is based on licensing its intellectual property to manufacturers. This is often a license to a “standard”Arm processor design that uses the “Cortex”branding. However, a few really big Arm customers have an ALA license that, instead of using Arm designs, allows you to design your own Arm chip from scratch. This is the license that Apple uses to build all of its custom Arm-based SoCs.

So Nuvia and Qualcomm had a license to manufacture custom Arm chips, but one company’s purchase by another still results in licensing issues. Arm’s complaints relate to the scope and outsourcing of work performed by Nuvia under license from the ALA. The lawsuit states that “Nuvia’s license fees and royalty rates reflected the intended scope and nature of Nuvia’s use of the Arm architecture. The licenses protected Arm’s rights and expectations by prohibiting the assignment of rights without Arm’s consent, whether or not the intended assignee had their own Arm licenses. cars and AR/VR headsets.

Arm says: “Neither Qualcomm nor Nuvia notified Arm of this deal in advance. They also did not obtain Arm’s consent to transfer or assign licenses to Nuvia.”Arm continues, “Shortly after the announcement of the merger, Arm informed Qualcomm in writing that Nuvia could not transfer its licenses and that Qualcomm could not use Nuvia’s pending projects developed under the Nuvia ALA without Arm’s consent. For over a year, Arm has negotiated with Qualcomm through Qualcomm Inc. and Qualcomm Technologies, Inc. in an attempt to reach an agreement regarding Qualcomm’s unauthorized acquisition of “work in progress”and the Nuvia license.”Apparently, at some point the negotiations reached an impasse, and now it’s time to pull out the lawyers.

Qualcomm shared its version of The Verge, with General Counsel Ann Chaplin stating, “Arm has no right, contractual or otherwise, to attempt to interfere with Qualcomm or NUVIA innovation.”She continued, “Arm’s complaint ignores the fact that Qualcomm has broad, well-established licensing rights covering its custom-designed processors, and we are confident these rights will be upheld.”

In terms of the big picture, it’s hard to see much point in Arm pursuing Qualcomm. Qualcomm and Nuvia represent Arm’s biggest chance of short-term market growth, which means more royalties for Arm. Qualcomm said it wants to use Nuvia Arm developments to enter the laptop and server markets, two areas dominated by Intel and AMD. Arm owns 100% of the smartphone market and 100% of the Apple hardware market, including larger devices such as laptops and PCs. You would think that Arm would be delighted that Qualcomm wanted to go after Intel in this way.

It’s also wild that it’s come to this point. Between Qualcomm and the Apple Nuvia pedigree, there’s a huge amount of experience with Arm. You might think that everyone already knows how to deal with Arm licensing rights.