Lawyers for Arm Holdings and Qualcomm are preparing to present their closing arguments on Friday in a case that could significantly impact Qualcomm’s entry into the PC market. Qualcomm aims to compete with Apple and Intel with a new chip designed for speed.
An eight-person jury in a U.S. federal court in Delaware will decide if Qualcomm or Nuvia, a startup that Qualcomm bought for $1.4 billion in 2021, violated a licensing agreement with Arm. Arm, based in the U.K., provides intellectual property to both Qualcomm and Nuvia.
If Arm wins the case, it could require Qualcomm to destroy the technology it acquired from Nuvia. This technology serves as the foundation for a chip released this year, which Microsoft and the broader Windows PC industry hope will help regain market share taken by Apple.
The disagreement focuses on the royalties that chip companies owe for each semiconductor made using Arm’s technology. Before Qualcomm acquired Nuvia, Nuvia’s licensing agreement stipulated that it had to pay significantly higher royalty rates than Qualcomm does now.
After Qualcomm acquired Nuvia, it intended to utilize Nuvia’s technology in its chips while benefiting from lower royalty payments under its existing agreement with Arm. Arm objected to this plan and initiated a lawsuit against Qualcomm in 2022.
During the trial that began on Monday, Arm aimed to depict Qualcomm’s actions as an unprecedented violation of standard contractual terms that Arm had successfully enforced for many years. Arm argued that Qualcomm’s approach could disrupt its business model.
In contrast, Qualcomm characterized Arm as a long-time vendor. It claimed that Arm’s new CEO was seeking to increase royalty rates and compete with Qualcomm by designing its own chips.
Documents and testimonies revealed that Qualcomm, based in San Diego, California, estimated it could save $1.4 billion annually in payments to Arm by adopting Nuvia’s technology as it entered new markets. Qualcomm executives consistently testified that their plans did not breach any license agreements.
The jury needs to decide if Qualcomm and Nuvia violated their agreements and if Arm fulfilled its contractual obligations.
During the trial, jurors examined contract language that seemed to grant Arm broad licensing rights for products developed using its instructions. This interpretation could affect Arm’s relationships with other chipmakers. Qualcomm executives argued that this reading neglected the fact that their license included comprehensive design work carried out by Qualcomm engineers to develop almost entirely new products.
The trial began on Monday and was scheduled to last five days. A verdict could be reached as soon as Thursday.
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