On October 24th, Arm responded to First Financial reporters regarding its plan to cancel the chip architecture license agreement with Qualcomm, stating, "Due to Qualcomm's repeated serious violations of the Arm licensing agreement, Arm has no choice but to take formal action to demand that Qualcomm rectify its breach, otherwise it will face the consequences of termination of the agreement
Arm emphasized that this move is crucial for protecting the ecosystem established with partners over the past 30 years. Arm is fully prepared for the December court hearing and firmly believes that the court will make a ruling favorable to Arm.
On October 23rd local time, Arm's stock price fell nearly 7%, and Qualcomm's stock price fell nearly 4%. A spokesperson for Qualcomm responded to First Financial reporters, saying, "This is Arm's consistent approach - more unfounded threats aimed at forcefully oppressing long-term partners, interfering with our performance leading CPU products, and ignoring the broad rights already covered by the architecture license agreements of both parties to increase license rates
When asked about the specific licensing agreements that Qualcomm violated, Arm sent an August 2022 statement to First Financial reporters. At that time, the documents showed that Arm would file a lawsuit against Qualcomm and Nuvia for violating licensing agreements and trademark infringement. Arm demands mandatory fulfillment of contractual obligations to destroy certain designs of Nuvia, prohibition of trademark infringement, and reasonable compensation for trademark infringement that has occurred.
Arm announced in August 2022 that Nuvia's license was suspended in March 2022 due to Qualcomm's attempt to transfer Nuvia's license without Arm's consent, which is a standard limitation in the Arm license agreement. Prior to and after this, Arm has made multiple goodwill efforts to seek a solution. In contrast, Qualcomm continued to violate Arm's licensing agreement for development even after the license was suspended. In the absence of other options, Arm can only file a lawsuit against Qualcomm and Nuvia to protect our intellectual property and business, and ensure that customers have access to effective products based on the Arm architecture Arm stated.
At present, this two-year lawsuit has not yet yielded any results. Arm did not provide further response to the progress of the case to the First Financial Journalist.
Arm is a chip architecture design company that authorizes chip companies such as Qualcomm and Nvidia to build chip architectures and charges royalties. The company claims that 99% of high-end smartphones use Arm technology. In addition, Arm CPUs are also used in Nvidia's latest Grace Blackwell data center chip.
At the same time, in recent years, Arm's business has expanded beyond smartphones to areas such as data centers, automobiles, and AIPC. Arm said, "The digital world from chips to the cloud lays the foundation of trust. Arm architecture is the cornerstone of the future In May of this year, it was reported that Arm had established an AI chip department with the goal of achieving mass production by 2025. Arm did not respond to this.
Qualcomm is currently one of the largest players in the global smartphone processor market, with its chips embedded in hundreds of millions of smartphones shipped each year. Recently, the company has increased its investment in the field of personal computing and launched PC processors for running artificial intelligence applications.
Boosted by the artificial intelligence boom, Arm's stock price has risen nearly 90% since the beginning of this year, with a P/E ratio of nearly 358 times. In contrast, Nvidia's P/E ratio is 65 times.