Today’s Cache | A legal tussle between Qualcomm and Arm

Arm and Qualcomm are locked in a legal battle over the latter’s acquisition of a chip design company Nuvia. The dispute could have profound impact on the semiconductor industry.

Updated - November 01, 2022 11:28 pm IST

Published - November 01, 2022 05:14 pm IST

Arm and Qualcomm are locked in a legal battle over the latter’s acquisition of a chip design company Nuvia

Arm and Qualcomm are locked in a legal battle over the latter’s acquisition of a chip design company Nuvia | Photo Credit: Reuters

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The chip industry is in flux. Semiconductors that drive the world of technology have, in recent times, been in short supply. A shift in technology and COVID-induced lockdowns have disrupted supply chains that underpin chip production and distribution around the world. As businesses, governments and consumers are still grappling with these shocks to the supply chain, two prominent firms in the chip industry are battling against each other.

Japan’s Softbank-backed Arm Ltd. sued the market leader of chip industry Qualcomm Technologies two months ago. The chip design firm’s case against the American company is related to the latter’s year-old acquisition - - Qualcomm purchased Nuvia Technologies for about $1.4 billion in 2021.

The idea behind the acquisition was to set the stage for Qualcomm to be a long-term player and lead the chip-making industry. Even before the purchase, Qualcomm had in-house custom design resources to power its Snapdragon mobile processors, right from GPUs, to silicon engines that accelerate AI.

But Apple’s decision to part ways with Intel had an effect on Qualcomm. The iPhone maker’s move reinvigorated Mac sales, and Qualcomm CEO Cristiano Amon, according to a report by Reuters, had wanted to use Nuvia’s Arm-based designs to do the same thing for Windows-based laptop market.

For Arm, the deal to buy Nuvia means a cut in royalty fees as Qualcomm would start building custom chipsets based on Nuvia’s design. Also, Arm alleged Nuvia’s license agreement with itself must be approved by it before they are transferred to Qualcomm. It sought an injunction that would require Qualcomm to destroy designs developed under Nuvia’s license agreements with Arm.

Qualcomm has filed a counterclaim to Arm’s injunction. According to a report by Semianalysis, Qualcomm claims it does not need Arm’s consent as the chip design company does not own or have any rights to the IP that was transferred from Nuvia to Qualcomm.

At the heart of this dispute between two companies that have had a long-running partnership is what will happen to Intellectual Property (IP) after a company holding licenses is bought out by another. Would the original license seller (Arm, in this case) continue to wield control over the IP even after the company ceases to exist in its earlier form? A verdict in this case will pave the path for future litigations on IP in chip designs.

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