By Tom Hals, Max A. Cherney and Stephen Nellis
WILMINGTON, Delaware, Oct 5 (Reuters) – Chipmaker Qualcomm and chip tech firm Arm Holdings, long at loggerheads, began another trial on Monday, with Qualcomm accusing Arm of withholding chip testing tools that were due under contract.
Qualcomm also alleges that Arm leaked to the media its 2024 threat to terminate a vital license agreement in a way that damaged discussions for a chip deal between Qualcomm and Meta Platforms.
In the lawsuit brought before US federal court in Delaware, Qualcomm, one of Arm’s largest customers, is seeking to quit paying royalties — potentially worth billions of dollars — to Arm for up to five years.
Qualcomm attorney Karen Dunn said in her opening statement that Qualcomm had been on the cusp of a deal with Meta when Arm notified Qualcomm that it was in breach of its architecture agreement and then allegedly leaked that notification letter to Bloomberg News.
Meta became concerned Qualcomm would lose its license and Dunn told the jury that by the time Qualcomm secured the Meta deal the value had decreased by $170 million. “Delay is costly,” she told the jury.
But Arm’s attorney Gregg LoCascio told the jury it would learn that what really happened is Meta shifted to AI eyeglasses and away from virtual reality headsets and sought to adjust financial terms for Qualcomm chips as a result.
“They were not harmed in the least,” LoCascio said.
While a five-year hold on royalty payments sought by Qualcomm could be a major sales impact for Arm, Judge Maryellen Noreika is weighing whether to throw out that term of the contract, which could mean Qualcomm would be able to seek only a smaller amount of damages.
In a related bench trial, Noreika also heard arguments over whether Arm has negotiated in good faith with Qualcomm for the next version of Arm’s chip technology. Qualcomm’s agreement with Arm runs through 2033.
Qualcomm CEO Cristiano Amon testified during the bench trial portion of Monday’s proceedings, during which Qualcomm’s attorney returned repeatedly to a chart that showed Arm was seeking an increase of 1,800% in its royalty payments between version 9 and version 10 of its computing architecture.
During a cross-examination, Arm’s attorney pressed Amon on whether Qualcomm was aiming to get Arm to stick to pricing in a 2013 architecture licensing deal that capped royalties at $1.88 per chip for any chip with at least five central processor cores.
Arm’s attorney asked Amon whether that agreement, which dates from an era of smaller smartphone chips, was under-priced in 2026’s market, where some data center chips have 288 central processor cores. The attorney asked Amon if the deal structure means that Qualcomm would be paying royalties for five central processor cores on larger chips and “getting 283 for free.”
Amon responded that “I don’t see it that way.”
The five-day trial marks another stage in the contentious relationship between Arm and Qualcomm.
Arm sued Qualcomm in 2022 alleging that Qualcomm had breached its contracts, though Qualcomm came away in 2024 with a key victory.
(Reporting by Tom Hals in Wilmington, Delaware and Max Cherney and Stephen Nellis in San Francisco; Editing by Edwina Gibbs and Nia Williams)
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