Qualcomm faces crisis that could strike at the very heart of Android phones (Updated)

Update: October 23, 2024 (04:33 PM ET): Qualcomm and Arm both shared official statements with Android Authority regarding the license suspension. Here’s what Arm had to say:

Arm: Following Qualcomm’s repeated material breaches of Arm’s license agreement, Arm is left with no choice but to take formal action requiring Qualcomm to remedy its breach or face termination of the agreement. This is necessary to protect the unparalleled ecosystem that Arm and its highly valued partners have built over more than 30 years. Arm is fully prepared for the trial in December and remains confident that the Court will find in Arm’s favor.

Qualcomm is understandably not too pleased about Arm’s impactful move here, and is not mincing words about how it characterizes the action:

This is more of the same from ARM – more unfounded threats designed to strongarm a longtime partner, interfere with our performance-leading CPUs, and increase royalty rates regardless of the broad rights under our architecture license.

In a statement to Android Authority, a Qualcomm spokesperson makes clear that the company doesn’t intend to take this sitting down, and is looking forward to asserting its rights before the court:

With a trial fast approaching in December, Arm’s desperate ploy appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed. Arm’s anticompetitive conduct will not be tolerated.

With so much riding on the outcome of those proceedings, we’ll be keeping a close eye on both companies’ further moves in the weeks to come.

Original article, October 22, 2024 (11:31 PM ET): In a significant update, Arm has decided to kill its licensing agreement with Qualcomm. The move could strike at the very heart of Android phones — Snapdragon chips.

According to a document obtained by Bloomberg, Arm has issued a 60-day notice to Qualcomm regarding the cancelation of its architectural license that allows Qualcomm to design chips based on Arm’s technology.

This growing legal dispute between the two companies threatens to disrupt Qualcomm’s business and the broader smartphone industry. Snapdragon processors power most Android smartphones, and Qualcomm generates approximately $39 billion in revenue from this business. If Arm cancels Qualcomm’s license, the latter might face a halt in sales or potential legal actions for damages, leaving consumers in a difficult position regarding the availability of Snapdragon-powered devices. It could also stall the innovation of Qualcomm’s future chips and potentially lead to price hikes or shortages of Android phones.

In 2022, Arm filed a lawsuit against Qualcomm, accusing the company of breaching contract terms following its acquisition of Nuvia, another Arm licensee. This acquisition is important for Qualcomm’s plans to integrate Nuvia’s tech into upcoming laptops and improve its Snapdragon chips for smartphones.

Arm’s decision to cancel Qualcomm’s license also reflects a strategic shift in its business model under new leadership. Instead of providing instruction sets to companies like Qualcomm, Arm now offers complete chip designs. This makes Arm a direct rival to Qualcomm, complicating the previously friendly relationship between the two companies.