Qualcomm shares fell nearly 5% yesterday (October 23) after British semiconductor chip designer Arm considered revoking a key license to the US company.
According to Bloomberg, Arm has given Qualcomm 60 days to resolve the issue before it terminates its design licensing agreement, which allows the US smartphone chip giant to design chips based on Arm’s blueprints.
The warning from Arm caused Qualcomm shares to fall 5% before entering the trading session on October 23.
Arm, majority owned by Japanese conglomerate SoftBank, operates by providing blueprints that other companies around the world can use to design semiconductor chips.
Qualcomm is one of the world's largest companies in the smartphone processor market. Its chips are integrated into hundreds of millions of smartphones sold every year.
Qualcomm has recently stepped up its efforts in the personal computing space, with PC processors designed to run artificial intelligence applications.
If the license is revoked, Qualcomm could have to stop selling products based on Arm's designs.
A Qualcomm spokesperson told Bloomberg that Arm was trying to “force a long-time partner,” adding that “it appears to be an attempt to circumvent the legal process, but the company’s request to terminate the contract is completely baseless.”
The two companies have been locked in a two-year legal battle centered on Nuvia, a company Qualcomm acquired in 2021 and to which Arm supplied the designs. Arm argues that Qualcomm should now renegotiate licensing terms with the British company.
Qualcomm's legal dispute with Arm sent its stock down 5% in trading on October 23, and it faces the prospect of further losses if the US smartphone processor maker doesn't find a solution.
(According to Bloomberg)
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