After 2024, will only public versions of Arm chips be available? Qualcomm banned from developing its own GPU

In September this year, Arm and Qualcomm were involved in a complex legal battle in the U.S. District Court over intellectual property licensing issues. It is not uncommon for large technology companies to face lawsuits, but this time it may have a profound impact on the chip industry.

A recent filing in the case suggests that fundamental changes may be taking place in the way Arm works with chipmakers and OEM partners.

Arm is dramatically changing its business model so that OEM partners that make servers and other computing equipment must license directly from Arm, according to a Qualcomm filing in the lawsuit. Typically, Arm licenses its architectural designs and related IP to chipmakers such as Nvidia and Qualcomm, which further design and produce the chips and then sell them to original equipment manufacturer (OEM) companies that use those chips to build computers.

In Case No. 22-1146 in U.S. District Court in Delaware, Qualcomm filed an 83-page counterclaim on October 26, stating that Arm and Specific licensing terms between Qualcomm. Qualcomm claims that after 2024, Arm will no longer license its central processor designs to Qualcomm and other chip companies under technology licensing agreements (TLA). Qualcomm claims that Arm will only be licensed to a broad range of device manufacturers.

Faced with Qualcomm’s latest statement, Arm has not officially responded, but it told the media via email on Friday that Qualcomm’s statement is “full of inaccuracies.” Arm This will be addressed in a formal legal response in the coming weeks.

"Arm allegedly told OEMs that the only way to get Arm-based chips was to accept Arm's new licensing terms," ​​noted SemiAnalysis' Dylan Patel. “Qualcomm claims that Arm lied to Qualcomm’s OEM partners about Qualcomm’s licensing terms.”

On the other hand, Qualcomm’s counterclaim indicates that Arm does not intend to allow If there are external GPUs, NPUs or ISPs, including Qualcomm's Adreno and the GPUs used by Samsung and AMD in cooperation, everyone needs to change back to Arm's "public version".

It seems that Arm is more thoroughly bundling other IP with its CPU IP, which means that the license agreement for GPUs from Samsung and AMD to MediaTek and Imagination will be in 2024. It will not be applicable after that.

Qualcomm argued in its countersuit filing that it endured heavy-handed tactics from Arm in the "baseless lawsuit." Arm is making it clear to the market that "it is arbitrary and opportunistic, using threats to innovate product development as a negotiating tactic, which is not what having a valid license and trademark should stand for."

Additionally, the counterclaim alleges that Arm falsely told Qualcomm’s long-term OEM customers that “unless they accepted new direct licenses from Arm and paid royalties on sales of OEM products, they would be unable to obtain Arm-compliant products starting in 2025.” Chip. Arm also threatened at least one OEM that if the OEM did not do so, Arm would license the OEM's large competitor..."

Arm told several Qualcomm customers that when When the TLA agreement expires, Arm will stop licensing CPUs to all semiconductor companies (including Qualcomm) under the Arm TLA. Arm claims it is changing its business model and will only provide licenses to device manufacturers themselves... Supplying them with Arm-compliant chips - because Qualcomm's Arm licensing agreement ends in 2024 - thereby forcing these customers to accept its direct licenses, Arm will not extend their licenses, and Arm will not allow Qualcomm to start in 2025 Ship products."

##"If Arm adopts the new approach claimed by Qualcomm in the counterclaim, then in the long run, they will really suffer. It's big trouble," said Jack Gold, an analyst at J. Gold Associates. "Technology licenses that allow chip companies like Qualcomm to use modified Arm IP are the basis for many product designs, not just Qualcomm. If Arm says you can only use our complete and unmodified IP in the chip and not modify it, Then no chip company will have any competitive advantage. This is obviously a crazy position..."

If Arm uses the technology licensing stick as Qualcomm describes, it will lead to the rise of the RISC-V architecture, which is what Arm should be worried about, Gold said.

If Qualcomm’s claims are true, this is obviously a disturbing event for the industry.

Qualcomm’s counterclaim seems to indicate that Arm is superior to Qualcomm and some OEMs. MediaTek, Samsung and other Arm partners may be afraid, while Nvidia, Broadcom and Apple It has good licensing terms with Arm and may be less affected.

Arm’s lawsuit

Arm has responded in advance to Qualcomm’s current claims: Arm’s initial claim against Qualcomm in early September was “intended to protect companies that rely on us. Arm ecosystem and partners for intellectual property and innovative design." Qualcomm violated the terms of the Nuvia licensing agreement, but it continues to use the technology without permission. Arm is seeking to enforce Qualcomm's obligation to destroy and use Nuvia designs derived from Arm technology.

Qualcomm acquired chip design company Nuvia for $1.4 billion in March 2021, hoping to quickly increase market share in Arm servers and Windows laptops. According to reports, Nuvia was founded by Gerard Williams III, the former chief engineer of Apple’s SoC department, who played an important role in the design of chips such as M1.

In September this year, Arm sued Qualcomm and Nuvia for breach of license agreement and trademark infringement. The lawsuit was initially thought to be primarily Arm's attempt to renegotiate with Qualcomm for higher licensing revenue.

According to the lawsuit, both Nuvia and Qualcomm hold an "Architectural License Agreement (ALA)," which is the highest (and reportedly most expensive) level of licensing for Arm's chip designs. Arm doesn’t make the chips itself — the company’s entire business model is designed around licensing its IP to manufacturers. Vendors typically manufacture chips using off-the-shelf Arm CPU designs licensed from the Cortex architecture. However, a few major Arm customers have ALA licenses and do not fully use Arm public designs.

Nuvia and Qualcomm both had licenses to make custom Arm chips, but the acquisitions caused problems. Arm believes that "the license protects Arm's rights and expectations by prohibiting transfers without Arm's consent, regardless of whether the intended transferee has its own Arm license." Neither Qualcomm nor Nuvia provided Arm with prior notice of the transaction, nor did they obtain Arm's consent to the Nuvia license transfer.

In addition, Qualcomm was also a party that voted against Nvidia’s acquisition of Arm. After more than a year of efforts by Nvidia, Nvidia and SoftBank announced the termination of the proposed transaction on February 7, 2022, due to "significant regulatory challenges." Arm is expected to go public within a year, but there has been no progress on the IPO so far.

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