Shares of Qualcomm Inc. (QCOM) plunged over 5% on Monday after Arm Holdings Plc, the British semiconductor design firm, escalated a legal feud by canceling a crucial licensing agreement that enables Qualcomm to design its own chips using Arm's intellectual property.
The cancellation of the so-called architectural license agreement stems from an ongoing legal battle between the two tech giants. In 2022, Arm sued Qualcomm for breach of contract and trademark infringement, alleging that Qualcomm failed to renegotiate the terms of its licensing agreement after acquiring chip design startup Nuvia in 2021.
According to reports, Arm has now given Qualcomm a 60-day notice to remedy the dispute, threatening to terminate the license that allows the San Diego-based company to create its own chips based on Arm's proprietary instruction set architecture. If the cancellation takes effect, it could potentially cripple Qualcomm's ability to sell products that account for much of its $39 billion in annual revenue, or expose the company to massive damages claims.
