Arm Holdings has issued a 60-day ultimatum to Qualcomm, threatening to terminate their licensing agreement unless Qualcomm addresses Arm’s complaints over alleged violations.

The British chip technology firm accuses Qualcomm of using its chip designs without proper authorisation, stemming from Qualcomm’s 2021 acquisition of chip developer Nuvia. This high-stakes conflict threatens Qualcomm's ability to use Arm’s designs, with potential wide-ranging consequences for the smartphone industry.

The core of the dispute centres around Qualcomm’s $1.4 billion purchase of Nuvia, a company developing advanced processors including those for AI chips and Snapdragon smartphone processors.

Arm alleges that Qualcomm has been using Nuvia’s pre-acquisition designs without its authorization. As part of its ultimatum, Arm is demanding that Qualcomm destroy all chip designs related to Nuvia that existed before the acquisition. Qualcomm, however, has sharply criticized Arm’s 60-day deadline, labelling it an “unfounded threat” aimed at derailing its operations.

This dispute carries significant weight due to the critical role that both companies play in the tech industry. Qualcomm’s Snapdragon processors power the majority of Android smartphones globally, relying heavily on Arm’s architecture for its chipsets.

Should Arm terminate its agreement, Qualcomm’s product development could face substantial delays, potentially forcing the company to halt work on certain chips. Such a scenario would not only impact Qualcomm’s business but could also ripple across the broader smartphone market, particularly for Android devices dependent on Snapdragon chips.

Qualcomm has strongly denied Arm’s accusations and plans to challenge them in court, with a trial scheduled for December. The company views Arm’s claims as an attempt to hinder the development of new chips while driving up royalty fees, accusing Arm of anti-competitive behaviour. Qualcomm has positioned itself to fight the breach of contract claims, asserting that Arm’s threats are groundless and designed to disrupt ongoing technological advancements.

Should the termination of the licensing agreement by Arm become effective, there are indications that Qualcomm will be limited to the use of the blue designs only which have been pre-designed by Arm.

This could adversely affect the continued development of future Snapdragon chips and cause delays in the launching of products which affects the entire smartphone industry. The end of this dispute will be interesting to observe as it has possibilities of recasting the state of affairs in the direction of design and chipsets in the mobile industry which is very broad.