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Why Arm’s lawsuit against Qualcomm is a big deal

Qualcomm Inc. President and CEO Cristiano Amon speaks at the CES 2022 press event January 4, 2022 at the Mandalay Bay Convention Center in Las Vegas, Nevada. CES, the world’s largest annual consumer tech trade show, runs in person from January 5-7, but some companies are concerned about a spike in COVID-19 cases. , virtually only decides to participate or cancel participation.

Ethan Miller | Getty Images

Arm is suing Qualcomm, pitting two of its most valuable semiconductor companies head-to-head, calling into question the future of partnerships between the two companies.

The lawsuit, which was filed Wednesday in the U.S. District Court for the District of Delaware, comes at a crucial time for Arm, as Arm owner Softbank announced that it would sell Arm to Nvidia after the deal to sell it to Nvidia failed due to regulations. hopes to be listed on the public market soon.

But the lawsuit also threatens Qualcomm’s expansion plans. It uses the design of the Nuvia processor at the center of the controversy to compete more directly with Apple’s chips for his iPhone and Mac, perhaps using them to enter the server chip market, a lucrative space. because I wanted to. Exclusively owned by Intel and AMD. Nuvia was founded by a former Apple chip designer and Qualcomm bought it for his $1.4 billion in 2021. Qualcomm’s current Snapdragon chips for smartphones are also based on Arm technology.

Arm is seeking damages and wants Qualcomm to destroy information and hardware from the Nuvia acquisition, including chips, dies, packaging and promotional materials.

The dispute is over the rights to develop chips using Arm’s Instruction Set Architecture (ISA). It is a core piece of intellectual property dating back to 1985 that outlines how the chip performs basic functions such as accessing memory and basic arithmetic.

The rise of Arm in recent years

Arm-based chips are gaining ground in recent years as they are more power efficient than x86-based chips from Intel and AMD. In 2021, more than 29 billion chips based on Arm technology have shipped, including the chips that are at the heart of Apple’s iPhones, Macs and iPads.

Some companies, such as Apple, have licensed ISA from Arm and designed their own physical processor circuitry to implement ISA instructions. Other companies like Qualcomm historically have also bought the rights to the full core design from Arm marketed as Cortex Arm is expected to sell his $2.7 billion in revenue from licenses and royalties in 2021 reported to be dollars.

The lawsuit highlights the tension between Arm’s business licensing underlying intellectual property to create processors that could compete with its own designs. Arm saw Qualcomm as a competitor last year, saying its architecture licenses posed a threat to its implementation business.

Litigation over intellectual property rights and contracts is common in the semiconductor industry. But Arm-Qualcomm’s lawsuit is a serious conflict over its ability to design the kind of chip that is at the heart of nearly every smartphone in the world. This could have a big impact on chip startups and pave the way for open source adoption to replace Arm.

Qualcomm general counsel Ann Chaplin said in a statement that the controversy was a departure from “a long and successful relationship.”

“Arm has no right, contractually or otherwise, to seek to interfere with Qualcomm’s or NUVIA’s innovations,” Chaplin said. It ignores the fact that we have license rights and we are confident that those rights will be confirmed.”

Meanwhile, Arm said in a statement: “We had no choice but to make this claim against Qualcomm and Nuvia in order to protect our IP and business and ensure that our customers have access to valid Arm-based products. I did,” he said.

Qualcomm’s Nuvia strategy

Qualcomm acquired Nuvia because it wanted its chips to outperform commercial Arm processor designs, especially to compete with Apple’s highly efficient custom Arm cores. Nuvia, a startup founded by former Apple and Google engineers, was developing server chips with custom cores under an architecture license. We also had access to Arm’s core design.

Post-acquisition, Qualcomm made Nuvia central to its smartphone and PC strategy, using the startup’s core to make laptop processors more competitive with Apple’s M-series chips, with products launching in 2023. .

Qualcomm was also pitching its Nuvia-based cloud processors to cloud providers such as Amazon, according to Bloomberg News.

In its complaint, Arm said Nuvia’s architecture license was not transferred when Qualcomm purchased it. According to Arm, Qualcomm has an architecture license, but Arm’s consent was required to purchase and use Nuvia’s custom core design. Arm said he terminated his Nuvia license in March.

If it’s upheld in court, Qualcomm’s entire chip strategy could be in flux.

However, there may be alternative routes.

Karl Freund, founder and analyst of Cambrian AI Research, speculated that Qualcomm could try to use an open-source RISC-V alternative to Arm’s instruction set.

Arm told regulators in December that “RISC-V momentum is accelerating” and that incumbent vendors are increasingly using RISC-V instead of Arm’s instruction set. Several startups are now building CPU cores based on RISC-V, but it’s still not used in mass-produced smartphones that currently use Arm.

However, Arm’s efforts to strengthen its intellectual property rights with long-term partners may prompt companies building custom Arm cores to reconsider open source alternatives.

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