Arm CEO Rene Haas downplayed his company’s ambitions to enter the chip design business during testimony at a U.S. federal trial on Monday, as part of ongoing litigation with Qualcomm. The legal battle centers on Qualcomm’s $1.4 billion acquisition of chip startup Nuvia in 2021 and the associated licensing dispute over Arm’s intellectual property. Arm alleges that Qualcomm is not honoring the agreed-upon royalty rates for Nuvia’s chip designs, which were developed using Arm’s technology.
At the heart of the case, Arm seeks the destruction of Nuvia’s low-power AI PC chip designs, which Qualcomm used to develop its chips. These chips, launched earlier this year, are expected to aid in Microsoft’s effort to challenge Apple’s dominance in the laptop market.
Arm, which licenses its chip technology to companies across the industry, claims that Qualcomm’s lower royalty payments for the Nuvia-designed chips threaten its business model. The trial revealed that Nuvia’s royalty rates were “many multiples” higher than Qualcomm’s standard rates, potentially costing Arm around $50 million in lost revenue.
“We’ve never had an issue like this,” Arm CEO Rene Haas testified in court.
Haas, however, was cross-examined by Qualcomm’s legal team, who attempted to link the royalty dispute with a broader strategy for Arm to eventually compete with Qualcomm by designing its own chips. During the cross-examination, Qualcomm’s attorneys presented a document outlining a possible strategy for Arm to enter chip design, which would place it in direct competition with Qualcomm.
In response, Haas dismissed the idea that Arm was planning to compete with Qualcomm by entering the chip market. “We don’t build chips and we never have,” Haas said, emphasizing that the company remains focused on licensing its technology. Despite the assertion, Haas acknowledged that he constantly evaluates potential strategies for the future, but reiterated that chip design is not part of Arm’s core mission.
During the trial, Qualcomm’s legal team also challenged Arm’s outreach to its customers, including Samsung Electronics, about the potential destruction of Nuvia technology. Haas defended Arm’s actions, stating the company was responding to widespread questions from partners and customers. “We had a reason,” Haas explained. “We were getting lots of questions from partners and customers at almost every meeting with senior executives.”
The case highlights the growing tension between Arm and Qualcomm as both companies navigate the competitive landscape of the chip industry. Qualcomm’s acquisition of Nuvia could significantly disrupt Arm’s revenue streams, and the legal battle has raised concerns about how future disputes could affect the broader chip market.
Arm, which is owned by SoftBank Group and went public in 2023, has not asked for monetary damages in the case. Qualcomm is estimated to pay Arm roughly $300 million annually in licensing fees, according to Bernstein analyst Stacy Rasgon. The trial is expected to wrap up soon, with jurors possibly deliberating as early as Thursday.
This trial marks a crucial moment for Arm as it defends its licensing model against challenges from one of its largest customers. The outcome of the case could have significant ramifications for Arm’s business and for the broader chip industry, which increasingly faces complex legal and competitive dynamics.
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