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family feud

Arm says it’s losing $50M a year in revenue from Qualcomm’s Snapdragon X Elite SoCs

At issue: Arm SoC designs that Qualcomm acquired when it bought Nuvia in 2021.

Andrew Cunningham – | 117
Credit: Qualcomm
Credit: Qualcomm

Arm and Qualcomm's dispute over Qualcomm's Snapdragon X Elite chips is continuing in court this week, with executives from each company taking the stand and attempting to downplay the accusations from the other side.

If you haven't been following along, the crux of the issue is Qualcomm's purchase of a chip design firm called Nuvia in 2021. Nuvia was originally founded by ex-Apple chip designers to create high-performance Arm chips for servers, but Qualcomm took an interest in Nuvia's work and acquired the company to help it create high-end Snapdragon processors for consumer PCs instead. Arm claims that this was a violation of its licensing agreements with Nuvia and is seeking to have all chips based on Nuvia technology destroyed.

According to Reuters, Arm CEO Rene Haas testified this week that the Nuvia acquisition is depriving Arm of about $50 million a year, on top of the roughly $300 million a year in fees that Qualcomm already pays Arm to use its instruction set and some elements of its chip designs. This is because Qualcomm pays Arm lower royalty rates than Nuvia had agreed to pay when it was still an independent company.

For its part, Qualcomm argued that Arm was mainly trying to push Qualcomm out of the PC market because Arm had its own plans to create high-end PC chips, though Haas claimed that Arm was merely exploring possible future options. Nuvia founder and current Qualcomm Senior VP of Engineering Gerard Williams III also testified that Arm's technology comprises "one percent or less" of Qualcomm's finished chip designs, minimizing Arm's contributions to Snapdragon chips.

Although testimony is ongoing, Reuters reports that a jury verdict in the trial "could come as soon as this week."

Ars Video

 

If it succeeds, Arm could potentially halt sales of all Snapdragon chips with Nuvia's technology in them, which at this point includes both the Snapdragon X Elite and Plus chips for Windows PCs and the Snapdragon 8 Elite chips that Qualcomm recently introduced for high-end Android phones.

On October 22, Arm announced it was canceling Qualcomm's architecture license, which could ban it from selling Arm-based chips entirely. Qualcomm was given 60 days' notice of the cancellation—a time window that encompassed the scheduled dates for this week's trial. Qualcomm claimed to Ars and other outlets at the time that Arm's announcement was "an attempt to disrupt the legal process."

A bet on future success?

That $50 million in alleged missing revenue looks like a relatively small amount to be fighting over, given that these are both billion-dollar companies—Arm made $3.23 billion in revenue in fiscal 2024, while Qualcomm earned $39 billion in revenue. It also seems counterproductive for Arm to disrupt the business of one of its largest and most successful partners and the only company that is currently shipping any Arm chips for Windows PCs; Nvidia and Mediatek are said to be working on their own PC chips, but those efforts could be months or years away from fruition.

It's more likely that Arm wants to make sure it's maximizing its share of Qualcomm's revenue, given the ambitions both companies have for the PC market. Qualcomm CEO Cristiano Amon and Haas have said that Arm PC shipments could account for over half of all PC sales in the next five years.

That said, it's unclear how well the first wave of Copilot+ PCs is selling. Analysts have said that sales of all Copilot+ PCs—which at this point encompasses a number of systems sold with Qualcomm, Intel, and AMD chips inside—accounted for less than 10 percent of all PC shipments in the third quarter of 2024.

Interim Intel co-CEO Michelle Johnston Holthaus also claimed recently that Qualcomm PCs were being returned more frequently because of software compatibility issues; Arm PCs can run most Windows apps and even plenty of games at this point, but there are still some kinds of software (like device drivers) that can't be translated from x86 to Arm automatically. For its part, Qualcomm says its return rates are "within industry norm." And obviously Intel's leadership does have a vested interest in steering buyers away from Snapdragon-powered PCs.

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Andrew Cunningham Senior Technology Reporter
Andrew is a Senior Technology Reporter at Ars Technica, with a focus on consumer tech including computer hardware and in-depth reviews of operating systems like Windows and macOS. Andrew lives in Philadelphia and co-hosts a weekly book podcast called Overdue.
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