Qualcomm vs. Arm – Short but Sharp pt. III

Qualcomm looks to be off the hook until 2033.

• As details emerge following the end of the trial in December, documents confirm that Qualcomm does have a license for V9 meaning that it is in a stronger position than I had previously anticipated.
• The jury in the trial decided that Qualcomm is not in breach of the Nuvia contract with Arm and that Qualcomm’s Orion processors are properly licenced under Qualcomm’s existing architecture licence with Arm.
• However, the jury was deadlocked on the question of whether Nuvia breached its licence with Arm, and it is on this basis that Arm could seek a retrial.
• Arm has said that it is seeking a retrial but it is not clear whether it is seeking to relitigate all of the jury findings (i.e. appeal) or just the one where the jury was unable to come to a verdict.
• My view at the time (see here) was that this was a victory for Qualcomm but because it did not have an architecture licence for the latest instruction set (v9), it would have to go back to Arm before the expiry of its current agreement which for all practical purposes is in 2033.
• The contract expires in 2028 but Qualcomm has the option to extend this until 2033 which as things stand today, I am certain that it will exercise.
• Documents that have subsequently been made available are pretty clear stating that Qualcomm and Arm added an architecture licence for v9 on June 23, 2020.
• Assuming that the original two verdicts are not overturned on appeal, this means that Qualcomm can migrate its Orion custom CPUs to v9 without having to enter into any further negotiations or agreement with Arm.
• Hence, Qualcomm should be able to continue to ship all of its arm-based products without having to enter into any negotiations with Arm for another 8 years.
• However, there is the issue of v10 which is the next version of the Arm instruction set which I expect will be released by Arm sometime around 2028 or 2029 based on Arm’s history.
• If there are new features in v10 that necessitate a quick move to v10 in order to remain competitive, then Qualcomm will have to take a v10 license before 2033.
• I do not think that this will be the case as there are areas of overlap between the last versions of one instruction set and the early versions of the next one.
• This is how I expect Qualcomm has been able to come up with very competitive products using v8 even though v9 has been around for more than 5 years.
• If Qualcomm does need v10 before 2033 then it will be in a difficult position because Arm’s design is not an official standard and so it does not have to adhere to the fair, reasonable and non-discriminatory (FRAND) principle that governs the licensing of standard essential patents.
• Hence, Arm can be as unreasonable as it wants when it negotiates with Qualcomm which will put Qualcomm in a difficult position in 2033 or earlier if it turns out it needs v10 before that time.
• Arm says it intends to seek another trial, but I continue to think that this is not in the best interest of the Arm ecosystem.
• Arm and its customers should be working together to expand its reach into PCs, vehicles, servers, AI and so on and not wasting time and resources fighting each other.
• Eight years is a long time and so I am hopeful that there will be a negotiation at some point where everyone gets something, the two companies kiss and make up and get back to the business of driving the Arm ecosystem.
• I continue to think that another 8 years of frozen dialogue and no cooperation will only benefit Arm’s rivals such as RISC-V and x86.
• This is crucial as the standards for AI are beginning to form and with Intel on its knees, the time to push the Arm ecosystem hard is now.