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Arm Holdings Plans Major Price Increases, Considers Developing Own Chips

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Arm Holdings, a key supplier of chip designs to tech giants such as Apple, Qualcomm, and Microsoft, is planning to increase its chip royalty rates by as much as 300%. The company, owned 90% by SoftBank Group, has also discussed the possibility of designing its own chips to directly compete with its major customers. These moves are part of Arm’s long-term strategy to increase its revenue and expand beyond licensing intellectual property.

Strategic Shifts and Pricing Plans

Arm’s pricing strategy, referred to as the “Picasso” project, aims to secure a $1 billion increase in smartphone-related revenue over the next decade. Part of this initiative includes raising the royalty rates it charges for ready-made chip designs, especially those based on its latest architecture, Armv9. However, large customers like Apple and Qualcomm may avoid some of these hikes by designing their own chips using Arm’s technology, bypassing Arm’s pre-designed components.

Documents presented during a trial in 2024 revealed that Arm had considered a dramatic 300% price increase for its royalty rates, though this proposal was never fully implemented. Despite the uncertainty, Arm executives expressed confidence in the company’s ability to push forward with these higher prices, even amid the possibility of losing some customers to in-house chip designs.

Competition with Customers

Arm’s ambitions to compete directly with its clients, particularly in chip design, were highlighted in testimony from CEO Rene Haas. In a conversation with an executive, Haas hinted that Arm could eventually create its own chips to compete against customers like Qualcomm, calling them “hosed” if the company pursued this path. This bold strategy has raised concerns among Arm’s customers, with analysts suggesting that Arm’s move could unsettle the market.

Despite this, Haas downplayed his comments, attributing them to informal brainstorming sessions about potential future strategies. While Arm has not yet entered the chip-manufacturing business, the company is exploring possibilities for evolving its business model.

Industry Reactions and Future Plans

Arm’s plans for expansion beyond its traditional licensing business model could significantly alter the competitive landscape in the tech industry. The company’s proposal to work more closely with device makers and secure deals directly with manufacturers has already begun to impact relationships, as evidenced by a meeting between Arm’s CEO and Samsung in 2022. This conversation stirred concerns about Qualcomm’s ability to supply chips to Samsung in the future, leading to changes in their supply agreements.

In response to these developments, analysts have expressed concern over how Arm’s potential shift toward chip design could affect its customer base, especially as it risks upsetting relationships with major firms in the semiconductor industry.

 

Jury Deliberates in Arm-Qualcomm Trial Following Closing Arguments

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The high-stakes license dispute between U.K.-based Arm Holdings and U.S. chipmaker Qualcomm has entered jury deliberations after closing arguments were presented on Thursday in a Delaware federal court. The case hinges on whether Qualcomm and Nuvia, a startup it acquired for $1.4 billion in 2021, violated Arm’s intellectual property license agreements.

The outcome of the trial could significantly impact Qualcomm’s expansion into the PC market, where it seeks to compete with Apple and Intel with its high-performance chips designed for AI-driven laptops.

Closing Arguments

Qualcomm’s legal team argued that neither Qualcomm nor Nuvia breached their contract with Arm, accusing the British company of using the lawsuit as leverage to exert control over smartphone chipmakers. Qualcomm attorney Karen Dunn warned the jury that a ruling in Arm’s favor could set a dangerous precedent, forcing Qualcomm to destroy its recently launched chips and threatening similar licensing agreements with other partners.

“You can bet the world is watching here,” Dunn emphasized, framing Arm’s actions as an overreach intended to stifle competition.

Arm’s attorney Daralyn Durie, however, dismissed these claims as irrelevant distractions, urging jurors to focus solely on whether Qualcomm and Nuvia violated their contractual obligations. Durie argued that Arm lawfully terminated its agreement with Nuvia in 2022 after finding the startup in breach, thereby requiring Nuvia to destroy technology based on Arm’s intellectual property.

“The decision to go ahead and use all this stuff without a license, that was their choice,” Durie stated, asserting that Qualcomm knowingly took a risky path.

Key Points of Contention

The dispute revolves around the termination of Nuvia’s license and its implications for Qualcomm’s chip designs. Qualcomm maintains that the Nuvia-developed technology at issue was created independently from Arm’s IP, while Arm claims otherwise.

Arm attorneys contend that Qualcomm aimed to save up to $1.4 billion annually by leveraging Nuvia’s designs under a less expensive licensing structure. Qualcomm countered by alleging Arm misled it into disbanding its internal design team, thereby increasing reliance on Arm’s technology before raising royalty rates by as much as 400%.

Additionally, Qualcomm cited internal Arm documents that it claims reveal plans to enter the chipmaking business, a move Qualcomm says undermines their longstanding partnership. Arm CEO Rene Haas denied these allegations during the trial.

Jury Deliberations

The jury deliberated for three and a half hours on Thursday but did not reach a verdict. Deliberations will resume Friday morning.

The trial, which began Monday, has broader implications for the semiconductor industry and Arm’s business model. Arm has characterized Qualcomm’s actions as an unprecedented violation of licensing norms that could disrupt its established practices of licensing technology to chipmakers globally.

The case underscores the growing tensions between major players in the semiconductor industry as competition intensifies in emerging markets like AI and advanced computing.

 

Arm and Qualcomm Clash Over Chip Design Ownership in U.S. Court Trial

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In a pivotal U.S. federal court trial this week, Arm and Qualcomm are locked in a high-stakes legal battle over the ownership of intellectual property (IP) related to chip designs based on Arm’s architecture. The dispute, taking place in Delaware, is critical for Qualcomm’s ambitions in the laptop market, where it is supporting partners like Microsoft to regain ground lost to Apple after the company introduced its custom chips.

The Core of the Dispute

At the heart of the legal conflict is who owns the intellectual property built on top of Arm’s computing architecture. Arm’s architecture competes with Intel’s and is widely used in smartphones, laptops, and data centers. While major companies like Apple design their own cores based on Arm’s architecture, Arm also provides off-the-shelf core designs for smaller firms like MediaTek. The crux of the case lies in whether Nuvia, a company acquired by Qualcomm for $1.4 billion in 2021, had the right to transfer its computing core designs to Qualcomm.

Key Legal Testimony

The companies disagree on whether Nuvia’s core designs, created by Gerard Williams—former Apple engineer and Nuvia founder—are derivatives of Arm’s architecture. Arm’s attorneys argue that the licensing agreement covers Arm technology, including “derivatives” and “modifications” made from it. During the trial, Arm’s attorney, Daralyn Durie, grilled Williams on the contractual language, asking him to acknowledge that Nuvia’s work was a derivative of Arm’s technology. Williams, however, denied this interpretation, stating, “I wouldn’t say that, but I’m not a legal expert.”

Impact on Qualcomm’s Plans

Qualcomm’s attorneys, meanwhile, emphasized how minimal Arm’s technology was in Nuvia’s final chip designs. Williams estimated that less than 1% of Nuvia’s final designs contained Arm’s technology. This assertion could significantly impact Qualcomm’s ongoing business strategy, particularly as the company seeks to expand into laptops, a market currently dominated by Apple’s custom chips. Qualcomm currently pays Arm approximately $300 million annually for its architecture, but evidence introduced at trial suggested that Arm executives believed they were missing out on $50 million annually due to Qualcomm’s acquisition of Nuvia.

Next Steps in the Trial

The trial could conclude with a jury verdict as soon as this week. Qualcomm’s CEO, Cristiano Amon, is also expected to testify, which could further influence the outcome of the case. The final decision may have significant ramifications for the future of chip design, especially in the rapidly evolving laptop and mobile markets.