High-Stakes Trial Between Arm Ltd and Qualcomm Inc

A high-stakes trial between Arm Ltd and Qualcomm Inc (NASDAQ:QCOM) commenced this Monday in a Delaware court, potentially impacting the future of artificial intelligence computing. The legal dispute centers on a contractual disagreement regarding Qualcomm's use of Arm's intellectual property and Qualcomm's acquisition of chip startup Nuvia in 2021 for $1.4 billion.

The jury trial, which started with opening arguments, is scheduled to continue until Friday. Each party has been allotted roughly 11 hours to present their case, following the jury selection last Friday.

Key Figures Testifying

Key figures expected to testify include Arm's CEO Rene Haas, Qualcomm's CEO Cristiano Amon, and Nuvia founder Gerard Williams, who also served as a senior executive in Apple (NASDAQ:AAPL)'s chip division and is now a vice president at Qualcomm.

Core Issues of the Litigation

At the heart of the litigation is Qualcomm's licensing agreement with Arm for intellectual property usage and the implications of its purchase of Nuvia, which was established by former Apple chip engineers, including Williams. Qualcomm's recent launch of new low-powered AI PC chips, which are anticipated to support Microsoft (NASDAQ:MSFT) and others in reclaiming market share from Apple's laptops, utilized Nuvia's designs.

Both Nuvia and Qualcomm held licenses with Arm, yet under different financial terms. Arm has insisted that for Qualcomm to use the Nuvia-based designs, the licensing terms must be renegotiated.

Qualcomm maintains that its existing license rights encompass all custom-designed central processing units (CPUs) and has expressed confidence that these rights will be upheld by the court.

Arm's Demands

In an unusual move, Arm has not sought monetary damages but has demanded that Qualcomm be compelled to destroy all Nuvia designs. Analyst Stacy Rasgon from Bernstein reported that Qualcomm pays approximately $300 million annually in fees to Arm.

Arm, headquartered in the United Kingdom (TADAWUL:4280), is a subsidiary of SoftBank (TYO:9984) Group, which took the company public in the United States in 2023.

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