As a tech enthusiast with decades of experience under my belt, I must say that the ongoing saga between Qualcomm and Arm is as intriguing as it is complex. The recent revelation that Qualcomm CEO Christiano Amon was instrumental in convincing the board to acquire Nuvia for $1.4 billion, claiming potential annual savings of the same magnitude, has certainly caught my attention.
2021 saw Qualcomm acquire chipmaker Nuvia for a sum of $1.4 billion. It has now been disclosed that Qualcomm’s CEO, Christiano Amon, played a significant role in persuading the board to make this acquisition. He maintained that this move could potentially save Qualcomm up to $1.4 billion annually. This assertion surfaced during the ongoing trial between Arm and Qualcomm, focusing on Qualcomm’s Snapdragon X Elite and Snapdragon X processors.
As a fervent admirer, I can’t help but share an intriguing piece of news that surfaced recently. Court documents revealed that Qualcomm’s top brass contemplated a $1.4 billion annual reduction in Arm fees by acquiring Nuvia. In their own words, this potential saving served as the justification for such an acquisition, according to Amon.
Amon’s account also contained his memory of when Qualcomm initially thought about acquiring Nuvia. Prior to the 2021 acquisition, Qualcomm found that technology acquired from Arm was lagging behind Apple’s. In response, it seemed logical to them that Nuvia, a company founded by ex-Apple engineers, could be the answer. However, their initial attempt to persuade Nuvia to create computing cores for Qualcomm didn’t pan out. This ultimately led to Qualcomm deciding to buy Nuvia instead.
However, it’s important to note that at that point in time, Nuvia hadn’t yet developed a market-ready product. The company was primarily engaged in server development, rather than the production of laptops or smartphones, which is a key factor in the ongoing legal dispute. Amon presented to Qualcomm’s board the potential advantage of acquiring Nuvia: it could save Qualcomm approximately $1.4 billion annually. This savings would stem from Qualcomm’s ability to utilize its own design core instead of relying on licenses from Arm.
According to the introduction of the Snapdragon X Elite and Snapdragon X Plus, which originate from Nuvia technology, Amon’s proposition to the Qualcomm board might have been too ambitious. However, we are still in the initial stages of PCs powered by Snapdragon. There is a strong possibility for significant growth in sales in the future, particularly if the 2nd Gen Snapdragon X Elite lives up to expectations.
The decision in the Arm vs. Qualcomm lawsuit might be announced as soon as today, December 20, 2024. However, it may take some time before this legal matter is resolved entirely. Following the verdict, there’s a possibility that further proceedings could ensue due to potential appeals.
Will Qualcomm have to destroy its Snapdragon X chips?
The legal dispute between Arm and Qualcomm might lead to Qualcomm needing to dispose of any semiconductors built using Armv8 architecture, although such an outcome is considered rare. Arm asserts that the disagreement encompasses not only original chips but also derivatives and alterations created with Armv8 technology.
Arm argues that Qualcomm should have renegotiated its licensing agreement with Arm following the acquisition of Nuvia, as the Nuvia license was primarily for server SOC (system-on-a-chip) designs. The issue at hand is that Qualcomm stands accused of leveraging Arm design rights, which they initially acquired under one license, to develop laptop chips instead.
Qualcomm asserts that only a tiny fraction, around 1%, of its Oryon CPU core designs are built using Armv8 technology. However, Arm’s counterargument could make this claim irrelevant.
It seems unlikely that Arm would desire all Nuvia-based chips to be destroyed, as I suspect their leaders aim for a resolution to their disagreement with Qualcomm. This could involve a financial settlement from Qualcomm or a renegotiation of terms between the two parties. However, since they haven’t reached an agreement yet, there’s an ongoing legal dispute instead.
Qualcomm depends greatly on licenses from Arm to manufacture chips for smartphones and processors for computers. Essentially, Arm earns revenue by granting these design licenses to Qualcomm. Ending this partnership might lead to a situation similar to cutting off one’s own nose in an act of petty revenge.
Qualcomm’s silver lining
It seems more pleasant for Qualcomm’s legal team and executives to spend their holidays elsewhere, rather than being embroiled in lawsuits with Arm. Similarly, it wouldn’t be surprising if they had hoped Snapdragon PCs would gain traction by 2024. However, there is a slight advantage here. Since the market share of Snapdragon-powered PCs is said to be just 1.5%, the financial stakes in this ongoing court case are relatively lower.
It became clear that only 720,000 computers equipped with Qualcomm processors were sold in Q3 24, which appeared to be nothing but disappointing news given Qualcomm’s goal to capture half of the market within five years. With less than 1% share of sales in Q3 24, this initial performance was far from promising. It is also reported that Qualcomm chips are found in only 1.5% of all Windows-based computers, which again does not bode well for a strong start.
However, if PCs powered by Qualcomm had become as popular as anticipated, the court case between Qualcomm and Arm could have amounted to billions instead of millions of dollars. Arm contends that it loses out on approximately $50 million in yearly income because, according to their leadership, Qualcomm failed to renegotiate its licensing agreement when such a step was deemed necessary.
Given that Qualcomm’s CEO argued for the decision to the board on the basis of potentially saving $1.4 billion annually in Arm royalty fees, a reported loss of $50 million by Arm appears relatively insignificant when considering its potential savings.
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2024-12-20 22:09