Qualcomm and Arm Holdings opened a second jury trial in federal court in Delaware Monday, with Qualcomm asking to stop paying Arm royalties for as long as five years, Reuters reported. Those payments could be worth billions of dollars, raising the stakes in a fight over licensing terms that has run since 2022.

What Happened

The five-day trial is being heard by U.S. District Judge Maryellen Noreika. Qualcomm makes two main claims. First, it says Arm withheld chip testing tools that it was owed under their contract. Second, it says Arm leaked to Bloomberg News its 2024 threat to terminate a key license held by Qualcomm, and that the leak damaged Qualcomm's negotiations with Meta Platforms over a chip deal.

In her opening statement, Qualcomm attorney Karen Dunn told jurors the leaked notice left Meta worried that Qualcomm could lose its Arm license. By the time Qualcomm secured the Meta deal, she said, its value had fallen by $170 million.

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Arm attorney Gregg LoCascio countered that Qualcomm "were not harmed in the least." He argued that Meta's priorities had shifted toward AI glasses and away from virtual reality headsets, and that Meta sought different financial terms for Qualcomm chips for that reason, not because of any uncertainty about the license.

Why It Matters

The remedy Qualcomm is seeking dwarfs the damage it describes. Rather than asking only for the $170 million it says it lost on the Meta deal, Qualcomm wants relief from royalty payments to Arm for up to five years. Qualcomm is one of the largest makers of Arm-based processors, used in most of its smartphone chips and increasingly in PC and data center designs, so years of withheld royalties would be a significant blow to Arm's licensing revenue.

A separate question will be decided by the judge rather than the jury. Qualcomm says Arm has failed to negotiate in good faith over licensing for the next generation of its architecture, and Reuters reported that Arm is seeking a royalty rate increase of about 1,800% between versions 9 and 10. A 2013 agreement between the companies capped royalties at $1.88 per chip with five processor cores, according to the report, and their license agreement runs through 2033.

Context

The dispute began in 2022, when Arm sued Qualcomm over its use of designs obtained through the acquisition of chip startup Nuvia, arguing Qualcomm needed Arm's consent to transfer Nuvia's licenses. A jury in that case largely sided with Qualcomm in December 2024, and Qualcomm went on to file its own claims against Arm, which are now being tried.

The termination threat at the center of the leak allegation was a notice Arm sent Qualcomm in 2024 that it planned to cancel an architecture license, a move that put pressure on Qualcomm during the first trial. News of the notice was first reported by Bloomberg.

What to Watch

The jury is expected to reach a verdict after the scheduled five days of testimony. If Qualcomm wins the royalty relief it is seeking, Arm could lose years of payments from one of its biggest customers. The judge's separate ruling on good-faith negotiations will shape what Qualcomm pays for Arm's next architecture, and either side may appeal.