Foreign media: Arm licensing model may undergo important changes

The Qualcomm-Arm lawsuit is epic, and the case has a massive new update. This update contains evidence that Arm is changing its entire business model and moving towards requiring OEM licenses. It also contains some suggestive evidence of anti-competitive licensing behavior by GPUs, NPUs, and ISPs.

As we previously reported, Arm sued Qualcomm. Qualcomm later filed a counterclaim.

According to the latest Qualcomm counterclaim, after 2024, Arm will no longer license its CPUs to semiconductor companies such as Qualcomm under technology licensing agreements (TLA). Instead, Arm will only license it to device manufacturers. Arm allegedly told OEMs that the only way to get Arm-based chips was to accept Arm's new licensing terms. Qualcomm claims that Arm lied to Qualcomm’s OEM partners about Qualcomm’s licensing terms.

Additionally, Qualcomm claims that Arm told OEMs that semiconductor manufacturers would not be able to offer other elements of Arm-based SOCs that Arm also offers as licensed products. This includes GPUs, NPUs, and ISPs. It appears that Arm is effectively bundling its other IP with its CPU IP in a take-it-or-leave-it model. This means that licensing agreements for Samsung's GPUs with AMD or MediaTek's GPUs with Imagination are no longer allowed after 2024. Additionally, none of these companies can use their in-house ISP or NPU, even though it is far superior to Arm.

It seems that Arm's actions against Qualcomm and OEMs are not very decent. MediaTek, Samsung and other Arm partners should be very scared. This will rapidly accelerate the RISC-V roadmap. It also reeks of anti-competitive behavior. Nvidia got the Arm license for 20 years, so they'll be fine. Apple obviously has good licensing terms because they have a history of founding Arm. We hear Broadcom also has very favorable terms.

If you don't believe us and think this all looks crazy, we get it. This is what we understand after reading the legal documents.

Since the filing of the lawsuit in this case on August 31, 2022, ARM has wrongfully attempted to undermine Qualcomm’s business and customer relationships by spreading misinformation about the nature of Qualcomm’s ARM license to customers purchasing Qualcomm’s ARM-compatible cores and chipsets.

ARM engaged in this misinformation campaign directly through its leadership and on behalf of its owner, SoftBank, in an attempt to harm Qualcomm, disparage its products, damage Qualcomm's relationship with its customers, and create uncertainty where uncertainty exists sex. not any.

As early as at least October 2022, ARM falsely stated to one or more of Qualcomm's long-term original equipment manufacturer ("OEM") customers that unless they accepted a new direct license from ARM, they would be subject to sales of OEM products based on Pay royalties, and starting in 2025, they won't be able to get ARM-compatible chips.

ARM has also threatened at least one OEM that if the OEM fails to do so, ARM will continue to license the OEM's large competitors - which means that the OEM will be excluded from the market and unable to obtain any products that meet ARM standards. Chips from Qualcomm or any other supplier, including "off-the-shelf" chips from ARM under the TLA. While ARM has approached rival OEMs with direct licensing offers, ARM has done so while acting as if ARM is willing to engage with competing OEMs only if the threatened OEM refuses a license.

ARM has also told one or more Qualcomm customers that it will stop licensing CPUs under the ARM TLA to all semiconductor companies, including Qualcomm, when the existing TLA agreement expires. ARM claims it is changing its business model and will only provide licenses to device manufacturers themselves. ARM has explained to OEMs that direct OEM licensing will be the only way for device manufacturers to obtain ARM-compatible chips.

ARM is trying to force out Qualcomm by falsely claiming that Qualcomm will not be able to supply them with ARM-compliant chips starting in 2025 because Qualcomm's ARM licensing agreement will end in 2024 and ARM will not extend its license with Qualcomm. These customers accept their direct license. , and ARM will not allow Qualcomm to ship products starting in 2025.

These statements are undoubtedly false and are intended to damage Qualcomm's relationship with its customers and by calling into question Qualcomm's ability to maintain its ARM license and provide products to its customers beyond 2024, despite the fact that Qualcomm has held ARM licenses under its ARM license for many years. There has always been a clear right to do so.

Qualcomm secured licenses under its ALA for years beyond 2025, which gives Qualcomm the right to unilaterally extend the contract for years past the initial term.

Accordingly, because the Qualcomm ALA has not been terminated and because no event has occurred that would give rise to the right to terminate, the Initial Term of the License will continue until [REDACTED]. Qualcomm subsequently has the right to extend the license to [REDACTED]. Therefore, ARM does not have the right to refuse to extend Qualcomm's license or prevent Qualcomm from shipping its products in 2025.

Additionally, ARM is not entitled to additional royalties from Qualcomm’s customers. Qualcomm's ALA provides Qualcomm with an exhaustive license, which means that ARM does not have the right to seek another royalty from Qualcomm customers for the same products for which ARM already receives royalties from Qualcomm.

ARM’s coercion efforts did not stop with these false statements about Qualcomm’s licensing agreement. To apply more pressure, ARM further stated that Qualcomm and other semiconductor manufacturers will also be unable to provide other components of the SoC such as graphics processing units ("GPUs"), neural processing units ("NPUs") and image signals to OEM customers Processor ("ISP")), as ARM plans to tie the licensing of these components to the device manufacturer's CPU licensing.

ARM also claims that it has informed Qualcomm that its new business model requires direct licensing with OEMs. This statement is wrong.

ARM has not notified Qualcomm that it will require direct permission from device manufacturers. ARM didn't tell Qualcomm that it intended to stop licensing CPU technology as a standalone license, that it would no longer license CPU technology to semiconductor companies, or that it would require licensees to source only from ARM. As noted above, these attempted or threatened changes to ARM's business model do not represent Qualcomm's existing agreement with ARM.

While ARM's statements about Qualcomm are factually unsubstantiated, they can cause serious reputational damage and damage Qualcomm's customer relationships. Furthermore, while ARM's goal may be to hurt Qualcomm - and to force contracts with Qualcomm's customers that are unnecessary given the fully exhaustive rights it grants Qualcomm under the contract - its strategy will harm ARM customers across the industry and licensee.