As Arm pushes to collect royalties that could eat up to 30% of a flagship Snapdragon chip's price based on the royalties it wants for its Armv10 architecture, Qualcomm is facing a huge shift in finances. This substantial increase in Arm licensing fees could affect the profit margins of device makers, potentially raising the price of end products. The question at hand is whether the 2013 licensing terms should apply to new, powerful processors.
Qualcomm faces potential 15x royalty increase in licensing dispute
The litigation concerns the Armv10 architecture and its relevance for Qualcomm's Snapdragon 8 Elite Extreme Gen 6. Arm contends that the current licensing arrangements are outdated and don't reflect the enormous increase in chip prices over the past ten years. Qualcomm argues that the existing licensing terms should cover these new advanced processors.
Qualcomm currently pays up to $1.88 per chip in capped royalties under the existing 2013 Architecture License Agreement (ALA) for processors with 5+ CPU cores. That works out to 0.85% to 1.25% of the selling price of the chip. Arm's desired royalty rates for 2027 to 2033 suggest a hike to $28.20 per chip (12.8% to 29.5% of the $220 Snapdragon flagship). And for 2034 to 2040, Arm wants a rate of $64.86 per chip.
Arm's counsel Gregg LoCascio noted during the trial that "today it's 220, it's ten times what some of them were in 2013." Late 2024 Qualcomm made a $250 million settlement offer, but Arm turned it down. The current trial, presided over by US District Judge Maryellen Noreika, is looking into whether the negotiating parties acted in good faith when agreeing to the original terms.
Trial evidence suggests that Arm's royalty structure for its v10 architecture may differ based on the product and is still sealed. If Qualcomm loses this case, it could see a significant increase in licensing fees. This ruling will impact finances for the next 20 years or so for mobile and data center processors.
Source: NotebookCheck
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