The mystifying, acrimonious battle between Arm and Qualcomm
25 comments
·October 25, 2024michaelt
manarth
My understanding is that it's the other way around.
- Qualcom has a "Technology license". Because ARM design the entire chip under that license, ARM charge a premium royalty.
- Nuvia had an "Architectural licence" (the more basic licence). Nuvia then had to design the chip around that foundation architecture (i.e. Nuvia did more work). The architectural license has a lower royalty.
Qualcom decided they were using Nuvia chips, and therefore should pay Nuvia's lower royalty rate.
ARM decided that Nuvia's chips were more or less ARM technology chips, or possibly that Nuvia's license couldn't be transferred, and therefore the higher royalty rate applied.
aspenmayer
Do you think that Qualcomm bought Nuvia with the expectation that Nuvia's royalty agreement would remain intact? Perhaps they wouldn't have paid as much, or purchased them at all if the license is able to be terminated in that way.
michaelt
I have no idea of the specifics of Nuvia's license.
But it's totally common for corporations to make value-destroying acquisitions. Some research suggests 60%-90% of mergers actually reduce shareholder value. Look at the HP/Autonomy acquisition, for example - where the "due diligence" managed to overlook a $5 billion black hole in a $10 billion deal. And how often have we seen a big tech co acquire a startup only to shut it down?
Mergers only seem rational because once a mistake is set in stone, the CEO usually has to put a brave face on it and declare it a big success.
I could certainly believe during the acquisition process that the specifics of Nuvia's license were overlooked, or not fully understood by the person who read them.
kergonath
Then, they should have done their homework because any transferability clause would be in Nuvia’s licensing agreement.
Or maybe there is no such language in the contract and Arm is over-extending, but that sounds unlikely.
jauntywundrkind
> and they think they should keep the IP from the Nuvia license
Incorrect according to Qualcomm. They claim Snapdragon X Elite & other cores are from scratch rebuilds, not using any of the design used for Nuvia.
They did however use engineers who had designed Nuvia. So there may be a noted resemblance in places. Latest Tech Poutine: 'you can't delete your mind.'
michaelt
The linked article says: "However, says Arm, it appeared from subsequent press reports that Qualcomm may not have destroyed the core designs and still intended to use the blueprints and technology it acquired with Nuvia"
Obviously it's hard to know for sure - it could even be an Anthony Levandowski type situation, where an ambitious employee passes off an unauthorised personal copy as their own work without Qualcomm realising.
klelatti
Reasonably sure that Qualcomm aren’t claiming their X Elite cores are free of Nuvia created IP. Rather that Arm can’t prevent the transfer of that IP to Qualcomm.
ajross
That's all routine though. This kind of license negotiation happens all the time, in every industry. Companies need to work together to sell their products. And almost always it ends up just being rolled into whatever the next contract they write is. Very occasionally, it ends up in court and one side settles once it's clear which direction the wind is blowing.
But getting to the point where a supplier of critical infrastructure pulls a figurative knife on one of their biggest customers for no particularly obvious reason is just insane. ARM Ltd. absolutely loses here (Qualcomm does too, obviously), in pretty much any analysis. Their other licensees are watching carefully and thinking hard about future product directions.
michaelt
See, this is one of the downsides of running an IP based business.
If you're selling physical chips and customer decides not to pay for their last shipment, you stop sending them chips. No need to get the courts involved; the customer can pay, negotiate, or do without.
But when you're selling IP and a customer decides not to pay? You can't stop them making chips using your IP, except by going through the courts. And when you do, people think you're "pulling a figurative knife on one of your biggest customers for no reason"
ajross
That's true enough, but you can refuse to license them for their next product, which is (or should be) incentive enough. Selling silicon IP blocks is a very mature industry, ARM is one of many such companies, and no one else is out there throwing doomsday bombs like this. Really, this is extremely weird.
klelatti
What’s missing from most of these analyses is the perspective that Arm really doesn’t want Qualcomm to become a dominant - architecture license (ALA) based - vendor of Arm based SoCs. Bad for Arm and for Arm’s other customers and the ecosystem.
Whilst Qualcomm has a wide ranging ALA that’s always a possibility. This might just be an opportunistic move to remove that threat to Arm’s business model.
notpushkin
Bad for Arm – sure. But that’s because Arm themselves want to be the dominant vendor. Arm’s other customers lose either way.
Pet_Ant
So previously ARM mainly just licensed the ISA or licensed already made cores for people who wanted to creating their own and now they want to shift the paradigm to mainly being that you buy cores from ARM and get them to customise them for you? They want to move up the food chain?
klelatti
> Arm’s other customers lose either way.
Sure Arm has done things - eg pricing v8 to v9 that customers hate. But do you really think Mediatek for example wants to compete with Qualcomm selling Nuvia based cores with a low ALA based royalty.
ChrisArchitect
Related:
Arm is canceling Qualcomm's chip design license
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macawfish
Meanwhile RISC-V slowly but surely picks up momentum.
orev
It’s getting extremely tiresome to see RISC-V comments in every thread about this. It’s unnecessary and irrelevant.
initramfs
ARM is owned by an investment bank, SoftBank. It operates kind of like Goldman Sachs. ARM is becoming a chipmaker, just like Intel. But Intels' CHIP grant is more similar to a pre-emptive 2008-era bailout of the banks (TARP), for being "too big to fail." (because it makes defense chips) https://irrationalanalysis.substack.com/p/arms-chernobyl-mom...
alephnerd
ARM is not becoming a foundry. Almost no one wants to become a foundry because the margins are too low.
This is why they are subsidized for tens of billions of dollars by countries all over the world.
As I understand it [1] the context is:
Qualcomm had one type of ARM license, granting them one type of IP at one royalty rate.
A startup called "Nuvia" had a different type of ARM license, granting them more IP but at a higher royalty rate. Nuvia built their own cores based on the extra IP.
Then Qualcomm brought Nuvia - and they think they should keep the IP from the Nuvia license, but keep paying the lower royalty rate from the Qualcomm license.
ARM offer a dizzying array of licensing options. Tiny cores for cheap microcontrollers, high-end cores for flagship smartphones. Unmodifiable-but-fully-proven chip layouts, easily modifiable but expensive to work with verilog designs. Optional subsystems like GPUs where some chip vendors would rather bring their own. Sub-licensable soft cores for FPGAs. I've even heard of non-transferable licenses - such as discounts for startups, which only apply so long as they're a startup.
If Nuvia had a startup discount that wasn't transferable when they were acquired, and Qualcomm has a license with a different royalty rate but covering slightly different IP, I can see how a disagreement could arise.
[1] https://www.theregister.com/2022/08/31/arm_sues_qualcomm/