Qualcomm CEO Christiano Amon told the company board that purchasing Nuvia outright would save it as much as $1.4 billion per year in payments to Arm. This admission was revealed during the Arm vs. Qualcomm trial, where the former claimed that the Snapdragon X chips the latter released earlier this year were infringing on its patents. According to Reuters, Amon testified that he used this reason to justify the acquisition of Nuvia, which cost Qualcomm $1.4 billion in 2021.
Although Qualcomm owned a huge share of the smartphone processor market in the late 2010s, it believed it was falling behind Apple’s Bionic chips in terms of performance due to its reliance on Arm designs. Aside from that, Amon wanted to take on Intel’s dominance in laptops and mobile computing. However, Qualcomm had no other alternative to Arm at that time. However, when former Apple engineers who worked on smartphone processors founded Nuvia in 2019, the Qualcomm CEO saw a solution in them. At first, Amon tried to convince Nuvia to build computing cores for the company. When that failed, he decided that the next best thing was to simply buy the startup.
Reportedly, this strategy was a tough sell to the Qualcomm board, especially as Nuvia didn’t have a product at that time and was mostly focused on developing chips for servers. So, to acquire the talent and designs that Nuvia had, Amon told the company board that this move would potentially save Qualcomm $1.4 billion yearly in royalties to Arm. It should be noted, though, that this number is a theoretical amount based on the assumption that Qualcomm’s Snapdragon X processors would take a massive chunk of the laptop market at its launch. In reality, Qualcomm has only sold 720,000 units in the first full quarter it went on sale; barely 0.8% of the entire market.
Arm argues that it is missing out on $50 million in annual revenue because Qualcomm failed to renegotiate its contract with the company after it acquired Nuvia. So, Arm reasons that Qualcomm should destroy all Nuvia designs that were built before its acquisition. On the other hand, Qualcomm asserts that its architecture license agreement with Arm fully covers everything it acquired under Nuvia and that Arm is only making this move because it plans to design its own chips in competition with its clients, including Qualcomm.
Arm is understandably aggressively defending its technology, as its core business relies on licensing agreements. If Qualcomm could save at least $50 million annually because of its Nuvia purchase, other Arm clients could potentially copy this move, severely threatening Arm’s business model. Still, there’s no guarantee which side the court will take. Closing arguments for the case are happening today, so both Arm and Qualcomm are holding their breath for the future of Snapdragon X.
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