Intellectual Property Battle Shapes Future of Chip Industry

In a high-stakes trial in U.S. federal court in Delaware, attorneys for Arm and Qualcomm are grilling a former Apple executive to determine the ownership of intellectual property built on Arm's computing architecture.

The dispute centers on Qualcomm's acquisition of Nuvia and its impact on the laptop business. Qualcomm is collaborating with partners like Microsoft to regain market share that Windows computers lost to Apple after the introduction of custom chips by the iPhone maker.

Arm's computing architecture, a rival to Intel's, is prevalent in smartphones and increasingly used in laptops and data centers. While massive companies like Apple design their own computing cores based on Arm's architecture, smaller firms such as MediaTek use Arm's off-the-shelf core designs.

The ownership of core designs based on Arm's architecture is at the heart of the dispute. The disagreement focuses on whether Nuvia, acquired by Qualcomm for $1.4 billion in 2021, had the right to transfer its computing core designs to Qualcomm after the sale.

In court, attorneys pressed Gerard Williams, Nuvia's founder and a former Apple engineer, on whether Nuvia's cores were derivatives of Arm's technology or if Arm's technology played a minor role in Nuvia's work. Williams estimated that less than 1% of Nuvia's final designs contained Arm's technology.

Analysts estimate Qualcomm pays Arm about $300 million per year, and evidence introduced at trial showed Arm executives believed they were missing out on $50 million per year in additional revenue due to Qualcomm's acquisition of Nuvia. A jury verdict could come as soon as this week, with Qualcomm CEO Cristiano Amon potentially taking the witness stand.