Qualcomm and Arm Face Licensing Uncertainty After Hung Jury

A licensing dispute between Qualcomm and Arm Holdings has ended without a jury verdict in Delaware, leaving unresolved allegations of contractual breaches and questions about future royalty payments. The case, the second trial between the semiconductor companies in two years, could affect Qualcomm's access to Arm technology and the economics of Arm's intellectual property business.

According to TIKR, Qualcomm alleges that Arm violated licensing agreements by withholding software patches and tools, failing to honor a pricing provision, and damaging Qualcomm's relationship with Meta. Arm disputes the claims and argues that Qualcomm suffered no harm.

Qualcomm's existing license for Arm architecture runs through 2033. However, the companies still face uncertainty over the terms governing newer versions of the technology, which is used in processors across the semiconductor industry.

Arm's business model relies on licensing its processor designs and intellectual property to customers, then collecting royalties when chips incorporating its technology are shipped. Qualcomm uses Arm's CPU designs in its Snapdragon processors, making the commercial relationship important to both companies.

According to Finance Yahoo, Arm generated $4.92 billion in revenue during fiscal 2026, an increase of 23% year over year. Royalty revenue reached $2.61 billion, while licensing revenue totaled $2.31 billion. Both segments grew by more than 20% from the previous year.

The financial stakes extend beyond the current contractual allegations because Qualcomm is also challenging Arm's approach to pricing newer processor architectures. During the proceedings, Qualcomm's side highlighted an alleged 18,500% increase in royalty rates between Arm's version 9 and version 10 architecture, according to Finance Yahoo's account of reporting by Reuters.

Qualcomm's older agreement with Arm dates to 2013 and included a royalty cap of $1.88 per chip for processors containing at least five CPU cores. Arm's lawyers questioned whether that arrangement remained economically appropriate as modern data-center processors expanded to include hundreds of CPU cores.

Arm has also argued that the lawsuit is intended to give Qualcomm leverage in negotiations over licensing terms. Its lawyer told the jury Qualcomm was “not harmed in the least.” A separate proceeding before a judge is examining whether Arm negotiated in good faith, and a ruling could arrive after the jury's decision.

Qualcomm's lawyer argued that the company's chip business depends on Arm honoring its contractual commitments. The unresolved allegations leave the companies facing continued uncertainty over their licensing relationship and the terms available for future processor designs.

Qualcomm is pursuing growth beyond smartphone processors as it seeks to expand its business in automotive technology and data centers. According to TIKR, the company reported $9.9 billion in revenue and earnings of $2.21 per share in its latest quarter.

Automotive revenue reached a record $1.6 billion, up 61% from the same period a year earlier, while revenue from businesses outside handsets increased 28%. Qualcomm has also set data-center revenue targets of $5 billion for fiscal 2027 and $15 billion for fiscal 2029, as part of a broader goal of $40 billion in non-handset revenue in fiscal 2029.

The company faces additional challenges from higher memory prices, which are weighing on phone demand and pressuring margins. Qualcomm also expects a substantial decline in revenue from Apple, adding uncertainty as it develops newer growth areas.

Market figures reported by TIKR showed Qualcomm shares at $176 on October 9, with a 52-week high of $260 and a six-month price increase of 34%. The figures provide market context while the licensing dispute remains unresolved.