Qualcomm and Arm head to trial again, potential for huge damages in focus

By Tom Hals, Max A. Cherney and Stephen Nellis

WILMINGTON, Delaware, Oct 5 (Reuters) - Chipmaker Qualcomm QCOM.O and chip tech firm Arm Holdings O9Ty.F, , long at loggerheads, will once again be in court on Monday with Qualcomm accusing Arm of withholding chip testing tools that were due under contract.

Qualcomm also alleges that Arm leaked to the media its 2024 threat to terminate a vital license agreement in a way that damaged discussions for a chip deal between Qualcomm and Meta Platforms META.O.

In the lawsuit brought before US federal court in Delaware, Qualcomm, one of Arm's largest customers, is seeking to quit paying royalties — potentially worth billions of dollars — to Arm for up to five years.

However, Judge Maryellen Noreika is weighing whether to throw out that term of the contract, which could mean Qualcomm would be able to seek only a smaller amount of damages.

Arm, owned by Japan's SoftBank Group 9984.T, has denied that it breached the contract and argued that it did not damage Qualcomm's chip deals which it described as speculative.

Arm has also countered that Qualcomm cannot seek damages for the leak of the Arm termination letter because Qualcomm leaked non-public details of antitrust probes into Arm to the media.

The five-day jury trial will mark yet another stage in the contentious relationship between the two firms.

Arm sued Qualcomm in 2022 alleging that Qualcomm had breached its contracts, though Qualcomm came away in 2024 with a key victory.

In a related bench trial, Noreika will also hear arguments over whether Arm has negotiated in good faith with Qualcomm for the next version of Arm's chip technology. Qualcomm's agreement with Arm runs through 2033.

Qualcomm is a major maker of chips for Android mobile phones but has expanded into other fields such as data center chips.

Arm, which has for decades supplied fundamental chip design technology to Qualcomm and other chip firms such as Nvidia, has become a competitor to those customers by releasing chips of its own.