20 AI News Investors Should Not Miss

14. Arm Holdings plc (NASDAQ:ARM)

Number of Hedge Fund Holders: 38

Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products. The company showcases leadership in mobile and AI technology with products like the Axion processor, Ethos-U85, and Windows on Arm. The company’s chips are used in conjunction with GPUs in data centers and to enable on-device AI features in smartphones.

On October 23, Bloomberg reported that Arm Holdings plc (NASDAQ:ARM) is canceling a chip designing license with Qualcomm. The design allowed longtime partner Qualcomm Inc. to use Arm’s intellectual property to design chips. This move would have an impact on a majority of smartphone manufacturers that rely on Qualcomm chips.

Arm Holdings plc (NASDAQ:ARM) has given Qualcomm a mandated 60-day notice of the cancellation of their architectural license agreement, which previously allowed the latter to create their chips based on standards owned by Arm. This move marks an escalation to a legal battle that started when Arm sued Qualcomm in 2022 for breaking their contract and misusing its trademarks. The company has now given Qualcomm eight weeks to resolve the issue before taking further action.

Arm states that it was “necessary to protect the unparalleled ecosystem that Arm and its highly valued partners have built over more than 30 years”. In response, the Qualcomm spokesperson stated that these are “more unfounded threats designed to strong-arm a longtime partner” and increase royalty rates. It “appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. Arm’s anticompetitive conduct will not be tolerated.”

The two companies are now headed to resolve a breach of contract lawsuit filed by Arm and a countersuit by Qualcomm. It centers on the latter’s 2021 acquisition of Nuvia, another Arm licensee, and Arm’s claim that Qualcomm failed to renegotiate contract terms. On the other hand, Qualcomm asserts that the existing agreement covers Nuvia’s activities. Nuvia’s work on microprocessor design is crucial for the personal computer chips that Qualcomm sells, as well as their more widely used Snapdragon chips for smartphones.