This article is written in conjunction with Kevin Hein of Tirias Research, who is attending the trial proceedings.

It has been nearly two years since Tirias Research’s Jim McGregor covered the first Arm vs Qualcomm trial in December 2024. In that trial, which ultimately was found in favor of Qualcomm, Arm was the plaintiff suing Qualcomm over its acquisition of Nuvia and its subsequent use of its license agreements. This time, it is Qualcomm bringing forth the suit alleging Arm’s breach of contract. After Day 1 in Wilmington, the trial raises a bigger question: Can Arm remain the industry’s neutral foundation while becoming a competitor?

WILMINGTON, Del. — After the first day of the latest Qualcomm vs Arm trial, one thing became increasingly clear: this is about much more than the terms of a semiconductor licensing agreement.

The day began with the details you would expect from a contract dispute. Lawyers discussed architecture licenses, technology licenses, royalty rates and the tools Qualcomm uses to verify that its custom CPUs comply with the Arm architecture. Qualcomm CEO Cristiano Amon spent much of the day on the witness stand explaining the company’s relationship with Arm.

But as the testimony moved from contracts to customers, competitors and the future direction of both companies, the individual pieces began to look like part of a much larger dispute.

At its center is a fundamental question: What happens when the company supplying a foundational technology begins competing with the companies that depend on it?

Arm As The Industry’s Switzerland

For many years Arm has occupied an unusual position in the semiconductor industry. Its technology was nearly everywhere but Arm itself competed directly with almost no one.

Arm licenses its instruction set architecture and CPU technology to companies that then compete against each other. Qualcomm, Apple, MediaTek, Microchip, Nvidia, NXP, Samsung, and many others could battle for customers while relying on the same underlying architecture. Additionally, companies like Amazon, Apple, Google, and others could design their own CPUs for internal use.

Arm benefited regardless of who won. That led to Arm sometimes being described as the “Switzerland” of the semiconductor industry. The description came up during the first day of testimony and is important to understanding Qualcomm’s broader argument.

Arm’s neutrality helped create one of the world’s most important technology ecosystems. Arm-based processors now dominate the electronic world. Processors utilizing its technology are in everything from clocks and electric toothbrushes to smartphones, PCs, automobiles, and increasingly, data centers.

That success also makes Arm difficult to replace. An instruction set is not simply another component. Decades of operating systems, applications, development tools, engineering and manufacturing investment become attached to an architecture.

Qualcomm argues that the relationship is now changing.

Qualcomm And Arm Are On A Collision Course

Qualcomm has worked with Arm for decades, but its acquisition of Nuvia in 2021 changed the relationship as it returned to designing its own CPUs, something it had done in the past.

It is worth noting that there are two types of licenses. An architecture license issued by Arm allows a company like Qualcomm to design its own Arm-compatible CPU while an Arm technology license allows the licensee to use CPU designs created by Arm.

Qualcomm has both types of licenses. While already an architecture license holder, Qualcomm’s ability to design its own CPUs was enhanced by the Nuvia acquisition. However, Qualcomm still requires access and support of the Arm architecture through their technology license for other Arm-designed CPUs that they still use. With the Nuvia acquisition, Qualcomm’s dependance on Arm for CPU design has been reduced and allows them to develop their own Arm-based designs like Arm does.

Arm is moving in the opposite direction towards Qualcomm’s and other licensees’ business model. Evidence discussed during Day 1 touched on Arm’s plans to expand beyond its traditional intellectual property business, including efforts to develop complete chips and pursue opportunities in AI and the data center. The opportunity is significant. Arm sees enormous potential across cloud AI, edge AI and physical AI as computing expands into new markets.

Qualcomm’s concern is not simply that Arm wants to grow. It is that Arm’s growth strategy increasingly takes it into businesses traditionally served by its licensees. A company that once supplied architecture and CPU technology to chip companies can now find itself pursuing the same markets and even the same customers as those companies.

That changes the relationship in another important way. Arm has spent decades working closely with its licensees and sits in a unique position within the ecosystem. Qualcomm’s argument is that the combination of Arm’s technology position, its knowledge of its customers’ businesses and its own expansion into chips creates a very different basis of competition than existed when Arm primarily sold intellectual property.

Meta emerged repeatedly during the first day as an example of competition between the two companies. Microsoft, Google, NVIDIA and Samsung also appeared at different points in the testimony. Arm’s ambitions in cloud AI, edge AI and physical AI were discussed alongside Qualcomm’s efforts to expand its own custom processors beyond smartphones.

The boundaries between architecture provider, chip supplier and customer are becoming less clear.

Licensing Takes On A Different Meaning

That changing competitive relationship provides important context for several otherwise technical disputes being argued in Wilmington.

Qualcomm alleges Arm withheld Architecture Compliance Kit support and related materials used to verify Qualcomm’s custom CPUs after the dispute over Nuvia began. Qualcomm’s filing says its engineers run roughly 48,000 ACK tests as part of this process.

Qualcomm also argues that Arm failed to negotiate in good faith over access to its future v10 architecture.

The details of those disputes deserve separate examination, particularly the economics surrounding v10. But the strategic issue is already apparent.

If Qualcomm increasingly designs its own CPUs, then access to the architecture, future architecture features and the infrastructure required to verify compatibility become more important than access to Arm-designed CPU cores. That gives the owner of the architecture considerable influence over companies building on top of it.

Day 1 also explored Arm’s communications with Qualcomm customers and Arm’s 2024 attempt to terminate Qualcomm’s architecture license. Qualcomm alleges Arm authorized outside counsel and its public relations firm to brief Bloomberg about the termination notice during Qualcomm’s Snapdragon Summit.

The significance extends beyond the individual legal claim. Questions about Qualcomm’s Arm license can create uncertainty among companies deciding whether to build products around Qualcomm chips.

RISC-V also surfaced during the first day’s testimony. The open instruction set is usually discussed as a technical and economic alternative to Arm. This trial highlights another potential advantage: no single company owns RISC-V, so there is no architecture owner that can later become a licensee’s competitor.

That does not mean Qualcomm or anyone else can simply replace Arm. Arm’s enormous software ecosystem is precisely what makes this dispute so important. The more difficult an architecture is to leave, the more important the relationship with the company controlling it becomes.

RISC-V therefore represents more than another processor architecture. It also offers companies a way to reduce the strategic risk that comes from dependence on a proprietary architecture.

The Bigger Question Is Just Emerging

There is an important caveat after Day 1. Much of the story came from Qualcomm’s presentation and Amon’s testimony. Qualcomm’s lawyers selected documents and testimony intended to support its case. Arm has a very different interpretation of these events and will have its opportunity to present it.

Day 1 therefore did not establish that Arm abandoned its historical neutrality or improperly used its position against Qualcomm. But it did reveal how much the relationship between the two companies has changed and how many parts of the Arm ecosystem are now caught up in that change.

The licensing economics surrounding Arm v10 deserve a closer look. So do Arm’s move into chips, the growing overlap between Arm and its customers, Qualcomm’s interest in RISC-V and the importance of the verification infrastructure surrounding the Arm architecture. The testimony in Wilmington is beginning to connect those issues in ways that are difficult to see when looking at each one separately.

That is what makes this trial important beyond the damages or the interpretation of individual contract provisions.

Arm’s greatest strength is the ecosystem it spent decades building. Its architecture is deeply embedded across smartphones and is expanding to PCs, automobiles, data centers and other markets. That scale gives Arm enormous opportunities as it expands its business, but, when coupled with Arm entering the chip business, it also changes the relationship with chip suppliers that have spent decades building on top of its technology.

The testimony has only begun, and Arm still has its case to present. There will be much more to say as the evidence develops. However, Day 1 leaves the semiconductor industry with a much larger question than who wins this particular licensing dispute:

Can Arm remain the neutral foundation of an ecosystem while increasingly competing inside that ecosystem?

Tirias Research tracks and consults for companies throughout the electronics ecosystem from semiconductors to systems and sensors to the cloud. Members of the Tirias Research team have consulted for IBM, Nvidia, Qualcomm, AMD and other companies throughout the mobile, data center, AI and Quantum ecosystems.