Qualcomm (QCOM, Financial) achieved a significant legal victory last Friday when a jury ruled that its license to use Arm Holdings' (ARM, Financial) chip architecture for laptops and PCs is valid. This decision allows Qualcomm to continue its chip sales in this market. The case centered on whether Qualcomm was covered by a less expensive license agreement that ARM had with Nuvia, a CPU design company acquired by Qualcomm in 2021, or if Qualcomm needed to renegotiate the deal, potentially increasing royalty fees to ARM.
The jury determined that Qualcomm did not breach its contract by adhering to the Nuvia-ARM agreement, alleviating concerns that its PC business margins and profits would suffer due to higher royalty rates. However, the risk is not entirely eliminated.
Overall, the verdict is a positive development for Qualcomm, reducing some risks for its emerging PC business. However, challenges remain as ARM plans to appeal the decision and with the possibility of Apple (AAPL, Financial) launching its own modem chips in the coming years.
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