Image credit: The Byteline

Qualcomm CEO Cristiano Amon testified in a Delaware federal court that the company’s 2021 acquisition of Nuvia, a small startup founded by former Apple engineers, was projected to save Qualcomm up to $1.4 billion annually in royalty payments to Arm, Reuters has reported.

The internal projection was highlighted as evidence during a trial over Qualcomm’s use of Nuvia’s technology.

Amon explained that these potential savings justified the $1.4 billion acquisition of Nuvia, which Qualcomm has since used to fuel its push into the PC market.

The move is part of Qualcomm's strategy to challenge Apple’s dominance and help Microsoft regain market share in the Windows ecosystem.

The trial centers on Arm’s claims that Qualcomm must destroy Nuvia’s technology because Arm never consented to the transfer of Nuvia’s license agreements.

Qualcomm argues that both it and Nuvia held licenses to create computing cores compatible with Arm’s architecture, making the technology acquisition lawful.

Amon detailed how Qualcomm’s reliance on Arm began to sour in the 2010s, when the company transitioned from designing its own computing cores to using Arm’s off-the-shelf designs.

This shift, Amon said, led Qualcomm to fall behind Apple in the smartphone market while leaving the company without a clear path to challenge Intel in the PC chip sector.

In 2019, a team of ex-Apple engineers who had helped design Apple’s flagship chips founded Nuvia. After failing to persuade Nuvia to work directly with Qualcomm, Amon decided to acquire the startup to bolster Qualcomm’s capabilities in custom core development.

While Nuvia lacked finished products and was initially focused on server chips, Amon told Qualcomm’s board that acquiring the startup could lead to substantial cost savings.

The projected $1.4 billion annual savings stemmed from Qualcomm’s anticipated entry into the PC chip market, which would have required hefty royalty payments to Arm.

This figure far exceeds Arm’s internal estimate of $50 million in lost revenue following the Nuvia deal. Analysts estimate Qualcomm currently pays Arm around $300 million annually, a figure that could increase as Qualcomm expands into new markets.

Arm terminated Nuvia’s license after the acquisition, demanding that Qualcomm destroy all technology developed under it. The ongoing trial will determine whether Qualcomm’s use of Nuvia’s technology violates Arm’s licensing terms.

Qualcomm’s acquisition of Nuvia highlights its ambition to reduce dependency on Arm and reassert its leadership in the competitive chip industry.

However, the outcome of the legal battle could have significant implications for Qualcomm’s strategy and its plans to expand into new markets.

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