{"id":6839,"date":"2024-12-17T05:32:02","date_gmt":"2024-12-17T05:32:02","guid":{"rendered":"https:\/\/www.tantraanalyst.com\/ta\/?p=6839"},"modified":"2024-12-31T11:19:03","modified_gmt":"2024-12-31T11:19:03","slug":"qualcomm-vs-arm-trial-day-1-opening-statements-and-surprising-revelations","status":"publish","type":"post","link":"https:\/\/www.tantraanalyst.com\/ta\/qualcomm-vs-arm-trial-day-1-opening-statements-and-surprising-revelations\/","title":{"rendered":"Qualcomm vs. Arm trial, Day 1 \u2013 Opening statements and surprising revelations"},"content":{"rendered":"

[vc_row fullwidth=”yes”][vc_column][vc_column_text]<\/p>\n

\"\"Background<\/span><\/strong><\/span><\/h5>\n
Qualcomm is one of the largest customers of Arm. However, ever since Qualcomm announced that it is acquiring Nuvia, the two companies have been at odds regarding their license contracts, culminating in today\u2019s court trail. Today was the first day of this jury trial.<\/span><\/h6>\n
Check out my article series<\/a><\/span> on the details of the fight between the two companies for more details.<\/span><\/h6>\n
Summary of Day 1<\/strong><\/span><\/h5>\n
On the first day, both companies fired their first salvos through opening statements and testimonies and tried to set the narrative for the other party. Arm is trying to convince the jury that Qualcomm acquired Nuvia to save on license costs. It knows that it needs a new license to use Nuvia technology, but it doesn\u2019t want to negotiate with Arm. They tried to negotiate with Qualcomm, but since they couldn\u2019t agree on new terms, they had no other choice than to sue.<\/span><\/h6>\n
On the other hand, Qualcomm is trying to project that it acquired Nuvia because Arm was falling behind on performance, and its current ALA with Arm covers Nuvia technology. Additionally, Arm is trying to ask for higher licensing fees to cater to the demand of its parent company, SoftBank, to increase its revenue.<\/span><\/h6>\n
In my view, Arm\u2019s opening statement was simple and told a complete story. It presented with a soft, almost victim-like demeanor. Qualcomm\u2019s statement was more assertive and included many strong facts (e.g., Arm internal communications saying Qualcomm has \u201cBombproof\u201d ALA).<\/span><\/h6>\n
Testimonials were quite informative and revealed many interesting facts, some rumored and others unknown (e.g. Arm considered a fully vertically integrated approach). Arm\u2019s first testimony was bungled during cross-examination, the second was neutral, and the last one was powerful.<\/span><\/h6>\n
The day started balanced, swung toward Qualcomm, and ended with a neutral\/slight advantage to Qualcomm.<\/span><\/h6>\n
Come back tomorrow for the second day\u2019s update.<\/span><\/h6>\n
Highlights of Day 1 :<\/strong><\/span><\/h5>\n
The first day started with pretrial discussions, opening statements from both companies and testimonies from Plaintiff Arm. Today’s witnesses were Arm Chief Commercial Officer Will Abbey, SVP Paul Williamson, and CEO Rene Haas, in that order. Key points of the Arm opening statement<\/span><\/h6>\n
    \n
  • \n
    Arm gave a deeply discounted licensing model to Nuvia, expecting to benefit when the company is acquired. The contract clearly states that the acquisition needs approval from Arm to assign its license to the new company.<\/span><\/h6>\n<\/li>\n
  • \n
    It used a metaphor of piano keys to explain its licensing model \u2013 its tech tells what note keys should play, and it doesn\u2019t matter how big the keys look, what music they create, etc.<\/span><\/h6>\n<\/li>\n
  • \n
    Claimed that Qualcomm bought Nuvia to reduce its cost because the royalty rate for an Architecture License Agreement (ALA) is much lower than a Technology License Agreement (TLA). Showed a Qualcomm email claiming about $1.4B annually<\/span><\/h6>\n<\/li>\n
  • \n
    Replied to one of Qualcomm\u2019s claims that since Arm specifications are openly available on their website, hence not confidential, by saying license to use them.<\/span><\/h6>\n<\/li>\n<\/ul>\n
    Key points of the Qualcomm opening statement<\/strong><\/span><\/h5>\n
      \n
    • \n
      Qualcomm reiterated it doesn\u2019t need Nuvia ALA, as its own ALA with Arm covers Nuvia technology. Shared a lot of Arm\u2019s internal emails\/messages to show it also understood this, but sued Qualcomm to increase its revenue (Qualcomm has a \u201cbombproof\u201d license).<\/span><\/h6>\n<\/li>\n
    • \n
      Used a metaphor of home to explain its view of licensing \u2013 the specification of doors, windows, etc, is similar to Arm license, but Qualcomm still needs to build the home, which is significant work and innovation. Developing the underlying RTL and creating processes is akin to this.<\/span><\/h6>\n<\/li>\n
    • \n
      Said Qualcomm had to buy Nuvia as Arm was falling behind in performance<\/span><\/h6>\n<\/li>\n
    • \n
      Arm’s deal made Qualcomm licensing 100-400% more expensive and included conditions like Nuvia engineers not working on new architecture design for 3 years, etc.<\/span><\/h6>\n<\/li>\n
    • \n
      Showed a lot of Arm internal communication regarding how the change in Arm management \/ownership pushed it to go hard against Qualcomm<\/span><\/h6>\n<\/li>\n<\/ul>\n
      Key Points from the testimonies:<\/strong><\/span><\/h5>\n
      Will Abbey<\/strong><\/span><\/h6>\n
        \n
      • \n
        Long-time Arm executive, was responsible for Nuvia and Qualcomm relationship<\/span><\/h6>\n<\/li>\n
      • \n
        Reiterated Arm\u2019s stance, said this is the first and the only time Arm is suing a customer in its entire history, and the only instance when the license was terminated (Nuvia)<\/span><\/h6>\n<\/li>\n
      • \n
        Said Qualcomm requested, and Arm assigned licenses when the former acquired CSR and Atheros. These were TLA, whereas Nuvia had ALA<\/span><\/h6>\n<\/li>\n
      • \n
        Documents revealed Qualcomm ALA\/TLA licensing rates:<\/span><\/h6>\n
          \n
        • \n
          ALA – 1.1% \/ $0.58<\/span><\/h6>\n<\/li>\n
        • \n
          TLA – 5.3% \/ $2.2<\/span><\/h6>\n<\/li>\n<\/ul>\n<\/li>\n
        • \n
          Surprised that Nuvia executives were never present in any negotiations after the acquisition<\/span><\/h6>\n<\/li>\n
        • \n
          During cross-examination, Qualcomm’s lawyer pointed out many inconsistencies between his statements during the sworn deposition and today\u2019s statement (e.g., during the deposition, Will had said Nuvia had canceled its license but said Arm canceled it now). For that, he had to explain that he didn\u2019t prepare well for the deposition, and preparation for the testimony \u201ctriggered\u201d more memories. However, the deposition was almost one year closer to the actual events than today\u2019s testimony.<\/span><\/h6>\n<\/li>\n<\/ul>\n
          Paul Williamson<\/strong><\/span><\/h6>\n
            \n
          • \n
            Currently leads IoT business but was responsible for mobile business during the Nuvia acquisition<\/span><\/h6>\n<\/li>\n
          • \n
            Reiterated many of Arm\u2019s stances and things expressed by Will, such as CSR, Atheros assignment, and others<\/span><\/h6>\n<\/li>\n
          • \n
            During cross-examination, many Arms internal emails\/messages about what Qualcomm ALA covers were revealed. One key exchange was between him and Arm\u2019s licensing person, where the latter opined Qualcomm ALA covered Nuvia technology<\/span><\/h6>\n<\/li>\n
          • \n
            Discussion revealed Qualcomm ALA is valid till 2028, with an option to extend for five more years with a $1M\/year fee<\/span><\/h6>\n<\/li>\n
          • \n
            Arm offered a new deal to Qualcomm, called the \u201cTC model,\u201d which had total processor licensing (CPU, GPU, & others) for ~500% higher licensing price<\/span><\/h6>\n<\/li>\n
          • \n
            Arm sent letters to its (and Qualcomm\u2019s) customers and PC OEMs about Qualcomm working products for which Arm canceled licenses.<\/span><\/h6>\n<\/li>\n<\/ul>\n
            Rene Haas<\/strong><\/span><\/h6>\n
            This was probably the longest and most consequential testimony.<\/span><\/h6>\n
              \n
            • \n
              11 years at Arm, 35 years in the Semiconductor industry<\/span><\/h6>\n<\/li>\n
            • \n
              He said, since he authorized the litigation, he felt he had to come to the testimony<\/span><\/h6>\n<\/li>\n
            • \n
              Talked about impressive Arm growth, which really took off in 2013. Highlighted looking to add more value and increase revenue<\/span><\/h6>\n<\/li>\n
            • \n
              Shared slide on how Arm is looking to outperform Nuvia with Black Hawk (Cortex X925)<\/span><\/h6>\n<\/li>\n
            • \n
              Cross-examination was full of discussion around tons of Arm internal communications<\/span><\/h6>\n<\/li>\n
            • \n
              Lots of messages and emails on how Qualcomm (and another player, most likely Apple\u2019s) ALA rates are low and need to be unwound to increase Arm revenue<\/span><\/h6>\n<\/li>\n
            • \n
              The final offer to Qualcomm was a one-time $123M assignment fee, the current ALA for mobile, and different rates for Compute, Auto, and others, which was rejected<\/span><\/h6>\n<\/li>\n
            • \n
              Disagreed with previous CEO\u2019s \u201cfinding middle ground with Qualcomm\u201d approach<\/span><\/h6>\n<\/li>\n
            • \n
              Discussions with SoftBank\u2019s (which owns 90% of Arm) Masayoshi Son to keep the pressure up with Qualcomm, and overall increase in Arm revenue<\/span><\/h6>\n<\/li>\n
            • \n
              Arm only has between 5 \u2013 10 ALA customers<\/span><\/h6>\n<\/li>\n
            • \n
              Some of Arm\u2019s disclosures to the UK government during the Nvidia acquisition were not consistent with its positions elsewhere, and Rene had to explain the reasons (mostly timing)<\/span><\/h6>\n<\/li>\n
            • \n
              Arm considered fully vertical model, making its own processor products. Even joked about how that would blow everybody else<\/span><\/h6>\n<\/li>\n
            • \n
              Also suggested collaborated vertical integration with Samsung LSI for Samsung devices<\/span><\/h6>\n<\/li>\n<\/ul>\n

              [\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

              [vc_row fullwidth=”yes”][vc_column][vc_column_text] Background Qualcomm is one of the largest customers of Arm. However, ever since Qualcomm announced that it is acquiring Nuvia, the two companies have been at odds regarding their license contracts, culminating in today\u2019s court trail. Today was the first day of this jury trial. Check out my article series on the details […]<\/p>\n","protected":false},"author":2,"featured_media":6855,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"image","meta":{"h5ap_radio_sources":[],"mc4wp_mailchimp_campaign":[],"footnotes":""},"categories":[107],"tags":[],"class_list":["post-6839","post","type-post","status-publish","format-image","has-post-thumbnail","hentry","category-blog","post_format-post-format-image"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/posts\/6839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/comments?post=6839"}],"version-history":[{"count":0,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/posts\/6839\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/media\/6855"}],"wp:attachment":[{"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/media?parent=6839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/categories?post=6839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tantraanalyst.com\/ta\/wp-json\/wp\/v2\/tags?post=6839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}