Qualcomm Stock Drops on Report that Arm Seeks to Cancel Chip Design License [Video]

Qualcomm (QCOM) shares are falling in premarket trading Wednesday following a report that Arm Holdings (ARM) is canceling a license that allows the British chip designer’s intellectual property in the U.S. company’s chips.

Bloomberg reported that Arm has given Qualcomm a 60-day notice that would trigger the end of their “architectural license agreement,”  a contract that allows the San Diego-based company to build its own chips using Arm’s standards.

Qualcomm’s processors are in most Android smartphones, the report said, and a cancellation of the license could put $39 billion of its revenue at risk. 

The threat to cancel the license marks an escalation of the feud between the two chip firms. Arm sued Qualcomm in 2022 for breach of contract and trademark infringement.

J.P. Morgan analysts said they expect the two to strike a deal before the license is canceled given how important the business is for the two sides.

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