Arm Faces Qualcomm Court Fight as AI Ambitions Put Customers in the Crosshairs

Arm Holdings Plc. (NASDAQ:ARM) is navigating an escalating legal battle with longtime customer Qualcomm Inc. (NASDAQ:QCOM) while expanding deeper into AI and data center chips, putting the company in increasingly direct competition with some of its traditional licensees.

Arm and Qualcomm returned to U.S. federal court in Delaware on Monday over licensing, technology access and Qualcomm’s relationship with Meta Platforms Inc. (NASDAQ:META). Both stocks traded lower Monday.

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Qualcomm Challenges Arm’s Licensing Practices

Qualcomm accused Arm of withholding chip-testing tools required under their contract and leaking its 2024 threat to terminate a key license agreement.

Qualcomm claims the leak damaged discussions with Meta over a potential chip deal and is seeking to suspend royalty payments to Arm for up to five years, a remedy potentially worth billions of dollars.

Qualcomm attorney Karen Dunn cited internal documents that she said showed Arm executives referring to Qualcomm as the “enemy” and worrying about declining royalty revenue.

Arm Denies Causing Qualcomm Harm

Arm rejected the allegations and argued that Qualcomm is using litigation to gain leverage in a business dispute.

Arm attorney Gregg LoCascio said Qualcomm failed to demonstrate actual damages.

“They were not harmed in the least,” LoCascio said.

Arm also described Qualcomm’s alleged lost chip deals as speculative.

Judge Maryellen Noreika is considering whether Qualcomm can pursue the five-year royalty suspension, which could materially affect Arm if granted.

Arm’s Customer Relationships Turn More Competitive

The dispute dates back to Arm’s 2022 lawsuit against Qualcomm. Qualcomm secured a key victory in 2024.

Tensions intensified in March 2025 when Qualcomm filed complaints with regulators in the U.S., Europe and South Korea, alleging that Arm’s push into selling its own chips threatened competition and customer access.

Arm increasingly competes with customers including Qualcomm and NVIDIA Corp. (NASDAQ:NVDA) for AI and data center business, including reported competition to supply Meta with CPUs.

AI Growth Supports Arm Shares

Despite the legal tension, Arm shares have gained close to 180% in 2026, supported by AI infrastructure demand, rising data center CPU adoption and strong financial results.

QCOM, ARM Price Actions: Qualcomm shares were down 1.64% at $181.83 and ARM Holdings shares were down 2.11% at $301 at the time of publication on Monday, according to Benzinga Pro data.

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