JPMorgan sees Arm license cancelation as negotiation tactic versus Qualcomm

JPMorgan says Bloomberg reported that Arm (ARM) is cancelling Qualcomm’s (QCOM) architectural license by putting Qualcomm on a 60-day notice prior to effective cancelation of the architecture license. Qualcomm has relied on the architecture license to design custom Arm chips for both the smartphone and PC markets, and could potentially explore future efforts in relation to entering the server market as well based on existing capabilities at Nuvia, the analyst tells investors in a research note. JPMorgan says the cancellation of the license will mark an escalation of the disagreement between the companies, but an eventual settlement is still the most likely outcome given that the move will impact revenues for both companies. Qualcomm accounted for 11% of Arm’s revenue in fiscal 2023, JPMorgan points out. The cancellation and 60-day notice appears to be a negotiating tactic, adds the firm. It thinks Qualcomm is most likely to move to get an injunction on the cancellation.