Arm Holdings Plc ( ARM ) shares are trading lower Wednesday following reports the company has threatened Qualcomm Inc ( QCOM ). with the cancellation of its chip design license.

What To Know: According to Bloomberg, Arm has already given Qualcomm ( QCOM ) a 60-day notice of cancellation regarding the companies’ architectural license agreement. The chip design license allows Qualcomm ( QCOM ) to make chips based on Arm’s guidelines.

Without the license, Qualcomm ( QCOM ) may be forced to stop manufacturing those chips, forfeiting billions of dollars in sales. The company’s chips serve as the backbone for most Android smartphones and tablets.

The news comes amid an ongoing legal dispute between the technology giants. Arm sued Qualcomm ( QCOM ) in 2022 for breach of contract and trademark infringement, centered around the company’s acquisition of chip-design startup Nuvia.

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Earlier this week, Qualcomm ( QCOM ) announced plans to use a Nuvia chip design in its Snapdragon chips for smartphones. Arm claims that Qualcomm’s current license does not cover Nuvia’s designs, while Qualcomm ( QCOM ) asserts that Nuvia is protected under its existing agreement.

Arm is reportedly demanding that Qualcomm ( QCOM ) destroy all Nuvia designs that were put in place before Qualcomm ( QCOM ) acquired the chip designer.

Qualcomm ( QCOM ) reportedly told Bloomberg that Arm is attempting to “strong-arm a long time partner” and expressed confidence that its rights under its agreement with Arm “will be affirmed.”

ARM Price Action: At the time of publication, Arm shares were down 5.8% at $143.69, according to data from Benzinga Pro.

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