A Delaware jury found for Arm Holdings (NASDAQ: ARM) on four of the six claims in Qualcomm’s (NASDAQ: QCOM) lawsuit on October 13, awarding Qualcomm just $2 in total damages on the two claims it won.
On those two claims, the jury found that Arm breached its chip architecture license agreement with Qualcomm and interfered with Qualcomm’s business relationship with Meta. It awarded $1 on each. Arm said the verdict showed it acted in good faith under its license agreement and that Qualcomm had pursued the case in an attempt to claim billions of dollars.
Arm shares fell 5% to $232.22 in afternoon trading on October 16 as a broad semiconductor selloff deepened. The decline came amid wider concern that AI infrastructure spending may slow, and reports on the day of the verdict showed Arm down only about 1%.
Advanced Micro Devices (NASDAQ: AMD) also dropped 5%, to $534.29, as the sector absorbed existing market pressure.
Taiwan Semiconductor Manufacturing (NYSE: TSM) held up comparatively better, slipping 2% to $412.45, a softer decline than those suffered by Arm and AMD.
The iShares Semiconductor ETF (NASDAQ: SOXX) fell 3%, reflecting broad weakness across the chip sector, while the Invesco QQQ Trust (NASDAQ: QQQ) declined a more modest 2%, pulling large-cap tech lower as well.
The legal battle between Arm and Qualcomm is not over, with closing arguments scheduled for next week in a related bench trial concerning the licensing of Arm’s latest chip architecture.
Unlike a jury trial, a bench trial places the decision solely in the hands of a judge, meaning Arm faces an entirely separate ruling on how it licenses its newest designs in the coming days.
Arm’s business model is built entirely on intellectual property, licensing chip architecture and core designs to partners who then pay per-chip royalties as products reach the market, making every licensing agreement financially critical.
Qualcomm sits among Arm’s key licensees, so the dispute remains closely watched for its potential bearing on the royalty stream that underpins Arm’s long-term growth story and investor confidence in the stock.
The bull case for Arm has long rested on royalty income expanding as more chips adopt its designs. Critics argue that any licensing dispute with a major licensee risks straining relationships with the customers that drive that revenue, while Arm says the jury’s verdict supports its position.
AMD designs processors and Taiwan Semiconductor manufactures chips for third parties, meaning both companies generate revenue tied to physical hardware rather than pure licensing fees, distinguishing their exposure from Arm’s.
With a second ruling from the bench trial expected shortly, investors in Arm, AMD, and Taiwan Semiconductor face continued uncertainty at a time when the chip sector is already under significant strain.
