Market Overview
The dispute between Arm and Qualcomm marks a fundamental shift in the relationship between these two companies and signals a pivotal change in the semiconductor industry. Qualcomm, once heavily reliant on Arm's Cortex core platforms, has shifted its strategy following the acquisition of Nuvia. This move allows Qualcomm to develop its own custom cores, such as the Oryon platform, and positions the company to directly challenge Arm’s control over the semiconductor ecosystem. While historically, these two operators maintained a relatively non-competitive relationship, the landscape is rapidly changing, and ABI Research's insights suggest this will have significant implications for the industry.
However, the dispute raises concerns for Arm, which risks losing control over its architecture as Qualcomm's custom solutions challenge Arm's dominance. ABI Research's analysis suggests that this dispute will affect not only Qualcomm and Arm, but also the broader semiconductor market.
Chart 1: Arm-Based SoC Market Share Breakdown: Smartphones, PCs, and Automotive Infotainment Systems
World Markets: 2023
(Source: ABI Research; Note: * 2024 expectations.)
“Arm’s lawsuit against Qualcomm was triggered by Qualcomm's US$1.4 billion Nuvia acquisition, marking a turning point in their longstanding partnership, with far-reaching implications for the semiconductor industry. This conflict could fundamentally reshape the computing landscape across smartphones, Personal Computers (PCs), and servers.” – Malik Saadi, VP of Strategic Technologies ABI Research
Qualcomm’s Strategic Shift: Custom Cores and Market Differentiation
Qualcomm’s transition from using Arm’s Cortex cores to developing custom cores marks a major strategic pivot for the company. This shift mirrors Apple’s approach to custom Arm-based processors, but differs in execution. Apple develops chips exclusively for its own devices, while Qualcomm designs and sells chipsets to a broad array of device manufacturers.
With its Snapdragon X Elite platform, Qualcomm is looking to carve a niche in markets beyond smartphones, targeting PCs and automotive applications as well. The move toward custom cores is a clear attempt to differentiate Qualcomm from its competitors and increase its control over processor designs across various sectors. However, the ongoing dispute with Arm complicates this strategic shift, and its outcome could have a profound impact on Qualcomm’s ability to expand into new markets.
Related Insight: Could the 2025 Launch of Windows 12 Spark an Arm-Powered Step-Change in the PC Market Landscape?
Arm’s Risk: Losing Qualcomm and Shifting Ecosystem Control
For Arm, the potential loss of Qualcomm as a key licensee represents a huge revenue risk. Qualcomm accounts for a significant portion of Arm's sales, particularly in sectors like smartphones, automotive, and PCs. Losing Qualcomm's business could significantly weaken Arm’s position in these critical markets.
Historically, Arm maintained control over the evolution of its ecosystem, setting the standards for chip architecture that all its licensees adhered to. Qualcomm’s push toward custom cores and its reliance on Nuvia’s technology threatens to disrupt this control. As the leading supplier of high-performance Arm-based Systems-on-Chip (SoCs), Qualcomm’s design choices could, in the future, drive the direction of Arm’s architecture in ways that Arm itself may not control. This represents a critical challenge to Arm's long-standing position as the dominant architecture provider for semiconductor companies.
The Impact on the Broader Semiconductor Ecosystem
The implications of the Arm-Qualcomm dispute go far beyond these two companies. ABI Research’s analysis indicates that the disruption in the relationship between these semiconductor giants will affect multiple industries, particularly in the mobile, automotive, and PC markets. The emergence of Qualcomm’s custom cores challenges the very foundation of Arm’s reference design model, which has dominated the industry for years.
As Qualcomm’s Oryon platform matures, it will compete directly with other chip designs, including those based on Arm’s standard architecture. This could lead to fragmentation within the semiconductor industry, with different industries or use cases potentially adopting divergent chip architectures based on specific needs—whether for performance, power efficiency, or cost-effectiveness.
The Role of Qualcomm’s Custom Cores in New Markets
The Oryon platform, leveraging Nuvia's technology, represents Qualcomm’s bid for greater technological independence. By incorporating the Nuvia cores into its mobile, PC, and automotive offerings, Qualcomm aims to enhance performance, while reducing reliance on third-party architectures.
In addition, Oryon’s focus on power-efficient computing allows Qualcomm to compete more effectively against both x86 platforms in PCs and other Arm-based licensees in mobile devices. However, the legal battle with Arm could slow or complicate this transition, threatening Qualcomm's ability to achieve its goals. ABI Research expects Qualcomm to continue aggressively pushing into the PC and automotive sectors. Oryon stands at the fore of its strategy, but the dispute with Arm could delay or reshape these plans.
Conclusion
The Qualcomm versus Arm dispute signals a critical turning point for the semiconductor market. As Qualcomm moves toward custom cores, it faces both legal and technical hurdles. Arm, meanwhile, risks losing its hold over chip architecture in key industries. ABI Research’s insights reveal the growing importance of customization in chip design. The dispute will reshape the competitive landscape in mobile, computing, and automotive markets, influencing future strategies in semiconductor development.
To learn more about the competitive dynamics between Qualcomm and Arm, download ABI Research's comprehensive report: Arm Versus Qualcomm: Analysis of a Landmark Industry Dispute.
