Silicon Valley Cannot Declare Culture Free, by Fransiscus Nanga Roka

The sales pitch of the semiconductor industry promises to deliver an infinite supply of intelligence. However, as the legal framework for this industry develops into what appears to be a war zone over who gets control of critical technology, it may be possible to use access to that technology as leverage in commerce.

Federal jurors in Wilmington, Delaware, ended their deliberation of Qualcomm’s claim against Arm on Friday (October 9th) afternoon. They will resume on Monday (October 13th). Separately, Judge Maryellen Noreika is addressing the question of whether a disputed contractual remedy might cause Qualcomm to lose its royalty payments for five years. There is currently no ruling that would allow Qualcomm to receive such a suspension.

The current dispute has its origin in Qualcomm acquiring Nuvia. In the previous lawsuit, Qualcomm won a jury verdict regarding licensing rights in December 2024. After that win, Qualcomm stated in an October 2025 press release that the court also dismissed Arm’s last remaining claim and denied Arm’s motion for a new trial. This decision did not settle the current claims being made against Arm.

The most recent conflict raises an alarming issue; could a technology vendor destroy the business of one of its customers that relies on that relationship?

Qualcomm claims that Arm did not provide required testing software per contract; and that Arm also released a 2024 license termination warning which impacted Qualcomm’s ability to negotiate a contract with Meta. According to Qualcomm, as a result of the delay in negotiating a contract with Meta, Qualcomm lost approximately $170 million in potential revenue. Arm counter-claims that it was Meta’s decision to change its focus from virtual reality (VR) headsets to artificial intelligence (AI) eyewear that led to the change in terms for the agreement between Qualcomm and Meta. Both companies are now required to demonstrate evidence supporting their claims rather than just express anger towards each other.

The same applies to the price war. Trial evidence showed that Arm was asking for an 18,500% royalty increase on architecture version 10 versus architecture version 9. Arm also questioned if the 2013 royalty cap of $1.88 per chip still applied given that today’s data center processors have many more than 100 cores.

The fact that there is a large amount of a product or service sold in comparison to others does not necessarily mean that the activity was illegal. There are many reasons why products or services may sell well without being based on illegal activities. For example, a company may have developed a new marketing strategy which has resulted in higher sales; or, a company may have created a product or service that meets the needs of consumers better than its competitors. It should be noted that in order for an individual or business to be guilty of copyright infringement, the plaintiff must prove that the defendant used the copyrighted material in a manner that violated the plaintiff’s rights as the owner of the copyright. This means that if a defendant did not use the copyrighted material in a way that interfered with the plaintiff’s right to control the use of that material, then the defendant will not be held liable for copyright infringement. In addition to proving that the defendant interfered with the plaintiff’s right to control the use of the copyrighted material, the plaintiff must also show that the defendant benefited financially from using the copyrighted material. If the plaintiff cannot demonstrate that the defendant made a profit from using the copyrighted material, then the plaintiff may still be able to recover damages for other types of harm caused by the defendant’s use of the copyrighted material. However, if the plaintiff cannot establish that the defendant profited from using the copyrighted material, then the plaintiff may only be entitled to nominal damages.

In addition, Qualcomm cannot automatically get a “windfall.” All remedies must be based on the terms of the contract, as well as on applicable laws and actual damages caused by the alleged interference. The courts will review the claims of interference and determine whether or not the sweeping royalty suspension can be legally enforced.

The broader risk occurs when an architecture supplier is also competing in the chip market. This creates incentives that warrant examination; the supplier will potentially have access to confidential customer data and be able to control technical input into the products they supply. While this doesn’t create proof of misbehavior, it does make credible safeguards necessary.

Five strategic reactions should follow.

First, licensing agreements will include delivery dates for all of the compliance tools, patches, and documentation; in addition to the expedited process of resolving any disputes regarding delayed deliveries that can result in the loss of revenue due to a delayed launch of a product.

Secondly, when a supplier begins to compete directly with their customer (i.e. enter the same market), they must have in place an independent audit of the barriers which separate the licensing of products; customer data that is considered proprietary; and any products developed by competing teams.

Third, future pricing should include transparent contract-based benchmarks and clearly defined negotiation processes. Unilateral increases in prices do not provide a stable basis for innovations.

Fourth, a damage assessment must separate losses due to misbehavior from losses due to changes in what customers are demanding. Meta’s decision making process for purchasing will need to be thoroughly examined.

Fifth, both government and industry need to commit to providing options for architectural flexibility, such as open instruction set architectures (ISAs), with an understanding that there will be significant cost associated with moving to a different architecture.

Antitrust regulators must investigate exclusionary behavior only when there is sufficient proof that such behavior has occurred. It would be a mistake for the regulators to assume that strong negotiations are evidence of an antitrust violation.

The greatest thing the semiconductor industry has going for it is the confidence people have in knowing their licenses are valid after making investments into products. If you lose this confidence, then every single product roadmap you develop will be viewed as a possible liability.

Invention will never succeed if the right to compete is used as an instrument of destruction.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia