Arm Holdings stock falls as Qualcomm trial nears end

Arm Holdings ADR stock fell 3.8% in morning trading today as the company's legal battle with Qualcomm nears conclusion in Delaware federal court.

The five-day jury trial, which started on October 5, addresses Qualcomm's effort to stop paying royalties to Arm for up to five years. Analysts estimate this remedy could be worth billions of dollars, creating uncertainty around a major revenue source for Arm.

Qualcomm has made two main allegations in the case. The company claims Arm withheld chip-testing tools that were owed under their architecture license agreement. Qualcomm also alleges that Arm leaked a 2024 license termination threat to the press, which Qualcomm says damaged its negotiations with Meta Platforms and reduced a potential chip deal's value by about $170 million.

A separate bench trial is examining whether Arm negotiated in good faith over the next generation of its chip architecture. Testimony in that proceeding showed that Arm sought a large increase in per-chip royalty rates for its latest architecture version.

Arm's CFO completed a pre-planned sale of over 10,000 shares in late September. ETF funds, including the Invesco QQQ Trust, were net sellers of ARM shares earlier this week.

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