Two of the globe's largest chip manufacturers will clash in court this week due to a disagreement over intellectual property.

What Happened: Arm Holdings plc's (NASDAQ:ARM) legal spat with Qualcomm Inc. (NASDAQ:QCOM) commenced Monday, Dec. 16, before a federal jury in Delaware, Bloomberg reported.

Recall Qualcomm's $1.4 billion acquisition of NUVIA, a chip startup, in 2021. Just two years earlier, Arm granted licenses to NUVIA — assets Qualcomm eventually inherited.

Arm, headquartered in the U.K. and majority-owned by SoftBank Group, claims the Nuvia deal requires renegotiation. It also wants Qualcomm to destroy certain chip designs it received once the deal closed.

Qualcomm, in court documents, insists it has its own license agreements with Arm. "Qualcomm has licensed and paid for the same intellectual property that NUVIA licensed under its own separate agreements with ARM," the statement reads.

ETFs To Watch

As per Benzinga Pro, chip ETFs closed in the green Monday:

• VanEck Semiconductor ETF (NASDAQ:SMH) was up 0.56%
• Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) was up 0.49%
• Columbia Semiconductor and Technology ET (NYSE:SEMI) was up 2.75%
• Direxion Daily Semiconductor Bull 3X Shares ETF (NYSE:SOXL) was up 5.88%

Why It Matters: The case — Arm v. Qualcomm, 22-cv-01146, US District Court, District of Delaware (Wilmington) — will likely see both CEOs, Arm's Rene Haas and Qualcomm's Cristiano Amon, take the stand.

This isn't the first time an M&A agreement involving these companies sparked legal challenges. Back in 2020, Nvidia attempted to buy Arm for $40 billion, which threw San Diego-based Qualcomm and other tech companies into a panic.

Regulators sank the deal in 2022 when the Federal Trade Commission sued Nvidia to block the merger. Arm also faced substantial regulatory pressure from British authorities.

Fast-forward to today, and Arm is now trying to flex its muscles by pulling Qualcomm's license — worth an estimated $1.5 billion.

And Qualcomm is not known to give up easily. Recall its past licensing tussle with Apple, settled in April 2019.

What's Next: Analysts predict the companies will eventually settle, probably with Qualcomm paying more to access Arm's tech.

The proceedings are anticipated to conclude by Friday, Dec. 20.

It's worth noting that the chips in question power most mainstream devices, and the legal dispute could have wide-ranging repercussions on the tech industry.

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