A federal judge weighing an antitrust claim against Arm Holdings Plc expressed reluctance to get involved in licensing fees that Qualcomm Inc. would have to pay Arm for using new technology needed to design the next generation of chips for computers, phones, vehicles and data centers.

By Leah Nylen US District Judge Maryellen Noreika in Delaware heard closing arguments Tuesday in a bench trial over whether Arm’s actions violated California state antitrust law, after a jury last week concluded the company breached a licensing agreement with Qualcomm, one of the chip designer’s biggest customers.

Qualcomm had asked the judge to force Arm to negotiate new licensing deals in good faith, but Noreika called that request “very, very drastic” and said it would require her to “sit here and play your moms” while she considers the legal issues around the antitrust claim.

“You want me to regulate Arm’s business based on a California statute,” Noreika said. “No one has appointed me the head of the FTC,” she added later, referring to the US Federal Trade Commission.

The judge said she’d issue a written decision on the antitrust claim, but indicated it might take her some time after both sides provide final written submissions later this month.

The complex legal dispute, which has already involved two jury verdicts, pits the two longtime business partners against each other as they jockey for advantage in the computing semiconductor market.

Arm, which is majority-owned by Japan’s SoftBank Group Corp., sells chip designs and licenses a so-called instruction set — code used by software to communicate with processors. Many of the world’s largest tech companies license Arm’s architecture and incorporate it into products from computers to cars. Qualcomm is the largest chip provider to mobile phone makers such as Samsung Electronics Co. ‘Good Faith’During the hearing Tuesday, Qualcomm lawyer Karen Dunn claimed Arm has delayed negotiations over licensing fees for the next-generation of its technology, known as v10, which is still in development but would underpin chips through 2040.

Arm is bound by its current licensing contract to negotiate with Qualcomm in “good faith,” Dunn said. But instead, when Arm has made offers on the v10 licenses, it has sought “exorbitant” royalty rates that are 15 times what the chipmaker pays for the current version of the technology, she said.

The exact amount that Arm is seeking per chip hasn’t been disclosed, and it would depend on whether the final product is used in mobile phones or data centers – an area currently dominated by Nvidia Corp. that both Arm and Qualcomm are seeking to enter.

Qualcomm pays about $1.88 to Arm on most chips today, Dunn and lawyers for Arm said. The judge said Qualcomm’s current licensing rates allow it a profit margin of close to 99%, while the proposed rates on the new technology would reduce that to about 75%.

“Is it that Qualcomm can’t afford it or it doesn’t want to pay it?”Noreika asked at one point.

Qualcomm wants Arm to negotiate a license to the technology on similar terms to what it has offered Nvidia and Apple Inc., Dunn said. Noreika, however, expressed skepticism about her ability to set a licensing rate, pointing out that Qualcomm sued only under California’s unfair competition law rather than federal antitrust law, which has higher standards.

Licensing Rates Gregg LoCascio, a lawyer for Arm, said the rates the company has proposed to Qualcomm for v10 licenses are based in part on what Alphabet Inc.’s Google and Microsoft Corp. are paying.

“If they really want to negotiate they could and they would,” LoCascio said of Qualcomm. “What these claims are about is that they don’t like that we’re evolving our business” to compete with them, LoCascio said.

Jason Wilcox, another Arm lawyer, said the company’s entry into the market improves competition by giving customers more options for chip suppliers. Noreika, however, questioned that argument as well.

Arm is “not just any competitor,” she said. “It’s in a unique position” because it controls the instruction sets. “Why doesn’t Arm getting into the chip business raise some of the same concerns” regulators had that scuttled Nvidia’s $22 billion acquisition of Arm in 2022? she said.

Wilcox said the situation is different because the Nvidia acquisition was viewed as giving an “entrenched player” greater control over the market, where Arm represents a new entrant that expands it. Arm and Qualcomm have been waging a long-running trademark and breach of contract dispute.

In the first trial in 2024, the jury found for Qualcomm, ruling it didn’t violate a startup’s agreement with Arm when it sought to incorporate the technology in its own chips without paying a higher licensing rate. Arm claimed the agreement should have been renegotiated after Qualcomm bought the startup, Nuvia.

Earlier this month, a second federal jury found that Arm breached a separate overarching licensing agreement with Qualcomm and sought to undermine the chipmaker’s relationships with customers, but awarded only $2 in damages. Jurors sided with Arm on four separate counts related to a different licensing agreement.