• Qualcomm shares fell on Wednesday after Bloomberg reported that British chip designer Arm is looking to scrap a key license for the U.S. firm.
• The license in question allows Qualcomm to design chips based on Arm architecture.
• Should the cancellation of the license take place, then Qualcomm may have to stop selling products based on Arm designs.

Qualcomm shares fell Wednesday after Bloomberg reported that British chip designer Arm is looking to scrap a key license for the U.S. firm.

Arm has given Qualcomm a 60-day notice of the cancellation of their so-called architectural license agreement, Bloomberg reported, citing a document. Shares were last 2.6% lower.

The license in question allows Qualcomm to design chips based on Arm architecture.

Arm, which is majority-owned by Japanese giant SoftBank, operates by effectively licensing blueprints that other companies use to design semiconductors.

Arm alleged that Qualcomm has breached its license agreement.

"Following Qualcomm's repeated material breaches of Arm's license agreement, Arm is left with no choice but to take formal action requiring Qualcomm to remedy its breach or face termination of the agreement."

"This is necessary to protect the unparalleled ecosystem that Arm and its highly valued partners have built over more than 30 years. Arm is fully prepared for the trial in December and remains confident that the Court will find in Arm's favor."

A Qualcomm spokesperson told CNBC that Arm was trying to "strong-arm a longtime partner" and that the British chip designer's move was a "desperate ploy."

"We are confident that Qualcomm's rights under its agreement with Arm will be affirmed," the Qualcomm spokesperson said.

The two companies have been locked in a two-year legal battle focused on Nuvia, a firm Qualcomm acquired in 2021 that is an Arm licensee. Arm argues that Qualcomm should now renegotiate licensing terms with the British firm.

Qualcomm is one of the world's largest players in the smartphone processor markets. Its chips are built into hundreds of millions of smartphones shipped annually.

More recently, the company has ramped up its efforts in the personal computing space with PC processors designed to run artificial intelligence applications.

Should the license cancellation take place, Qualcomm may have to stop selling products based on Arm designs.