Arm Stock Is Down 8% Last Week. What Does Lam Research Have to Do With It?

Chip stocks lost $200 billion on October 22 after Lam Research warned of supply chain constraints, despite NVIDIA's optimistic AI demand outlook. Lam Research's stock fell 11.76%, and other semiconductor stocks also declined. The Philadelphia Semiconductor Index dropped 6.72%. Meta's free cash flow fell to $784 million, and Alphabet reported its first cash-flow-negative quarter.

Arm and Qualcomm are in a trial over royalty rates for Arm's v10 architecture. Arm's v10 rates could be up to 30% of a $220 Snapdragon chip's price, 15x Qualcomm's current rate. Qualcomm offered $250M upfront to settle, which Arm rejected. Arm argues 2013 terms are outdated and should not cap data center processor royalties.

Arm (ARM) and AMD (AMD) shares fell 5% after a Delaware jury ruled Arm breached its license agreement with Qualcomm (QCOM). Taiwan Semiconductor (TSM) dropped 2%. The verdict adds to a broader chip sector selloff, with the iShares Semiconductor ETF (SOXX) down 3%. Arm's business model relies on licensing, making the ruling significant for its royalty income.

ARM Holdings plc (NASDAQ: ARM) shares fell 4.07% on October 16, 2026, due to concerns over weakening AI-chip demand and an escalating legal battle with Qualcomm. The company's revenue stands at $4.01B, with a market valuation of 50.7x sales and 73x free cash flow. ARM's gross margin is 97.9%, and EBITDA margin is 27.8%. The stock has dropped from a September high of $336.98 to around $234.8, with intraday trading showing indecision.

A jury found Arm breached its agreement with Qualcomm and interfered with its Meta relationship, but rejected several other claims. Qualcomm was awarded $2 in damages, but key decisions on licensing and remedies remain with the judge. The outcome could impact future licensing talks and business practices. Arm also claimed victory, as it avoided substantial financial damages and defeated several claims.

A Delaware jury found Arm guilty of breaching a licensing agreement with Qualcomm and interfering with its business relations, awarding Qualcomm $2 in damages. Arm disputes the ruling, claiming it acted in good faith. Qualcomm seeks to stop paying royalties to Arm for five years, a decision pending with Judge Maryellen Noreika. The dispute began after Qualcomm's 2021 acquisition of Nuvia, with Qualcomm alleging Arm withheld chip-testing tools and leaked threats to end a key license.