Arm Holdings may cancel Qualcomm’s license to manufacture chips based on ARM architecture. The chipmaker received a 60-day notice to cancel the deal, Bloomberg reports.

The move follows a legal battle that began in 2022 when Arm sued Qualcomm for breach of contract and trademark infringement. This conflict has the potential to shake up the smartphone and PC markets and disrupt both companies’ financial and operational activities.

Qualcomm currently sells hundreds of millions of processors for Android smartphones based on the ARM architecture. These chips make up the majority of the US company’s $39 billion revenue. If the repeal goes into effect, the chipmaker will have to stop selling the products or face damages claims.

Arm representatives declined to comment. A Qualcomm spokesperson said that the British company is trying to “force out a longtime partner.”

“[It] appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed,” said in an emailed statement.

The legal battle between the companies began after Qualcomm acquired Nuvia, a chip development startup, in 2021. Nuvia’s work became the basis for Snapdragon X chips, which are used in almost all laptops with AI capabilities, also known as Copilot+ computers. Nuvia’s design, called Oryon, has also been used in Snapdragon processors for smartphones. The British company says that this violates the agreement and demands that Nuvia’s previous work created before the acquisition be destroyed.

Among other things, the conflict between the two companies began with a change in leadership and priorities. The Snapdragon chipmaker aims to move away from using Arm’s design in favor of its own developments, but so far it has been impossible to make such a change within the company.

At the same time, the architecture developer wants to offer chipmakers more advanced chip designs, and Arm CEO Rene Haas believes that the company should receive a bigger award for its work.