On November 19, 2025, the South Korea Fair Trade Commission (KFTC) conducted an unannounced inspection of Arm Holdings plc’s Seoul office as part of an inquiry into the chip‑design firm’s licensing practices. The inspection followed a formal complaint lodged by Qualcomm, which alleges that Arm has shifted from its long‑standing “open network” model to a more restrictive regime that limits access to its intellectual property and harms competition.
Qualcomm’s complaint centers on specific licensing terms that the company claims now require licensees to pay higher royalties and to obtain additional approvals for new product lines. Qualcomm argues that these changes disadvantage competitors that rely on Arm’s cores for smartphones, tablets, and emerging AI processors, potentially consolidating market power in the hands of a few large players.
Arm has not yet issued a formal statement regarding the KFTC’s visit, but it has previously defended its licensing framework in other jurisdictions. In a recent U.S. court case, Arm contended that Qualcomm is using regulatory bodies to expand a commercial dispute for its own competitive advantage. The company maintains that its licensing model remains open and that any changes are driven by evolving market dynamics and the need to support advanced technology development.
The Seoul office is a key hub for Arm’s global operations, handling licensing negotiations, customer support, and regulatory compliance. Targeting this location signals the KFTC’s intent to scrutinize the core of Arm’s licensing business and assess whether the company’s practices align with South Korea’s antitrust standards.
The investigation could have significant implications for Arm’s revenue streams, which are largely derived from licensing fees and royalties on chips built with its designs. If the KFTC finds that Arm’s licensing terms violate competition law, the company could face penalties, be required to modify its licensing agreements, or even be compelled to offer more favorable terms to licensees, potentially eroding its profit margins.
Historically, South Korea has taken a hard line against tech firms with anticompetitive practices. In 2016, the KFTC fined Qualcomm KRW 1.03 trillion (about $850 million) for abuse of dominance in its own licensing practices, a decision upheld by the Supreme Court. The precedent suggests that the KFTC will not hesitate to impose substantial penalties on Arm if violations are confirmed.
The broader context of the Arm‑Qualcomm dispute adds weight to the KFTC’s inquiry. Qualcomm has raised similar concerns with regulators in the United States and Europe, and the two companies are engaged in separate legal battles over licensing agreements. A finding against Arm could accelerate the adoption of alternative open‑source architectures, such as RISC‑V, among Android device manufacturers seeking to avoid potential licensing constraints.
While the KFTC’s inspection is a regulatory event, its outcome will be closely watched by investors, partners, and competitors alike, as it could reshape the competitive landscape of the semiconductor industry and influence the strategic direction of companies that depend on Arm’s technology.
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