The issue is that Qualcomm wants to switch to ARM chips where they don't pay ARM much money.
When you're making ARM chips, you can either license the instruction set or you can license whole core designs. Most people license whole core designs. You build a chip using an ARM Cortex X4 core, 3 Cortex A720 cores, and 4 Cortex A520 cores and call it a day. But when you're using ARM's core designs, you have to pay them a lot to license those core designs. But when you're licensing the instruction set (and designing your own cores), you pay ARM a tiny licensing fee. This is what Apple does.
In this case, the story goes:
A startup called Nuvia wanted to create custom ARM cores for servers and negotiated a deal with ARM that was very favorable since ARM would like to grow its server marketshare. The agreement included a stipulation that they couldn't sell their IP to another company for that other company to build ARM cores built on Nuvia IP (according to ARM). Qualcomm argues that they have an instruction set license so they're allowed to build custom cores based off that license. ARM says that Nuvia's instruction set license means that Qualcomm can't.
I don't know what the cost difference is between core licenses and instruction licenses, but some places seem to think it's around 5x. Qualcomm has around 35% of the ARM chip market, but crucially a huge portion of the more expensive (and profitable for ARM) flagship cores. It's possible that Qualcomm is half of ARM's business (maybe more). If Qualcomm shifts to their own core designs and starts paying ARM 20% of what they're paying now, that could wipe out 40% of ARM's revenue.
If Qualcomm can shift from more expensive core licenses to cheaper instruction licenses, it would wipe out a huge portion of ARM's business. Worse, if those cores are better and become the de-facto flagship cores, it'd wipe out even more of ARM's business as companies like Samsung and Google might feel the need to buy Qualcomm chips (with better cores) rather than buying ARM's Cortex X cores for their flagship phones.
Likewise, Qualcomm is unlikely to stop at smartphones. They're already moving into laptops which will make it harder for any company using ARM-designed cores to get a foothold there. Qualcomm could move into servers in the near future and offer something better than the ARM Neoverse cores that are used by AWS's Graviton, Google's Axion, and Ampere.
So it's an enormous threat to ARM's business and ARM feels like it gave Nuvia a sweetheart deal because they were a small startup looking to enter a mostly new market rather than disrupting their current business - and they gave them a license with restrictions on it. Then Nuvia sold to Qualcomm who is using that IP to stop paying ARM - and ARM thinks that goes against the restrictions that Nuvia agreed to.