An ongoing legal dispute between tech giants Arm Holdings and Qualcomm threatens to disrupt the launch of new AI-powered personal computers, according to industry leaders and experts.
At the annual Computex trade show in Taipei, executives from Microsoft, Asus, Acer, and others joined Qualcomm CEO Cristiano Amon to promote a new generation of AI-powered PCs. However, discussions at the event frequently centered on the contract dispute between Arm Holdings and Qualcomm, which could delay the delivery of these innovative PCs.
The disagreement arises from Arm’s lawsuit against Qualcomm in 2022 for failing to negotiate a new licensing agreement after acquiring Nuvia, a company established by former Apple engineers. Arm asserts that the new laptop processors, intended for Microsoft’s latest AI PC, Copilot+, are directly derived from Nuvia’s technology and should therefore be subject to additional royalties.
“Arm’s claim against Qualcomm and Nuvia is about protecting the Arm ecosystem and ensuring Qualcomm adheres to its contractual obligations,” an Arm spokesperson stated.
Qualcomm, however, argues that its existing broad license for Arm technology encompasses its PC chips. “Arm’s complaint ignores Qualcomm’s established license rights for its custom-designed CPUs,” said Ann Chaplin, Qualcomm’s general counsel.
The stakes are high, as Microsoft expects to capture around 5% of the market with Arm-based laptops by the end of the year, translating to roughly 1 to 2 million units. Nearly two dozen models from Microsoft, Dell, and Samsung are set to launch on June 18.
If Arm prevails in the litigation, Qualcomm and its approximately 20 partners, including Microsoft, might have to cease shipments of the new laptops. Doug O’Laughlin, founder of chip financial analysis firm Fabricated Knowledge, commented, “The more successful the laptops are, the more fees Arm can eventually demand.”
Adding another layer of complexity, Qualcomm’s exclusive agreement to supply laptop builders with its chips expires this year, potentially opening the market to competitors like Nvidia and Advanced Micro Devices.
Despite the public legal battle, some investors and analysts believe a settlement will be reached before the trial, scheduled to begin in federal court in Delaware in December. “There is a degree of absurdity in Arm suing its second-biggest customer and Qualcomm being sued by its largest supplier,” said Jay Goldberg, CEO of D2D Advisory.
The outcome of this legal dispute could have a significant impact on the AI-powered PC market, a sector poised for substantial growth.