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Arm and Qualcomm dispute could derail AI-powered PCs

by on12 June 2024

Goes to court in December

According to a Reuters report, a two-year-long legal battle is threatening the debut of a new wave of AI-driven personal computers. Arm and Qualcomm are at the heart of this dispute.

At the Computex trade show in Taipei last week, leaders from Microsoft, Asus, and Acer, alongside Qualcomm’s CEO Cristiano Amon, showcased AI-powered PCs.

However, the ongoing legal tussle between Arm Holdings and Qualcomm is causing significant concern. If this disagreement is not resolved, it could potentially halt the shipment of these new PCs, which are expected to generate substantial revenue for Microsoft and its associates.

Microsoft's projection to capture about five per cent of the Arm-based laptop market by the end of the year, translating to 1-2 million units sold, is now under threat. The launch of nearly 20 models from companies like Microsoft, Dell, and Samsung on June 18 could be halted if Arm wins the legal battle, potentially reshaping the market and industry competition.

"Doug O’Laughlin, the founder of chip financial analysis firm Fabricated Knowledge, said, “It’s a real risk. The more successful the laptops are, the more fees Arm can eventually collect.”

The lawsuit, initiated by Arm in 2022, revolves around Qualcomm’s inability to secure a new license following its purchase of Nuvia, a start-up by ex-Apple chip engineers, for $1.4 billion in 2021. Nuvia’s original plan was to create server chips under Arm licenses, but Qualcomm shifted the focus to developing a laptop processor, now part of Microsoft’s AI PC, Copilot+.

Arm argues that the Copilot+ laptop design is closely related to Nuvia’s chip and has terminated the license for these chips.

An Arm spokesperson stated, “Arm’s claim against Qualcomm and Nuvia is about protecting the Arm ecosystem and partners who depend on our IP and innovative designs and enforcing Qualcomm’s contractual obligation to destroy and stop using the Nuvia designs derived from Arm technology.”

Qualcomm maintains that its extensive license for Arm technology encompasses its PC chips.

Qualcomm’s general counsel, Ann Chaplin, said in 2022: “Arm’s complaint overlooks the fact that Qualcomm has broad, well-established license rights covering its custom-designed CPUs, and we are confident those rights will be upheld.”

The situation is further complicated by Qualcomm’s end of its exclusive agreement to supply chips to laptop manufacturers this year, which paved the way for rivals like Nvidia and Advanced Micro Devices (AMD), which are both crafting their own chips.

Despite the friction between Arm and Qualcomm, some investors and analysts hope for a resolution before the trial, which is set to start in a federal court in Delaware in December.

 Jay Goldberg, CEO of D2D Advisory, remarked, “There is a degree of absurdity in Arm suing its second-largest customer and Qualcomm being

Last modified on 12 June 2024
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