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A two-year legal battle between two tech giants, Qualcomm Inc (NASDAQ:QCOM) and Arm Holdings PLC (NASDAQ:ARM), reportedly threatens to disrupt the emerging wave of AI-powered personal computers.
At the annual Computex trade show in Taipei, executives from Microsoft Corp (NASDAQ:MSFT), Asustek Computer (OTC:ASUUY), Acer, and others joined Qualcomm CEO Cristiano Amon on stage to promote a new generation of AI-powered PCs.
Despite the enthusiasm at Computex, concerns are growing about a contract dispute between Arm Holdings and Qualcomm that could halt shipments of these new laptops, reported Reuters.
Arm Holdings, majority-owned by Japan’s SoftBank Group Corp (OTC:SFTBF), sued Qualcomm in 2022 for not renegotiating a license after acquiring Nuvia, a company Qualcomm purchased in 2021 for $1.4 billion.
The lawsuit centers on the intellectual property and designs Qualcomm obtained from Nuvia. Arm claims the design for Microsoft’s latest AI PC, Copilot+, is a descendant of Nuvia’s chip and should be subject to a new royalty rate.
Related Read: Nvidia’s AI Chip – The Product Propelling Its Success
The report quoted an Arm spokesperson stating, “Arm’s claim against Qualcomm and Nuvia is about protecting the Arm ecosystem and partners who rely on our IP and innovative designs..”
Qualcomm argues that its existing broad license for Arm technology covers the PC chips in question. The spokesperson referred Reuters to a 2022 statement, “Arm’s complaint ignores the fact that Qualcomm has broad, well-established license rights covering its custom-designed CPUs, and we are confident those rights will be affirmed,” by Ann Chaplin, Qualcomm’s general counsel.
The legal dispute adds complexity as Qualcomm’s exclusive chip supply deal for laptops expires this year, opening the market to competitors like Nvidia Corp (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD), per the report.
Despite the conflict, some analysts reportedly expect a settlement before the trial, scheduled for December in Delaware federal court.
Price Action: QCOM shares are trading higher by 1.56% at $209.85 at the last check Monday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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