Could Arm's legal battle with Qualcomm over technology licensing prevent Copilot+ PCs from really taking off?

In August 2022, chip design company Arm filed a lawsuit in the United States against Qualcomm, demanding that it destroy certain Arm-based technologies. Without any progress in this matter, Qualcomm has continued to use these technologies in its Snapdragon X processors, the only chips currently designed for use in Microsoft’s new Copilot+ AI PCs. Given that the PC industry hopes that AI will revive a somewhat struggling market, will this ongoing legal battle ultimately prevent the success of the AI PC?

According to a Reuters report (via Heise), this question was frequently discussed among Computex 2024 attendees. The whole situation began to form when Qualcomm acquired Nuvia, a startup developing server processors, in 2021.

This company had processor architectures licensed from Arm, and once it became part of Qualcomm, further development of work continued. Ultimately, Nuvia’s designs were used in various high-end processors, including the Snapdragon X line.

However, in August 2022, Arm filed a lawsuit in the U.S. District Court of Delaware, claiming that Qualcomm did not have the right to do so, because by the time Nuvia officially became part of Qualcomm, the former’s Arm licenses have expired.

By using Nuvia’s chip designs, Qualcomm breached its contract, according to the lawsuit, and as a remedy, Arm demanded that Qualcomm destroy all technologies developed using Nuvia’s old licenses.

Since then, no progress has been made in the legal battle, and as it continues to weigh on Qualcomm, the PC industry fears it could derail the expected boom in laptop sales. Indeed, the star of the Copilot+ AI PC show is Qualcomm’s Snapdragon Microsoft’s AI PC ecosystem.

Qualcomm’s position on the matter is that it believes it “has extensive and well-established licensing rights covering (its) custom-designed processors,” according to a Reuters report, which is why no agreement from any no such agreement has been concluded between the two companies.

A significant number of major laptop vendors (Dell, Asus, Acer, MSI and Gigabyte) have started development of Snapdragon X-powered laptops and many are already available on store shelves. Could a final push from Arm force a halt, or even a permanent halt, to the sale of these PCs?

I don’t think this will happen because so much capital has already been invested in the Windows ecosystems on Arm and Copilot+, a positive outcome for Arm in the legal battle would likely trigger a series of new lawsuits against it from Microsoft, Dell , Asus, etc. And it would also deter any company from wanting to use Arm in the PC industry for a long time.

The most likely outcome of the lawsuit is that Arm and Qualcomm eventually settle out of court, with the latter paying the former a good sum of money or a larger share of the profits made by the Snapdragon X line.

But until there’s a concrete conclusion to the two-year-long licensing battle, the new wave of AI PCs may end up in a gentle fashion, rather than the stunning crash that PC vendors are hoping for. .