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

In August 2022, chip design company Arm filed a US lawsuit against Qualcomm, demanding that it destroy specific Arm-based technologies. Without any progress in the case, Qualcomm started using these technologies in its Snapdragon X processors, the only chips currently classified for use in Microsoft’s new Copilot+ AI PCs. Given how much the PC industry expects AI to revive a somewhat flagging market, will this ongoing legal battle ultimately prevent the AI ​​PC from succeeding?

According to a Reuters report (via Heise), this issue was frequently discussed among Computex 2024 attendees. The whole situation began to take shape when Qualcomm acquired Nuvia, a start-up company that develops CPUs for servers, in 2021.

This company licensed processor architectures from Arm and, upon becoming part of Qualcomm, development work continued. Ultimately, Nuvia’s designs were used in several high-end processors, including the Snapdragon X line.

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

By using Nuvia’s chip designs, Qualcomm violated the contract, according to the lawsuit, and as restitution, Arm demanded that Qualcomm destroy any technologies developed using Nuvia’s old licenses.

Since then, no progress has been made in the legal battle, and as it continues to hang over Qualcomm, the PC industry is quite concerned that it could derail the expected boom in laptop sales. That’s because the star of the Copilot + AI PC program is Qualcomm’s Snapdragon X processor, which uses a version of Nuvia’s CPU design, as it is currently the only chip ratified for use in Microsoft’s AI PC ecosystem.

Qualcomm’s position on the matter is that it believes it “has broad and well-established license rights covering [its] Custom CPUs”, according to a Reuters report, which is why there was no agreement of any kind between the two companies.

A significant number of major laptop vendors (Dell, Asus, Acer, MSI, and Gigabyte) have moved forward with the development of Snapdragon X-powered laptops, and many are now available on retail shelves. Could a final push by Arm force the suspension or even halt of sales of these PCs for good?

I don’t think this will happen because so much capital has already been invested in the Windows on Arm and Copilot+ ecosystems, a successful outcome for Arm in the legal battle would likely trigger a series of new lawsuits against it from companies like Microsoft, Dell, Asus and so on. And it would also prevent 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 will eventually reach an out-of-court settlement, with the latter paying the former a good amount 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 licensing battle, the new wave of AI-powered PCs may hit shore with a mild bump rather than the stunning crash PC vendors are hoping for.