Legal Clash Between Arm and Qualcomm Over AI Chips Heads to Trial

A high-stakes legal battle between chip technology giant Arm and semiconductor leader Qualcomm is set to begin on Monday in a Delaware courtroom, a dispute that could have significant implications for the burgeoning market of artificial intelligence (AI)-powered PCs.

The trial, which follows over two years of legal wrangling, centers on a contractual disagreement regarding Qualcomm’s use of Arm’s intellectual property. Arm licenses its chip designs to companies worldwide, and Qualcomm, one of its biggest customers, has used these designs to develop processors for smartphones and, more recently, low-power AI PCs.

According to Reuters, the trial will start with opening arguments on Monday and is expected to conclude by Friday. Both sides have been allocated approximately 11 hours to present their cases to the jury, which was selected last week. Among the notable witnesses slated to testify are Arm CEO Rene Haas, Qualcomm CEO Cristiano Amon, and Gerard Williams, a former senior executive at Apple and founder of Nuvia, a chip startup now owned by Qualcomm.

The Core of the Dispute

The dispute arose following Qualcomm’s $1.4 billion acquisition of Nuvia in 2021. Founded by former Apple engineers, including Williams, Nuvia specialized in custom-designed central processing units (CPUs). Qualcomm has since integrated Nuvia’s designs into its new line of AI-focused PC chips, which debuted earlier this year. These chips are part of efforts by Qualcomm and Microsoft to challenge Apple’s dominance in the laptop market with machines powered by Apple’s proprietary silicon.

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The legal issue hinges on whether Qualcomm’s license agreement with Arm extends to the Nuvia designs. Arm claims that Qualcomm must renegotiate the terms of Nuvia’s contract to use the designs, while Qualcomm maintains that its existing licensing rights already cover custom CPU designs, per Reuters.

Arm has gone so far as to demand that Qualcomm destroy the Nuvia-based designs in question, though it is not seeking monetary damages. Qualcomm, on the other hand, has stated it is “confident” that its rights will be upheld.

Financial Stakes and Broader Implications

The outcome of this trial could have wide-ranging repercussions. According to Bernstein analyst Stacy Rasgon, Qualcomm currently pays Arm around $300 million annually in licensing fees. If Arm prevails, Qualcomm may face restrictions on the use of Nuvia’s technology or be forced to renegotiate its licensing agreement on less favorable terms.

For Arm, the case is not just about contractual rights but also about asserting its position as a critical supplier in the chip design ecosystem. Arm, which was acquired by Japan’s SoftBank Group and went public in the U.S. earlier this year, licenses technology that powers a vast array of devices, from smartphones to AI servers.

AI PCs on the Horizon

The trial’s timing coincides with a growing push by Qualcomm and others to develop AI-powered PCs, an emerging category of devices that blend high performance with power efficiency. These machines, running Microsoft’s Windows operating system, aim to compete with Apple’s MacBooks, which are powered by chips developed in-house.

Source: Reuters