Showdown! Arm threatens to revoke Qualcomm's license, which may affect the entire AI computer and smartphone industry

The two giants in the chip supply chain have seen new developments in their long-standing technical licensing litigation.

According to media reports on Wednesday, Arm has issued a "final warning" to Qualcomm, stating its intention to cancel the latter's design architecture license within 60 days.

As the dominant player in the mobile internet era, Arm almost monopolizes the semiconductor industry's chip design IP supply, with Qualcomm being a core customer of Arm.

However, in August 2022, following Qualcomm's acquisition of chip startup Nuvia the previous year, Arm filed a lawsuit against its ally Qualcomm for contract violations, trademark infringement, licensing fees, and the ownership of Nuvia's IP.

The reason behind this is that after acquiring Nuvia, also an Arm licensee, Qualcomm announced plans to incorporate Nuvia's CPU design version (Oryon) into its Snapdragon X processors. However, Arm believes that from the moment Nuvia officially became part of Qualcomm, the former's Arm license expired, and Qualcomm's actions violated the licensing agreement.

Arm vs. Qualcomm: Will the entire AI PC industry pay the price?

Over the past two years, the above-mentioned litigation has made substantial progress. Arm stated that the focus of the dispute lies in Qualcomm's failure to renegotiate contract terms after acquiring Nuvia; Qualcomm, on the other hand, argued that the existing agreement already covered its acquisition of Nuvia.

Arm also pointed out that the processor architecture of Microsoft's Copilot+ laptops is a direct technological descendant of Nuvia chips and stated that licenses for these chips have been revoked.

It is worth noting that Snapdragon X is currently the only chip approved for use in the Microsoft AI PC ecosystem. Furthermore, Qualcomm publicly stated that it will use its technology derived from Nuvia to manufacture chips for smartphones, cars, augmented reality devices, and other hardware.

Some analysts suggest that if Arm ultimately wins the lawsuit, it may force Qualcomm and around 20 suppliers using Snapdragon X processors to halt the shipment of new AI PCs, resulting in losses of up to billions of dollars.

Doug O'Laughlin, founder of chip financial analysis company Fabricated Knowledge, commented:

"This is definitely a real risk."

"The more successful the (new laptops) are, the more fees Arm can ultimately receive."

At the same time, some media analysts believe that this scenario is unlikely to occur.

"Major manufacturers have already invested heavily in the Windows on Arm and Copilot+ ecosystems. If Arm succeeds in the legal battle, it may trigger a series of new lawsuits from companies like Microsoft against it."

"And this will also deter any company wanting to use Arm architecture in the PC industry for a long time."

The individual speculated that the most likely outcome of this lawsuit is an out-of-court settlement between Arm and Qualcomm, with the latter paying a substantial compensation to the former or the former receiving a profit share from the Snapdragon X series products In December, Arm and Qualcomm will face final judgment in the federal court in Delaware.

It is worth noting that Arm's exclusive chip supply agreement with Qualcomm is likely to expire this year, which may provide Qualcomm's competitors with a significant opportunity to enter the market and take away market share from Qualcomm