Qualcomm’s license battle with Arm puts many AI-enabled Copilot+ PCs in peril

As its long-running dispute with Arm turned into a war of words this week, the stakes for chip giant Qualcomm and its technology partners, including Microsoft, couldn’t be higher.

Along with MediaTek and Apple, Qualcomm is one of the biggest suppliers of chips for use in smartphones and tablets.  As PCs, smartphones, and automobiles acquire more AI capabilities, the increasingly powerful Snapdragon Elite platform is supposed to be Qualcomm’s big move into those arenas.

Now the dispute with Arm, which has been rumbling on since 2022 over Qualcomm’s right to develop the ARM-based Oryon CPU core in its chips, threatens to derail the whole project. To clarify, ARM is the architecture, Arm is the company.

According to Bloomberg, and independently verified by PC World, Arm recently issued a 60-day notice of cancellation of Qualcomm’s Oryon license.

Disputes over intellectual property (IP) and licensing are common in tech, but the report garnered an unusually spiky response from a Qualcomm spokesperson, which suggests the confrontation might be more serious.

“This is more of the same from Arm — more unfounded threats designed to strongarm a longtime partner, interfere with our performance-leading CPUs, and increase royalty rates regardless of the broad rights under our architecture license.”

According to the spokesperson, the timing of Arm’s move was connected to an impending court date in December.

“Arm’s desperate ploy appears to be an attempt to disrupt the legal process, and its claim for termination is completely baseless. We are confident that Qualcomm’s rights under its agreement with Arm will be affirmed. Arm’s anticompetitive conduct will not be tolerated.”

Of course, it probably didn’t help Qualcomm’s mood that the news emerged smack in the middle of the company’s major Snapdragon Summit 2024, held in Maui this week.

Why does Oryon matter?

Qualcomm’s Snapdragon Elite platform comprises four system-on-a-chip (SoC) microprocessors aimed at different market segments: X Elite for Windows PCs, the 8 Elite for smartphones and tablets, the Elite Cockpit for automotive systems, and the Elite Ride for automated driving.

All use ARM-based cores in different configurations: the Oryon CPU as a general microprocessor, the Hexagon neural processing unit (NPU) to accelerate AI capabilities, and the Adreno graphics processing unit (GPU) for graphics.

It is the first of those, the Oryon CPU core originally acquired when Qualcomm bought Nuvia in 2021, that is at the heart of the dispute between the two companies. Arm claims that the agreement it had with Nuvia to develop Oryon did not transfer to Qualcomm, and that any agreements it had with Qualcomm were separate. Buying Nuvia didn’t alter this fact.

Could this affect business PCs?

The dispute is complicated by the involvement of Microsoft, which heads a list of PC makers using Qualcomm’s X Elite platform to push AI-enabled PCs.

That should be good news. After a long dip, the PC market has looked up in the last year, increasing 3.4% year-over-year in Q2 2024, according to figures from Canalys, the third quarter in a row to register growth.

Previous attempts to get Windows running on ARM floundered, but this time Qualcomm has made good with X Elite. Having decided that AI-enabled PCs are a new paradigm, Microsoft will want the dispute to be resolved as soon as possible.

The same goes for Qualcomm’s other PC partners, including Acer, Asus, Dell, HP, Lenovo, and Samsung, all of which have developed models using the same platform. In addition to Microsoft’s Surface Pro and Surface Laptop, models based on X Elite include Lenovo’s Yoga Slim 7x 14, HP’s OmniBook X, Acer’s Swift 14 AI, and various laptops in Dell’s XPS, Latitude, and Inspiron ranges.  

All feature Copilot+, each promotes the claimed performance boost and hugely improved battery life of the X Elite, and most are at the more expensive business end of the price charts.

PCs with Intel and AMD processors also qualify as Copilot+ certified, so any failure to resolve the dispute, or defeat for Qualcomm, won’t disrupt AI capabilities from appearing in Windows laptops, but the Oryon core is also used in high-end smartphones and tablets due for release in the coming weeks.

The market assumption is that the companies will resolve the dispute before it reaches court, not least because of the uncertainty its continuation would create for both. That’s how numerous other licensing and IP disputes in tech end up being quietly forgotten.

That didn’t stop the pair’s share prices from taking a dive as news of the squabble’s latest development became public, a sign that some think this dispute is bound to hurt at least one of the companies.

According to Daniel Newman, CEO of analysts The Futurum Group, the dispute is unusual in putting at risk the development programs of numerous third parties, including powerful players such as Microsoft. That will put both Arm and Qualcomm under huge pressure to settle.

“I believe the sooner this is resolved, the better it is for the entire ecosystem,” he told CSO Online. “The reality with situations like these are they do tend to work out, but many times there are significant actions that are taken by either or both sides to escalate these matters.”