The highly anticipated trial between Arm (ARM) and Qualcomm (QCOM) kicks off today in Delaware, with potential implications for the burgeoning market of artificial intelligence PCs.
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What Is the Arm and Qualcomm Legal Battle about?
The legal battle has pitted Arm, which designs chips and licenses this chip-designing technology, against Qualcomm, one of its largest customers. This dispute has extended for more than two years. The conflict centers on Qualcomm’s licensing agreements with Arm and its $1.4 billion acquisition of chip startup Nuvia in 2021. Nuvia, founded by former Apple (AAPL) chip engineers, developed chip designs that Qualcomm used to produce AI-powered PC chips launched earlier this year.
Interestingly, Nuvia and Qualcomm had separate licensing agreements with Arm under different financial terms. As a result, Arm contends that Qualcomm must renegotiate the licensing terms for Nuvia-based designs to use them. Qualcomm, however, argues that its existing license covers custom-designed central processing units (CPUs) and is “confident those rights will be affirmed.”
Arm Demands the Destruction of Nuvia’s Designs
Meanwhile, Arm is demanding the destruction of Nuvia’s designs but has not sought monetary damages. Qualcomm risks significant setbacks in its AI PC ambitions if the court rules against it.
What Is the Future Price of ARM Stock?
Analysts remain cautiously optimistic about ARM stock, with a Moderate Buy consensus rating based on 15 Buys, four Holds, and one Sell. Year-to-date, ARM has surged by more than 90%, and the average ARM price target of $154.21 implies an upside potential of 5.2% from current levels.
