Opening Arguments in Delaware Court

A high-stakes legal battle between Arm and Qualcomm kicked off on Monday in Wilmington, Delaware, with both companies presenting contrasting narratives about a contract dispute that could significantly impact the future of artificial intelligence PCs.

At the heart of the litigation is Qualcomm's license agreement for Arm's intellectual property and its $1.4 billion acquisition of chip startup Nuvia in 2021. Qualcomm utilized Nuvia's designs to develop new low-powered AI PC chips, which were launched earlier this year and are expected to aid Microsoft and others in helping the Windows operating system regain market share lost to Apple's laptops.

Key Evidence and Witnesses

During the opening arguments, attorneys for both companies displayed contracts, emails, and internal corporate chats with key language highlighted for the jurors. Arm's attorney, Daralyn Durie, emphasized that the evidence would show Qualcomm's unauthorized use of Arm technology. In contrast, Qualcomm's attorney, Karen Dunn, argued that Arm was attempting to stifle competition due to its own technological lag and pressure to raise royalty rates.

Expected witnesses in the one-week trial include Arm Chief Executive Rene Haas, Qualcomm CEO Cristiano Amon, and Nuvia founder Gerard Williams, who is now a Qualcomm vice president.

Contract Dispute and Financial Implications

The dispute centers around the different financial terms of Nuvia and Qualcomm's licensing agreements with Arm. Arm has demanded that Qualcomm renegotiate the Nuvia contract terms to use the designs based on Nuvia technology. Qualcomm, however, asserts that its "well-established license rights" cover any custom-designed central processing units (CPUs) and is confident those rights will be affirmed.

Arm has not sought monetary damages but has argued that Qualcomm should be required to destroy the Nuvia designs. According to Bernstein analyst Stacy Rasgon, Qualcomm pays Arm roughly $300 million a year in fees. Britain-based Arm is owned by SoftBank Group, which listed Arm in the U.S. in 2023.