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(Reuters) – A two-year Qualcomm-Arm legal battle pitting two tech titans threatens to disrupt an emerging wave of new personal computers powered by Artificial Intelligence, tech industry executives and experts say.

A parade of executives from Microsoft, Asus, Acer, and others joined Qualcomm CEO Cristiano Amon on stage last week at the annual Computex trade show in Taipei to pitch a new generation of AI-powered PCs.

But the main conversation among conference attendees was over how a contract dispute between Arm Holdings and Qualcomm, which work together to make the chips powering these new laptops, could abruptly halt the shipment of new PCs that industry leaders expect will make Microsoft and its partners billions of dollars.

The Far-Reaching Implications of the Qualcomm-Arm Legal Battle

Rough projections suggest Microsoft expects to take roughly 5% of the market with the Arm-based laptops by the end of the year, selling about 1 million to 2 million units.

Nearly two dozen models ranging from Microsoft, Dell and Samsung are expected to ship to consumers June 18.

An Arm victory in the Qualcomm-Arm legal battle could force Qualcomm and its roughly 20 partners, including Microsoft, to halt shipments of the new laptops.

“It’s definitely a real risk,” said Doug O’Laughlin, Founder of chip financial analysis firm Fabricated Knowledge. “The more successful (the laptops are), the more fees Arm can get eventually.”

The British company, which is majority-owned by Japan’s SoftBank Group, sued Qualcomm in 2022 for failing to negotiate a new licence after it acquired a new company. The suit revolves around technology that Qualcomm, a designer of mobile chips, acquired from a business called Nuvia that was founded by Apple chip engineers and which it purchased in 2021 for USD $1.4 billion.

Arm builds the intellectual property and designs that it sells to companies such as Apple and Qualcomm, which they use to make chips. Nuvia had plans to design server chips based on Arm licences, but after the acquisition closed, Qualcomm reassigned its remaining team to develop a laptop processor, which is now being used in Microsoft’s latest AI PC, called Copilot+. This invariably led to the now protracted Qualcomm-Arm legal battle that might cause seismic waves in the AI PC boom.

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