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Qualcomm Wins Key Verdict in U.S. Chips Trial Against Arm

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Qualcomm scored a significant victory in its legal battle with Arm Holdings, as a U.S. federal court jury found that Qualcomm’s central processors are properly licensed under its agreement with Arm. However, the case ended in a mistrial on one critical issue, leaving some aspects unresolved.

The dispute centers on Qualcomm’s use of technology from Nuvia, a startup it acquired in 2021 for $1.4 billion, and its licensing agreement with Arm. After deliberating for over nine hours, the jury ruled that Qualcomm did not breach its license with Arm and that its chips using Nuvia technology are fully protected by its contract with Arm.

However, the jury could not unanimously decide whether Nuvia violated the terms of its license with Arm before being acquired by Qualcomm. As a result, Judge Maryellen Noreika encouraged the parties to mediate, though Arm has already vowed to seek a new trial.

Arm’s shares fell 1.8% in extended trading following the decision, while Qualcomm’s shares rose by the same margin. Qualcomm hailed the ruling as a vindication of its innovation rights, while Arm expressed disappointment over the jury’s inability to reach a consensus on key claims.

The case has implications for Qualcomm’s ambitions in the laptop market, particularly its push into “AI PCs” designed to handle advanced tasks such as chatbots and image generation. Competitors like Nvidia, AMD, and MediaTek are also vying to create Arm-based processors for this growing market.

Analysts view the verdict as a stabilizing factor for Qualcomm’s roadmap. “The risk of losing access to Nuvia cores is much closer to being off the table,” said Stacy Rasgon, a Bernstein analyst.

The trial also reignites industry-wide questions about the boundaries of Arm’s intellectual property. While Arm licenses its architecture to companies like Qualcomm and Apple, it argued in court that its agreement with Nuvia allowed it to demand the destruction of custom core designs.

“This trial has ramifications for the entire tech ecosystem,” said Jim McGregor of Tirias Research. “Arm’s architecture forms the backbone of everything from consumer gadgets to satellites, and this verdict underscores ongoing tensions between licensing and innovation.”

Despite the partial victory for Qualcomm, unresolved issues regarding licensing terms and royalty rates may continue to impact future negotiations across the semiconductor industry.

 

US Asks Nvidia to Investigate Unauthorized Exports of AI Chips to China

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The U.S. Department of Commerce has reportedly asked Nvidia to investigate how the company’s artificial intelligence (AI) chips have ended up in China over the past year, according to a Thursday report by The Information. The investigation follows concerns over the potential unauthorized diversion of Nvidia products to Chinese entities, despite U.S. export restrictions.

Investigation into Distribution Channels

Nvidia has enlisted major distributors, including Super Micro Computer and Dell Technologies, to conduct spot checks of their customers in Southeast Asia. Nvidia’s AI chips are embedded in servers made by Super Micro and Dell, and the company is reportedly looking into how these chips may have been redirected to China without the required licenses.

The report suggests that multiple individuals involved in smuggling Nvidia chips have managed to evade detection during recent inspections conducted by Super Micro. The smuggling tactics reportedly involved duplicating serial numbers from Nvidia servers or altering them within the server’s operating system to disguise their origin.

Nvidia’s Response and Policies

In response, an Nvidia spokesperson reiterated the company’s commitment to adhering to U.S. export control regulations, stressing that any unauthorized diversion of its products would be detrimental to its business. Nvidia also insisted that its customers and partners must strictly follow these regulations, including prohibitions on grey market resales.

Both Dell and Super Micro have also emphasized their compliance with U.S. export laws. Dell stated that it requires all distributors and resellers to follow export controls and would sever relationships with any partner found to be non-compliant. Super Micro similarly asserted that it investigates and acts against any unauthorized exports, affirming its commitment to U.S. regulations.

Broader Context: U.S. Crackdown on Chinese Exports

This investigation comes as the Biden administration intensifies its crackdown on Chinese access to high-end AI chips. The U.S. government has already broadened its ban on the sale of advanced AI chips to China, including a move to limit semiconductor exports to 140 companies, including chip equipment makers, earlier this month. Despite these restrictions, there have been reports that Chinese universities and research institutions have still been able to procure Nvidia chips through resellers.

 

Micron Shares Drop as Sluggish PC Demand and Weak Forecast Cloud AI Growth Potential

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Micron Technology’s shares fell by approximately 15% on Thursday after the company issued a grim forecast for the upcoming quarter, highlighting weak demand for personal computers (PCs) and smartphones, which overshadowed the positive growth in its AI-related chip sales.

Weak Demand for DRAM Chips

The market for dynamic random-access memory (DRAM) chips, which are commonly used in personal computers and smartphones, has been struggling since the end of the pandemic. This decline is driven by a lingering supply glut and continued sluggish demand from consumers. As a result, Micron’s forecast for its flash memory chip revenue in fiscal 2025 looks bleak, as these chips are heavily dependent on PC and mobile phone shipments. According to William Kerwin, an analyst at Morningstar, the post-pandemic growth in demand for traditional PCs has not met expectations, and AI-enabled computers have yet to achieve widespread popularity.

Slow Transition to Windows 11

Micron is also facing headwinds from the slower-than-expected adoption of Windows 11, after Microsoft announced the end of support for Windows 10. This gradual transition has contributed to the challenges in the broader PC market, impacting demand for memory chips.

If the losses hold, Micron’s market value could decline by more than $17 billion, bringing it to approximately $99 billion. This downward shift in value reflects concerns about Micron’s ability to recover from these demand-related issues.

Growth in AI Chips and High-Bandwidth Memory

Despite the challenges in the PC and mobile markets, Micron has seen strong growth in its high-bandwidth memory (HBM) chips, which are used in advanced AI systems. Revenue from these chips more than doubled sequentially, and Micron is positioning itself to take advantage of market expansion opportunities from data center investments in 2025. Analysts from Piper Sandler believe that Micron’s HBM segment remains intact and will continue to drive growth.

Micron is one of only three major HBM chip providers, alongside SK Hynix and Samsung, which has helped boost its stock by around 22% this year. Analysts expect HBM demand to remain a key driver of Micron’s performance moving forward.

Analyst Reactions

Despite the positive outlook for AI-related chips, at least 10 brokerages have lowered their price targets for Micron following its disappointing earnings results. According to data from LSEG, Micron’s 12-month forward price-to-earnings ratio is now 10.67, significantly lower than Qualcomm’s 13.4 and Advanced Micro Devices’ 23.97.