Qualcomm's PC Chips Have 1 Glaring Problem

Qualcomm's PC Chips Have 1 Glaring Problem

The PC market entered a new era last month with the launch of Windows laptops powered by Qualcomm's (NASDAQ: QCOM) Arm-based central processing units (CPUs). This isn't the first attempt to make Windows on Arm work, but this time around, both Microsoft and the leading PC manufacturers have thrown their weight behind the effort.

In general, Qualcomm's CPUs offer solid performance and battery life. Laptops powered by these new chips are getting mostly good reviews, although they don't necessarily blow the competition out of the water. It's a good enough showing that Arm on Windows is likely to stick this time around, with more Arm-based chip designers joining the fray in the coming years.

One major problem with Qualcomm's chips

While laptops powered by Qualcomm's chips offer people new options, there's one major downside that will turn some laptop buyers away. Qualcomm's chips rely on emulation to run applications compiled for the standard x86 version of Windows. While this works a lot of the time, it's far from perfect.

Gaming is the biggest problem area. Despite claims from Qualcomm that games would work without issue, testing by PCWorld found that the gaming situation on Qualcomm's chips is a mess. Some games won't start at all, others have instability issues that render them unplayable, and still others chug along at unacceptable frame rates. PCWorld found that a competing laptop using one of Intel's Meteor Lake chips provided more than triple the performance in some cases.

While the emulation works well in many types of applications, including web browsers and other day-to-day programs, it falls far short when it comes to gaming. Qualcomm can improve the situation with software driver updates, but it will likely take game developers releasing Arm-native versions of their games to unlock the full power of these chips.

Perception is everything

Qualcomm is entering a market that has been a duopoly for decades. Intel and AMD have long been the only options for PC CPUs. Breaking into this market requires convincing the typical laptop buyer, who likely doesn't know all that much about the tech that powers their devices, to try something new.

The emulation struggles are going to make Qualcomm-powered laptops a tougher sell. Everything just works on laptops powered by Intel or AMD chips. For many laptop buyers, the downsides of jumping to Qualcomm won't be worth it.

By the time Qualcomm meaningfully improves the emulation situation, laptops with next-generation chips from Intel and AMD will be on the market. AMD's Ryzen AI chips launch at the end of July, and Intel's Lunar Lake chips will be available later this year. Both families of chips will provide big leaps in AI processing power, and they won't have any of the compatibility issues Qualcomm is facing.

For the time being, Intel and AMD likely don't have too much to worry about. Arm-powered Windows PCs are here to stay, but meaningful market share gains may take years. Intel and AMD won't be sitting still. Intel in particular is pushing hard to improve battery life with its Lunar Lake chips, which could undercut one of the main benefits of Qualcomm-powered laptops.

A more competitive PC CPU market is on its way, but it won't happen overnight. Qualcomm has to sell customers on its new chips, and with emulation problems making headlines, that effort may come up short.

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Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, and Qualcomm. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.