China has initiated an antitrust investigation into Nvidia, the world’s largest provider of AI processors, following concerns over its 2020 acquisition of Israeli networking company Mellanox. This move, reported by Chinese state media on Monday, suggests potential breaches of China’s anti-monopoly laws, although specific violations remain unclear.
Nvidia’s stock, which soared nearly 200% this year due to the AI boom, saw a slight dip of less than 2% in premarket trading. Valued at over $3 trillion, Nvidia is second only to Apple in market capitalization.
US-China Chip War Intensifies
This investigation is the latest escalation in the US-China battle for AI dominance—a sector critical to national security for both nations. It comes shortly after the Biden administration imposed further restrictions on the sale of high-tech memory chips to China, highlighting the strategic importance of AI and related technologies.
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These new export controls are part of the US’s efforts to slow China’s AI development, fearing military applications. Senior US Commerce Department officials believe these measures will effectively curb China’s technological progress.
In retaliation, China condemned the US restrictions, calling them a “significant threat” to global supply chain stability. Recently, China also banned the sale of critical materials like germanium and gallium, essential for chip manufacturing, closing loopholes that allowed continued sales.
Domestic Efforts to Strengthen AI Capabilities
Accusations of tech theft have also surfaced, with the US alleging China stole American-made AI software—claims Beijing denies. This investigation adds another layer to the tech conflict, with Nvidia being a pivotal player in AI. Disruptions to Nvidia’s operations could significantly impact its global ambitions.
Both nations are boosting their domestic chip manufacturing capabilities. The US’s CHIPS Act has invested billions into companies like Intel, reducing reliance on foreign tech. Meanwhile, China launched a $47.5 billion state investment fund, its largest ever for the semiconductor industry.
Nvidia Under Scrutiny in the US
In the US, Nvidia faces antitrust scrutiny, compounding its challenges amid the intensifying chip war. The stakes for Nvidia and other tech companies have never been higher as this geopolitical rivalry unfolds.