Nvidia targeted by China in new chip war probe
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China launches an anti-monopoly probe into Nvidia amid escalating US-China tensions over semiconductor and AI technology. [Photographer: Philip Pacheco/Bloomberg]
China has launched an investigation into Nvidia, a leading US computer chipmaker, amid escalating tensions in the ongoing US-China technology war. The probe, focused on Nvidia’s potential violations of anti-monopoly laws, adds to the growing list of trade-related conflicts between the two countries, particularly in the semiconductor sector.
Nvidia, known for developing chips essential for computer graphics and artificial intelligence (AI), is at the center of a geopolitical struggle as both China and the US vie for dominance in advanced technology. The company has expressed willingness to cooperate with Chinese authorities, stating, “We work hard to provide the best products we can in every region and honor our commitments everywhere we do business.” In a statement, Nvidia emphasized that it is ready to respond to any questions regulators may have.
The investigation was first reported by Chinese state broadcaster CCTV, which noted that the probe was launched as part of a legal process. The issue revolves around Nvidia’s acquisition of Mellanox Technologies, a smaller company, in 2020. Authorities allege that Nvidia violated certain commitments made at the time of the acquisition. This probe comes amid a broader context of growing scrutiny over the company’s business practices, with regulators in various countries, including the US, UK, EU, South Korea, and China, taking a closer look at Nvidia’s operations.
This investigation follows a series of recent actions from both countries, further escalating tensions. Last week, the US imposed new restrictions on exports to 140 Chinese companies, including semiconductor firms like Piotech and SiCarrier. These restrictions require special permission for American companies to sell certain products to Chinese firms. In retaliation, China introduced stricter export controls on key minerals such as antimony, gallium, and germanium, which are critical for semiconductor production. This move targeted the US specifically, signaling that China is not willing to accept the growing pressure from Washington without response.
Founded in 1993, Nvidia initially made its mark by developing graphics processing units (GPUs) used in gaming. Over the years, the company has expanded its focus to include chips used in AI, an area where Nvidia has become a dominant player. Today, its market value exceeds $3 trillion, and the company is integral to the development of next-generation AI technologies. This growing influence has made Nvidia a focal point for competition regulators in various nations.
Nvidia’s reach extends globally, with the company acknowledging that customers in China, including Hong Kong, accounted for approximately 13% of its sales this year. This figure has decreased in recent years, as US restrictions on advanced technology exports to Chinese companies have intensified, citing national security concerns. Despite the challenges, Nvidia remains a central figure in the global semiconductor market.
The company’s CEO, Jensen Huang, has been cautious in his public statements regarding the political risks associated with Nvidia’s business. Earlier this year, when asked about the potential impact of rising geopolitical tensions, Huang emphasized that the company would continue to adapt, saying, “We guide one quarter at a time. Whatever the new administration decides, we’ll, of course, support the administration.” This remark reflects Nvidia’s strategy of focusing on short-term goals while navigating the uncertainty of global politics.
The investigation into Nvidia is seen by some experts as a form of retaliation from China. James Lewis, a researcher at the Center for Strategic and International Studies, noted that the timing of the probe likely sends a message to the US government. “The Chinese have decided they’re not just going to take sanction after sanction,” he said. According to Lewis, previous US export controls have only delayed China’s access to critical technologies, rather than completely halting it. He is skeptical about the long-term impact of AI advancements, suggesting that the technology may not be as revolutionary as both sides claim.
Regardless of the reasoning behind the probe, analysts predict that the tit-for-tat actions between the US and China will continue. The semiconductor industry, and particularly the race for AI supremacy, remains a high-stakes battleground. As tensions escalate, companies like Nvidia find themselves caught in the crossfire, navigating not only market competition but also the complex dynamics of international relations and trade policy. The outcome of the investigation, along with ongoing political developments, will likely shape the future of the global tech landscape for years to come.
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