 "China hits back at US, initiates antitrust investigation in NVIDIA’s AI chip dominance")
China has launched an antitrust investigation into NVIDIA, the American semiconductor giant dominating the AI GPU market, in what appears to be a direct retaliation against the United States’ escalating chip export restrictions.
The probe, led by China’s State Administration for Market Regulation (SAMR), scrutinises NVIDIA’s $6.9 billion acquisition of Mellanox Technologies in 2019, approved by Beijing in 2020 under strict conditions to ensure non-discriminatory access to products for the Chinese market.
This move signals a calculated response by China to counter US pressure in the intensifying tech rivalry, targeting a company central to advancements in AI and computing.
Geopolitical Tensions Escalate
The antitrust investigation comes days after Chinese state-backed industry associations urged local companies to limit purchases of US-made chips, citing concerns over reliability and security. The latest restrictions from Washington had already barred NVIDIA from exporting its advanced A100 and H100 GPUs to China, forcing the company to develop modified versions, the A800 and H800, to comply with US rules.
Nigel Green, CEO of deVere Group, views the investigation as part of a broader geopolitical strategy by Beijing, highlighting its intent to retaliate against perceived US provocations. China is using regulatory scrutiny not only to push back but also to challenge NVIDIA’s stronghold in a market critical for AI development.
Impact on NVIDIA’s Business
NVIDIA’s operations in China are significant, with the region contributing $5.41 billion in revenue for the quarter ending October 29, 2024 — about 17.9 per cent of its global total. The antitrust probe could lead to heavy fines, operational restrictions, or even a forced unwinding of the Mellanox deal under Chinese law, potentially impacting NVIDIA’s business ties in its third-largest market.
The company has yet to comment on the investigation, but its US-listed shares dropped 1.8% in pre-market trading following the announcement. NVIDIA’s founder, Jensen Huang, recently reaffirmed the company’s commitment to maintaining a presence in China, praising the country’s strengths in AI development despite growing tensions.
The Rise of Chinese Competition
China’s scrutiny of NVIDIA coincides with the country’s push to strengthen its domestic semiconductor industry. Huawei Technologies has accelerated efforts to develop alternatives, such as its Ascend 910C processor, which aims to rival NVIDIA’s A100 chips. This adds pressure on NVIDIA, already navigating restrictions and regulatory hurdles.
The NVIDIA probe mirrors a similar action against Micron Technology in 2023, when Chinese regulators banned its products in critical sectors, citing national security concerns. These moves underline Beijing’s strategy to counter US tech dominance while boosting domestic players.
As the tech war intensifies, the NVIDIA investigation highlights the high-stakes battle between the world’s two largest economies, with AI and semiconductors at the heart of their rivalry.