China’s State Administration for Market Regulation has announced an antitrust investigation into Nvidia, alleging violations of the country’s anti-monopoly laws. The probe marks a significant escalation in the global tech tensions between China and the US.
Focus on Mellanox Acquisition
The Chinese regulator is revisiting Nvidia’s 2020 acquisition of Mellanox, an Israeli-American company specializing in networking products for supercomputers and data centers. While the deal was cleared by global regulators at the time, China’s authorities are now suggesting Nvidia may have breached its original commitments under the acquisition agreement.
Nvidia responded, stating:
“Nvidia wins on merit, as reflected in our benchmark results and value to customers. We work hard to provide the best products we can in every region and honor our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business.”
A Potential Retaliation Amid Tech Tensions
The investigation comes shortly after the US imposed fresh export restrictions on AI-related technologies to China. The Biden administration recently banned 140 Chinese companies from accessing advanced chips and semiconductor-making equipment, prompting speculation that China’s probe into Nvidia is a retaliatory move.
Some industry insiders see this as part of a broader geopolitical strategy. Chinese chip industry groups have already called for domestic companies to prioritize local suppliers over US-based technology, adding to the tense atmosphere.
Nvidia’s AI Dominance Under Scrutiny
Industry analyst Patrick Moorhead noted that Nvidia’s dominance in the generative AI sector is likely a key focus of the probe.
“Zero surprises here. These things take 5-10 years to sort through. Quicker in China, but still very slow. All regions will be investigating Nvidia on datacenter GPUs at some point,” he commented.
Nvidia’s market dominance has also attracted attention outside of China. The US Department of Justice is reportedly examining the company’s practices, and French regulators raided Nvidia’s offices last year to investigate its role in the AI chip boom.
Nvidia’s Position in China
Despite US export restrictions, Nvidia continues to sell “export-compliant” AI chips to Chinese industries. The company recently reported sequential growth in its data center revenue in China due to these sales, though its CFO cautioned about the competitive nature of the Chinese market.
Broader Implications
The antitrust probe highlights the mounting pressure on Nvidia as a global leader in GPUs powering AI technologies. It also underscores the growing entanglement of business and geopolitics in the semiconductor industry.
As the investigation unfolds, Nvidia faces challenges not only in China but also from other regulatory authorities worldwide, reflecting the far-reaching implications of its dominance in the AI space.