China has opened an antitrust investigation into US chipmaker Nvidia, the world’s largest supplier of artificial intelligence (AI)- enabled processors, Chinese state media reported. The investigation is seen as a new step in the growing competition for AI dominance between the US and China, as both countries view AI advancements as critical to national security.
The Chinese government believes Nvidia’s acquisition of Israeli networking company Mellanox violates the country’s anti- monopoly laws, China Central Television reported Monday. However, no clear information has been given regarding the exact loss due to this acquisition. China approved the acquisition in 2020.
Shares of Nvidia fell 2% in premarket trading on Monday. However, the company’s shares have bounced nearly 200% this year, as demand in the AI sector has fueled strong demand for Nvidia’s chips. The company’s current market value is over $3 trillion, second only to Apple.
The Sino- US chip war is intensifying:-
The US- China chip war has taken a new turn this month. Last week, the Biden administration imposed new restrictions on high- tech memory chip sales to China. Although these chips are different from Nvidia’s graphics processors, they are very important technologies for developing AI.
The latest limitation is the third major move by the US government to curtail China’s AI capabilities. The US fears that China could use AI for military advantage. Industry experts have predicted that this will hit the development of China’s AI chips.
China’s Ministry of Commerce, however, has strongly criticized the restrictions, saying they pose a major threat to the stability of global supply chains. China has responded by banning the sale of key materials such as germanium and gallium, which are needed to make chips.
Earlier, China had placed some restrictions on the sale of these materials, but had kept concessions for some sales. Now these concessions have been stopped completely.
The reason behind Nvidia’s investigation:-
The investigation launched against Nvidia makes the situation even more serious. A blow to Nvidia, a symbol of a revolution in the field of AI technology, could affect global AI development. Nvidia is currently embroiled in antitrust investigations in both the US and China.
Preparation of self- reliance of both countries:-
Both the US and China are promoting their own production of microprocessors to strengthen their grip on the technology space. The US is investing billions of dollars in companies like Intel to boost local manufacturing through the Biden administration’s Chips Act. This is expected to reduce America’s dependence on China and other countries.
China, on the other hand, announced a major $47.5 billion semiconductor investment fund in May, in which the country’s six major state- owned banks have participated.
Although the US has accused China of stealing AI software, China has denied the allegations. Under increasing pressure, China’s antitrust investigation into Nvidia could have long- term implications for the global AI sector.
