China says it is investigating NVIDIA Corp. for allegedly violating the country’s anti-monopoly laws — the latest high-tech clash between the U.S. and its adversary.
In a sparsely-worded, vague press release issued Monday, China’s State Administration for Market Regulation indicated it is focusing on the chip maker’s $6.9 billion acquisition of Mellanox Technologies, a network and data transmission company, in 2020.
China’s probe appears the latest tit-for-tat action against the U.S. in which tech companies are essentially being used as pawns.
Last week, the U.S. imposed its third crackdown in three years on China’s semiconductor industry, curbing exports to 140 companies that include makers of chip equipment.
China, in turn, banned exports to the U.S. of critical chip minerals such as gallium, germanium and antimony. To make its point crystal clear, four of China’s top industry associations also agreed that Chinese companies should reconsider buying U.S. chips because they are “no longer safe” and instead should buy chips locally.
Consequently, NVIDIA has been caught in the cross-hairs of antagonism between the two countries: A previous export edict by the U.S. stopped the world’s largest provider of processors that power artificial intelligence (AI) from selling its most advanced AI chips to China. NVIDIA worked around the ban with new China-specific versions that meet American export controls.
Last week, there were reports NVIDIA was in talks with Taiwan Semiconductor Manufacturing Co. to start production of its Blackwell chip in Arizona. Until now, TSMC has made NVIDIA’s most advanced chips in Taiwan.
Prior to the export limitations, NVIDIA dominated China’s AI chip market with a more than 90% market share. About 17% of NVIDIA’s revenue comes from China, down from 26% two years ago.
The Silicon Valley-based company is already under investigation by the Justice Department following complaints from rivals that NVIDIA punishes those who buy products from both NVIDIA and its competitors at the same time.
So far, the investigations have not unearthed any wrongdoing — and are unlikely to, according to one industry analyst.
“The probes into NVIDIA will come from likely every regulatory body around the globe given its dominant market share in GPUs and its sticky software (CUDA),” Daniel Newman, CEO of The Futurum Group, said in a social media post. “There is no meaningful proof to date that NVIDIA is abusing its dominant market position or its competitive advantage to stifle competition or harm consumers. There have been anecdotal stories that have floated around, but at this point, it is all speculative.”
Escalating tensions between the U.S. and China go beyond NVIDIA, and spill across the tech industry.
While China braces for punitive tariffs of up to 60% from the incoming Trump administration, and operatives tied to the country are accused of stealing data from major telecoms for at least six months, Chinese tech company TikTok on Monday filed an emergency motion for an injunction to stop a U.S. ban of TikTok from going into effect Jan. 19.
