
China has initiated an antitrust investigation into Nvidia, the world’s largest supplier of chips used in artificial intelligence (AI) applications. This development marks a significant escalation in the intensifying tech and trade conflict between China and the United States, which both view AI dominance as crucial to national security.
The Chinese state-run media outlet China Central Television (CCTV) reported Monday that the government is examining whether Nvidia’s 2020 acquisition of the Israeli networking company Mellanox violates China’s anti-monopoly laws. Despite the merger being approved by Chinese regulators at the time, the government is now questioning whether the deal impacts market competition, though no specific violations have been outlined.
In response to the news, Nvidia’s stock dipped by less than 2% in premarket trading. The company, which has been one of the best-performing stocks this year, has seen its market value surge nearly 200% in 2024 due to the boom in AI demand. Nvidia’s current market capitalization exceeds $3 trillion, making it one of the most valuable companies globally, second only to Apple.
This probe comes amid an ongoing chip war between the US and China, which has escalated this month following the Biden administration’s imposition of new export controls on high-tech memory chips to China. While these memory chips are not directly related to Nvidia’s primary business of manufacturing graphics processors, they are crucial to AI development, highlighting the strategic importance of the technology. The US government aims to slow China’s progress in AI, fearing its potential military applications, and experts believe these export restrictions will hinder China’s chip development.
In retaliation, China has imposed restrictions on critical materials, such as germanium and gallium, essential for semiconductor manufacturing. These moves follow China’s previous restrictions last year, with Beijing now tightening its control over these resources by closing loopholes that allowed continued sales.
Nvidia is also facing scrutiny in the US for antitrust concerns, including its business practices and market dominance. Both countries are looking to enhance their domestic semiconductor industries through major investments. The Biden administration has funneled billions into semiconductor companies through the CHIPS Act to reduce dependence on foreign tech, while China has set up a $47.5 billion semiconductor investment fund to boost local chip production.
As tensions rise, this investigation into Nvidia signals a further escalation of the broader economic and technological competition between the US and China, with both countries positioning themselves to lead in the AI and semiconductor sectors.