Nvidia's AI Chip Deal with Mellanox Sparks Antitrust Probe in China

Nvidia’s AI Chip Deal with Mellanox Sparks Antitrust Probe in China

China has started an antitrust investigation into Nvidia, which makes the most processors in the world because it is worried about Nvidia’s plans to buy Mellanox in 2020. The investigation stems from the increasing use of Nvidia’s processors in AI technology.

China has started an antitrust investigation into Nvidia, which makes more processors than any other company in the world. These processors power artificial intelligence (AI).

The investigation came about because the Chinese government was worried that Nvidia’s plan to buy the Israeli networking company Mellanox in 2020 might be against China’s anti-monopoly laws. Chinese state media reported on Monday that it is still not clear how the merger might have broken these laws.

This year, the AI boom has caused Nvidia’s stock to rise nearly 200% in value. After the news, it fell less than 2% in premarket trading. The company is worth more than $3 trillion, making it the second most valuable in the world after Apple.

The investigation is the latest step in the long-running competition between the US and China to be the leader in AI, a field that both countries see as critical for national security.

This comes just a few days after the Biden administration made it harder to sell high-tech memory chips to China. Even though Nvidia’s main product is graphics processors, these restrictions show how important AI and the technologies that support it are becoming.

The US is putting limits on chip sales for the third time, and these new rules are part of that. The goal is to slow China’s progress in making AI chips. The US government is worried that China might use AI progress for military purposes. Experts in the field believe that the plan, according to senior officials at the US Commerce Department, is effective in slowing down China’s technological progress.

China’s Commerce Ministry strongly criticized the US restrictions, calling them a “significant threat” to the stability of global supply chains. As a response, China banned the sale of important materials like germanium and gallium last week.

Chips require these materials. China used to impose restrictions on these materials, but it has now closed any gaps that allowed their continued sale.

In the rivalry between the US and China, senior US officials have also said that China stole AI software made in the US, which Beijing has denied.

Nvidia Antitrust Probe

The Nvidia investigation is a big step forward in this tech war since Nvidia is a major player in the AI revolution happening around the world. Any problems with Nvidia’s operations could make it harder for the company to reach its global goals.

Along with limiting sales of chips and materials, both countries are also working to improve their own chip-making capabilities. The Biden administration has put billions of dollars into companies like Intel through the CHIPS Act to make the US less dependent on technologies from other countries.

China, meanwhile, has started a $47.5 billion state investment fund to help its semiconductor industry. This is the biggest project the country has ever taken on in this area.

According to Bloomberg, antitrust authorities in the United States are also scrutinizing Nvidia, further complicating matters for the American chipmaker. The chip war between the US and China is getting worse, and Nvidia and other tech companies have never been more at risk.

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