Violation of Antitrust Regulations Accusation Made by China Against Nvidia
In a complex web of trade tensions, Nvidia, a leading manufacturer of powerful AI chips, finds itself at the centre of the ongoing dispute between the U.S. and China.
The Trump administration recently agreed to allow Nvidia and AMD to resume selling certain AI chips to China under a deal permitting them to obtain export licenses for about 15% of their revenue from these sales. However, China remains cautious and has not clearly accepted these shipments, applying regulatory pressure on Nvidia and using the chip ban as leverage in ongoing talks with the U.S. in Madrid.
This development comes as China investigates Nvidia for anti-monopoly issues related to its Mellanox acquisition, a probe that was opened in December. The acquisition was approved by Beijing after Nvidia agreed to conditions, including guaranteeing the supply of its chips to China.
Nvidia's shares fell around 1% in morning trading following the announcement of the investigation.
Feng Chucheng, founding partner of Beijing advisory firm Hutong Research, stated that China was signaling that Nvidia is not a bargaining chip for the U.S. and that China was on the road to self-sufficiency in AI.
Beijing has raised concerns about potential cybersecurity risks of the H20 chip and stopped companies from buying it until Nvidia could clear a regulatory review. This move followed the Biden administration's ratcheting up of controls on China's access to high-end chips in December.
China hasn't been able to produce at scale any chips as powerful as Nvidia's best products, partly due to American restrictions on advanced chip-making equipment. As a result, Chinese companies are making progress in substituting their own products for U.S. chips.
National champion Huawei and other tech giants such as Alibaba and Baidu have increased the use of homegrown products in their infrastructure. China has been funding its domestic chip industry more aggressively since Trump's first term with the goal of long-term self-sufficiency.
Nvidia's CEO, Jensen Huang, is reportedly in talks with the Trump administration about selling a chip called Blackwell to China. However, the company has said its products don't have remote trackers or other "backdoors."
In July, President Donald Trump permitted Nvidia to resume sales of its H20 chip, which was temporarily blocked in April. Yet, Nvidia was in a tough spot due to having to halt supply of its most advanced chips to China to comply with U.S. export controls, which opened it up to criticism from Beijing.
The investigation into Nvidia's acquisition was announced just hours before a framework deal on TikTok was reached during U.S.-China trade talks. Nvidia's acquisition of an Israeli company was also investigated by China's antitrust regulator for violating the country's antimonopoly law.
Since 2022, the U.S. government has blocked Nvidia and other American chip vendors from selling many of their top-flight artificial-intelligence chips to China. The investigation found initial violations, but the investigation is continuing and no specific punishments have been announced.
As the trade dispute between the U.S. and China continues, Nvidia remains a high-profile business caught in the crossfire.
