China has initiated an antitrust investigation into American chipmaker Nvidia following recent U.S. semiconductor export controls aimed at restricting China's access to advanced chip technologies. This investigation, overseen by the State Administration for Market Regulation, comes in the wake of the Biden administration's measures which target 140 companies and are intended to impede China's advancements in artificial intelligence (AI) technologies that could potentially be utilised for military applications.
The U.S. export control package is part of a broader strategy to ensure that sensitive technologies do not bolster China’s military capabilities. China responded to these developments by tightening its export regulations on critical raw materials to the U.S. and advising its enterprises to exercise caution when purchasing American chips.
In a statement issued on Monday, the Chinese regulatory body expressed concerns that Nvidia's acquisition of Israeli networking company Mellanox might contravene its anti-monopoly laws, although further details were not provided regarding the specifics of these alleged violations. The regulations in question were established in China in 2020.
Despite the unfolding situation, Nvidia has remained unavailable for comment on the investigation as of the publication date. The company's shares were observed to have dipped 2.2% in pre-market trading in New York following the announcement.
This inquiry by China follows closely on the heels of Nvidia's recent agreement to establish an artificial intelligence research and development centre in Vietnam. This move is perceived as a strategic initiative by the chip manufacturing giant to lessen its dependency on China amid the ongoing tension over semiconductor sales.
The latest round of export controls represents the third such implementation by the U.S., with the Commerce Department articulating that these restrictions are designed to hinder China's progress in developing AI chips, which, according to U.S. claims, could offer military advantages.
China’s Commerce Ministry has reacted to these restrictions by asserting that they constitute “a significant threat” to the stability of global supply chains, highlighting the widespread implications for international business dynamics.
Nvidia has historically been a key supplier of high-performance graphics processing units (GPUs) and AI chips to Chinese firms, with China accounting for about 12% of Nvidia's revenue—approximately US$3.7 billion—in the July quarter of 2024. This figure marked an increase of over 30% from the previous year. Despite repeated affirmations from Nvidia CEO Jensen Huang about the company's ongoing commitment to its operations in mainland China, Nvidia has simultaneously been exploring alternatives to decrease its reliance on the Chinese market.
In addition to its investment in Vietnam, Nvidia has been cultivating partnerships and investment opportunities across several Southeast Asian nations, including Thailand, Malaysia, Indonesia, and Singapore, as part of its strategy to expand its presence in the region amidst evolving geopolitical tensions.
Source: Noah Wire Services