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China has launched an antitrust investigation into chip giant Nvidia as competition intensifies with the US to develop cutting-edge technologies comparable to artificial intelligence.
Chinese state media reported on Monday evening that the state market regulator had opened an investigation into Nvidia in recent days over alleged violations of the country's anti-monopoly law.
The state media report said China's market regulator was also investigating possible violations of commitments made by the US chipmaker in its $6.9 billion acquisition of Mellanox, an Israeli-American provider of networking products. China's market regulator conditionally approved the deal in 2020.
The deal was the most important acquisition ever for the US semiconductor company and took Nvidia deeper into the info center and high-performance computing markets.
In recent years, Nvidia has turn into the worldwide leader in AI chips, with its graphics processors crucial in the event of leading AI models. But U.S. export controls have forced Nvidia to sell watered-down versions of its essential GPUs in China and created a big black market of smugglers who illegally bring its more advanced processors into China.
“This investigation appears to be more of a political motion than a legal one,” said a Chinese antitrust expert who didn’t need to be named, adding: “Never before has state media taken the lead and announced an investigation.”
China's investigation comes per week after Washington announced tougher export controls on advanced high-bandwidth memory chips and chip-making equipment to the country, prompting Beijing to right away respond with an embargo on critical materials to the United States.
The lack of imported memory chips will probably be a challenge for Nvidia's local rival Huawei, which needs HBM chips for its own AI processors.
“Nvidia wins through performance, which is reflected in our benchmark results and customer value, and customers can select the answer that’s best for them,” Nvidia said. “We work hard to offer the perfect possible products in every region and fulfill our commitments wherever we do business. We are joyful to reply any questions regulators could have about our business.”
Four Chinese government-backed industry associations that represent the majority of the country's semiconductor demand issued coordinated statements last week urging their member corporations to reconsider buying U.S. silicon, which three of them described as “now not secure.” “or reliable”.
The public instructions got here after Chinese officials in recent months pressed local tech giants behind closed doors to purchase more of Huawei's AI processors and fewer of Nvidia's, in response to two people conversant in the matter.
Chinese customers still bought $5.4 billion value of Nvidia chips last quarter, contributing 15 percent of sales.
Analysts say the modified Nvidia H20 chips available for China are still powerful AI accelerators for groups like ByteDance, Alibaba and Tencent in comparison with other available options.
Analysts estimated earlier this yr that Nvidia would sell 1 million of its H20 chips, about double Huawei's expected AI sales.
Washington's sanctions have made it harder for Chinese AI corporations to construct massive computing clusters like their U.S. rivals, that are seen as crucial to advancing AI development.
Shares of Nvidia fell 3 percent in New York on Monday morning.
