As the US-ChinaUS chipset war escalates, China launches an ANtitrust investigation into Nvidia.
In a new escalation of its tech conflict with China, the world’s biggest chipmaker powering artificial intelligence (AI) has come under antitrust investigation from China. As this move, reported by Chinese state media, becomes a reality, the battle for AI supremacy, which both countries believe is essential for their national security and global influence, gets matched up a notch further.
Nvidia Under Firewall for Chipmaker Acquisition
China Central Television (CCTV) reported on Monday that the government is studying whether Nvidia’s 2020 purchase of Israeli networking company Mellanox violates the country’s anti-monopoly laws. CCTV did not give specific details about the probe, which represents a major turning point in the simmering standoff between China and Nvidia, a company considered one of the most important building blocks for the coming AI revolution.
News of the GC’s investigation of Nvidia didn’t stop the company’s stock (NVDA), which fell less than 2% in premarket trading Monday. Nvidia, however, continues to be one of the hottest stocks on Wall Street, surging some 200% this year as the astronomical growth in AI demand scorches the company’s earnings and stock price. The firm’s market worth has surpassed $3 trillion, and only Apple is now valued more.
The Growing US-China Chip War
The investigation into Nvidia is only the latest chapter in a tit-for-tat chip war between China and the United States. A week ago, the Biden administration rolled out another round of restrictions on high-tech memory chip sales to China. Despite the distinction of these memory chips from the graphics processors Nvidia specializes in, they’re also crucial to AI research.
These export controls are the third round of restrictions the United States has put on China’s access to next-generation semiconductor technology. Because officials are worried that China could use AI to boost its own military prowess, they argue that these restrictions are vital for slowing its job in developing AI chips. Banks in both countries and industry analysts assume the US measures will be felt.
China’s Retaliation: A New Phase in the Chip War
China’s Commerce Ministry has sharply criticized the US export restrictions as ‘a major threat’ to global supply chain stability. In retaliation, China recently banned germanium and gallium, both vital to chip manufacturing, making it difficult for the US to procure these materials.
China imposed a partial ban on these materials a year ago but carried loopholes that permitted some exports to continue. But now these loopholes have been closed, ratcheting the dispute to another level.
This is my first part about Nvidia and the AI Revolution. In my opinion, Nvidia holds a key role in this revolution.
That makes the investigation of Nvidia’s part in the AI boom all the more critical. Nvidia has long been the leading GPU graphics Processing unit supplier and is synonymous with AI innovation. It provides powerful chips for many machine learning deployments, including self-driving cars and helps explain why AI took off where it did. A loss for Nvidia would not only imperil Nvidia’s operations but also undercut US efforts to hold onto intelligence in AI technology.
The US-China Semiconductor Arms Race
From trade restrictions and regulatory investigations to pastime warring over chip imports, the US and China are furiously attempting to level up their domestic chip-making capabilities. In the US, billions of dollars in subsidies are being offered through the CHIPS Act to drum up domestic chip production, with a view to ward off dependence on Chinese and other foreign suppliers. These initiatives are bound to help companies like Intel expand the US semiconductor industry.
At the same time, China has introduced its largest-ever semiconductor investment fund, $47.5 billion. The fund is one of six launched by Chinese state-run banks as part of the country’s efforts to boost its local chip manufacturing and reduce dependence on foreign technology, especially from the US.
This is part of a Broader Battle for AI Supremacy.
Just one piece of that broader competition between China and the US for dominance in AI and semiconductor tech: Nvidia is under antitrust investigation. In fact, having both countries so intensely focused on developing and controlling the forces determining critical AI innovation, the stakes have never been higher. The result of this ongoing technological cold war will likely determine the shape of the future global economy and militaries.
We will inform you about this developing story as China and the US compete for AI supremacy.
