China Probes Nvidia Over AI Chip: What’s Behind The Latest US-China Chip Tensions?

China has launched an investigation into Nvidia Corp. over suspicions that the US-based tech giant violated anti-monopoly laws. The probe focuses on Nvidia’s behavior and its 2020 acquisition of Mellanox Technologies Ltd., a deal approved by Beijing on the condition that Nvidia would not discriminate against Chinese companies. This move marks another escalation in the ongoing tech war between the US and China, which has seen increasingly harsh sanctions and restrictions placed on both sides.

The investigation follows the Chinese government’s increasing scrutiny of foreign tech companies amid rising tensions with Washington. Nvidia, known for its dominance in AI chips, has seen significant growth in market value due to surging demand for its products that power artificial intelligence systems. However, the company’s global dominance has raised alarms about potential anti-competitive practices.

The $7 billion Mellanox deal, approved by China in 2020, included a clause requiring Nvidia to share product information with competitors within 90 days of releasing new products. Despite this, the investigation centers around whether Nvidia adhered to these conditions and whether its business practices have harmed Chinese companies.

This is not the first time Nvidia has faced global scrutiny. Last year, the US Department of Justice looked into whether Nvidia violated antitrust laws by making it difficult for customers to switch to other suppliers. The European Union and France also opened probes into Nvidia’s behavior, raising concerns about its dominance in the AI chip market.

Nvidia’s role in the AI chip market is particularly significant, as its GPUs are essential for training large language models and running AI systems. The increasing demand for these chips has led to massive shortages, driving prices to tens of thousands of dollars per unit. While Nvidia faces stiff competition from companies like Amazon, it currently holds a dominant position in the market, making it a focal point for regulatory bodies worldwide.

The investigation in China comes amid escalating sanctions from the US, including restrictions on the sale of Nvidia’s most advanced chips to Chinese companies. These sanctions are part of broader efforts by Washington to slow China’s technological advancements and maintain its edge in AI and semiconductor industries.

Despite the growing pressure, Nvidia’s stock continues to perform well, though it has recently faced a dip due to the investigation. As the situation develops, Nvidia’s ability to navigate these international challenges will likely play a key role in shaping the future of the global AI chip market.

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