Latest Developments in the US-China Tech War: China Launches Antitrust Investigation into Nvidia

1. Who is Nvidia?

Nvidia is a leading American technology company, well-known for its artificial intelligence (AI) products and gaming graphics chips. The company is a pioneer in AI development and high-performance computing, serving industries such as gaming, healthcare, and autonomous vehicles.

In April 2024, Nvidia announced its acquisition of the Israeli startup Run:ai for $700 million, with plans to expand its AI product offerings under the Nvidia DGX Cloud AI platform.

Nvidia has also been impacted by the US-China trade war. US restrictions have prevented the company from selling its advanced AI chips to China, forcing it to adjust its products to meet export control regulations. Before the restrictions, Nvidia held 90% of the AI chip market share in China. However, by 2023, this market share had dropped to just 17%.

In Vietnam, Nvidia has signed an agreement to establish the AI Research and Development Center Vietnam, aiming to foster innovation and enhance technological capabilities in the country.

2. What is Happening?

Recently, China announced it has launched an investigation into Nvidia, accusing the company of potentially violating its antitrust laws. This move comes amid rising tensions between the US and China over tech control, especially in the semiconductor industry. It is seen as a direct response from China to recent US restrictions intended to curb the development of China's tech industry.

This investigation is part of the broader tech war between the US and China. US export restrictions on China's semiconductor industry have affected over 140 companies in China. Meanwhile, the Chinese government has retaliated by imposing bans on the export of certain rare minerals to the US, which are crucial for tech and military production.

3. Details of the Investigation

China's investigation into Nvidia mainly focuses on the company's business practices, particularly the 2020 acquisition of Mellanox Technologies. According to the State Administration for Market Regulation (SAMR), the investigation seeks to clarify the conditions surrounding the Mellanox deal and Nvidia’s recent actions, especially given the company’s commitment not to discriminate against Chinese firms when the deal was approved.

Following the announcement of the investigation, Nvidia’s stock dropped by 3.7%, reflecting market concerns about the potential impact of this probe on Nvidia’s business in China and other regions.

4. Nvidia’s Response

In response to the investigation, Nvidia affirmed its willingness to cooperate and provide all necessary information to Chinese regulatory authorities. The company emphasized that its business strategy is based on genuine innovation and customer choice.

"Nvidia’s success is driven by innovation and the performance of our products, as demonstrated by customer trust and the value we deliver," stated a representative from Nvidia. "We are committed to offering the best products and honoring our business commitments in all markets globally."

This investigation by China not only marks a significant event for Nvidia but also reflects the escalating tensions in the US-China tech war. The outcomes of this investigation will likely have a profound impact on Nvidia’s global strategy, particularly in key markets like China and Vietnam.

Written by: Thanh Trúc - Director & Host at ALTAS TALK

Release Date: 10/12/2024

Check out the latest episode discussing the US-China tech war on ALTAS TALK - What Do Young People See in the Current Economic Movement?