Just two weeks after Nvidia (NVDA) CEO Jensen Huang praised China’s contributions to AI research in Hong Kong, the Chinese government launched an antitrust investigation into the Santa Clara-based company, in California, in a context of escalating geopolitical tensions with the United States and uncertainties surrounding the situation. new Trump administration.
The Chinese State Administration for Market Regulation is review of Nvidia acquisition in 2020 of Mellanox, an Israeli company that manufactures computer networking equipment, Chinese media reported today (December 9). China approved Nvidia’s $6.9 billion purchase of Mellanox on the condition that the Israeli company provide samples of new products to competitors within 90 days of making them available to Nvidia, according to Bloomberg, which noted that China’s approval was necessary due to the size of its economy and semiconductor market. The deal also received approval from merger control authorities in the United States, Israel, Mexico and the European Union.
In a statement to Observer, Nvidia said it was happy to answer any questions from regulators about its business. “Nvidia wins on merit, as evidenced by our benchmark results and customer value, and customers can choose the solution that works best for them,” the chipmaker said. “We work hard to provide the best possible products in every region and honor our commitments wherever we operate. »
The investigation is the latest coup in an escalating semiconductor battle between the United States and China, which has been described by China’s Commerce Ministry as a “abuse of control measures» and a “typical act of economic coercion”.
Earlier this month, the Biden administration enacted a new round of controls on chip exports to the country, following earlier efforts to restrict China’s access to advanced AI chips. The country responded by banning the export to the United States of gallium, germanium, antimony and other ultra-hard materials. These materials have various high-tech and military applications.
Previous measures taken by the United States have prevented Nvidia from selling advanced GPUs to China since 2022. President-elect Donald Trump is expected to maintain these measures as well as the Biden administration’s tough stance on China.
Nvidia stock falls amid antitrust investigation
Nvidia shares fell more than 3% today in response to this news. The past year has been a lucrative one for the chipmaker, which saw its shares jump nearly 200 percent to claim a market capitalization of $3.38 trillion, making it the second most valuable company in the world behind Apple (AAPL) and boosting the wealth of its founder and CEO to a estimated at $120.5 billion.
Growing demand for GPUs that support AI applications has propelled Nvidia to become the leader in the AI chip industry, with a market share of 70 to 95 percent, according to Mizuho Securities. The chipmaker, which reported a 94% year-over-year rise in revenue to $35 billion in the most recent quarter, counts among its biggest tech giants Meta ( META), Microsoft (MSFT), Google (GOOGL) and Amazon (AMZN). customers.
In China, however, Nvidia has lost ground due to strict export controls. Its sales in the country accounted for 15 percent of its total sales in the quarter ended September, down from 26 percent last year.
Huang himself has advocated for a positive relationship between the United States and China when it comes to technological advancements, praising China’s contributions to AI research. “Open research is one of the miracles of modern science and perhaps the ultimate form of global cooperation, a form we must protect,” the CEO said as he received an honorary doctorate from the University of Hong Kong science and technology last month.