Nvidia dragged into US-China tit-for-tat over chip restrictions

Dec 09, 2024

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Simone Del Rosario Business Correspondent

By Simone Del Rosario (Business Correspondent), Brent Jabbour (Senior Producer), Emma Stoltzfus (Video Editor)

The world’s second-most valuable company is caught in the back-and-forth between the United States and China. Beijing announced on Monday, Dec. 9, it launched an antitrust investigation into chipmaker Nvidia.

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China’s State Administration for Market Regulation said it suspects the company, crucial to the proliferation of artificial intelligence, is violating a promise it made during its $7 billion acquisition of Israeli networking company Mellanox Technologies. Regulators approved the deal under the contingency that Nvidia wouldn’t discriminate against Chinese competitors. Since that promise in 2020, the U.S. has restricted Nvidia from sending its most advanced chips to China.

Beijing’s investigation into Nvidia comes one week after the Biden administration further restricted exports of chips to China. The Commerce Department’s Bureau of Industry and Security said the policy affects semiconductors that “can be used in the next generation of advanced weapon systems and in artificial intelligence (AI) and advanced computing, which have significant military applications.” The rule added an additional 140 Chinese entities to the trade blacklist.

“NVIDIA wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them,” an Nvidia spokesperson told Straight Arrow News in response to China’s investigation. “We work hard to provide the best products we can in every region and honor our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business.”

Beijing banned Micron chips from being used in infrastructure projects last year. That move came after previous chip restrictions implemented by Washington.

Nvidia briefly became the world’s most valuable company with the AI boom. But the company’s stock fell as much as 3% Monday morning on news of the investigation. Apple is currently in the top spot as the world’s most valuable company.

Trade tensions are expected to only escalate as the White House changes hands. President-elect Donald Trump had a highly publicized trade war with China during his first term in office. And he’s promised even higher tariffs on China as he prepares to return to the White House.

But Nvidia CEO Jensen Huang said the company will navigate the environment within the rules.

“I don’t know what’s going to happen with the new administration, but whatever happens, we’ll balance simultaneously compliance with laws and policies, continue to advance our technology and support and to serve customers all over the world,” Huang said in Hong Kong in November 2024. “We’ll continue to do that and we’ll be able to do that just fine.”

Nvidia previously dominated the AI chip market in China before U.S. government restrictions. Now, the company is facing increased competition from domestic Chinese firms like Huawei.

Tags: AI, antitrust, apple, Artificial Intelligence, China, Commerce Department, Jensen Huang, National Security, NVIDIA, Semiconductor Chips, Semiconductors, Tariff, Trade

Simone Del Rosario:

The world’s second largest company is now caught up in the U.S. and China’s tech tit for tat.

Beijing announced Monday it launched an antitrust investigation into Nvidia.

China’s market regulator says it suspects the U.S. company is violating promises it made the country in 2020 during its $7 billion acquisition of Israeli networking firm Mellanox Technologies.

Beijing approved the deal so long as Nvidia did not discriminate against Chinese competitors. Since then, the U.S. has restricted Nvidia from sending its most advanced chips to China.

China’s investigation into Nvidia comes one week after the Biden administration further restricted exports of chips to China … ones that “can be used in the next generation of advanced weapon systems and in artificial intelligence (AI) and advanced computing, which have significant military applications.” The rule added an additional 140 Chinese entities to the trade blacklist.

In response to Beijing’s investigation, an NVIDIA spokesperson told Straight Arrow News:

“NVIDIA wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them. We work hard to provide the best products we can in every region and honor our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business.”

The China-U.S. back and forth over chips is a saga at this point. Beijing banned chips from Micron from being used in infrastructure projects last year. That was after previous chip restrictions implemented by Washington.

Nvidia has flirted with the top spot as the world’s most valuable company with the AI boom. But the company’s stock fell as much as 3 percent on news of the investigation. Apple is currently on the perch with the highest market cap in the world.

Expect trade tensions to continue as the White House changes hands. President-elect Donald Trump had a highly-publicized trade war with China during his first term in office. And he’s promised even higher tariffs on China in a second term.

Last month, Nvidia CEO Jensen Huang talked about the company’s approach to innovating amid trade tensions.

JENSEN HUANG:
“I don’t know what’s going to happen with the new administration, but whatever happens, we’ll balance simultaneously compliance with laws and policies, continue to advance our technology and support and to serve customers all over the world. We’ll continue to do that and we’ll be able to do that just fine.”

Simone Del Rosario:

Nvidia used to dominate China’s AI chip market before U.S. restrictions. Now, it faces increasing competition from Chinese companies like Huawei.

For SAN, I’m Simone Del Rosario

To see how Apple is balancing the tit-for-tat act in China, search “Apple Huawei” for this story on SAN.com or the Straight Arrow News app.