China has launched a formal investigation into Nvidia, a leading US-based semiconductor company, accusing it of violating anti-monopoly laws. This probe is part of the ongoing US-China tech rivalry over the global semiconductor market, which continues to heat up as both countries vie for control of high-tech chip production. Following the announcement, Nvidia’s stock dropped more than 3%, reflecting investor concerns over the potential fallout.

Nvidia's Role in the AI Chip Market

Founded in 1993, Nvidia initially focused on graphics processing units (GPUs) for gaming. However, it has since become a dominant player in the development of advanced chips that power artificial intelligence (AI) systems. With a market value exceeding $3 trillion, Nvidia is at the forefront of AI chip technology. But as geopolitical tensions rise between the US and China, Nvidia finds itself in the middle of a technological and economic battle.

Impact of US-China Tensions on Nvidia’s Business

Nvidia reported that Chinese customers, including those in Hong Kong, accounted for about 13% of its sales this year, a decline from previous years. This drop comes as the US government has increasingly restricted the export of high-end chips to China, citing national security concerns. Nvidia CEO Jensen Huang has remained cautious about the company's future in this tense environment, stating that the company will follow whatever decisions are made by the US administration.

China’s Probe into Nvidia’s Acquisition of Mellanox Technologies

China’s investigation centers on Nvidia’s 2020 acquisition of Mellanox Technologies, a smaller chip company. Authorities claim that Nvidia violated commitments made during the acquisition. This move follows a new round of US export restrictions, which targets 140 Chinese companies, including key chipmakers like Piotech and SiCarrier. In response, China has implemented new export controls on crucial minerals such as antimony, gallium, and germanium, specifically targeting the US market. Chinese trade groups have also advised local businesses to avoid purchasing from US tech companies, further escalating tensions.

The Growing US-China Chip War and Its Global Impact

The US-China semiconductor conflict is expected to continue, with both countries taking increasingly aggressive actions against each other's tech industries. As the race for semiconductor supremacy continues, Nvidia’s role in the AI and chip market places it at the heart of this global dispute. Investors and businesses alike will need to closely monitor developments as these tensions evolve, potentially reshaping the future of technology and international trade.

Source: bbc.co.uk