Nvidia slapped with antitrust investigation by China over AI chips

Nvidia faces China’s wrath as the country files an antitrust investigation overs suspected violation of the country's anti-monopoly law over acquisition of Israel chip designer Mellanox Technologies back in 2020. This problem came after the latest sanctions by the US over exports to China, and is being considered as a way of responding to the sanctions.

The Mellanox Technologies acquisition deal was approved by China on a condition that Nvidia is to provide information regarding any new Mellanox product within 90 days, as reported by Bloomberg. It now claims that the company has violated that agreement, hence violating the anti-monopoly law.

The US government previously added sanctions on Nvidia regarding the export of advanced semiconductors to China. Nvidia reportedly circumvented these by trying to create a different model exclusively for China, which was heavily criticized by the US government.

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China responds to US sanctions

With both countries at war over semiconductor exports, Nvidia is the one getting the short end of the stick. With even more restrictions, even China has put restrictions on equipment used to manufacture semiconductors. These included minerals like gallium, germanium, and antimony. Furthermore, China is also pushing for local companies to buy domestic chips and the ones coming from the US are no longer considered safe.

All of this sounds like a bit of bad news for Nvidia, with the company’s shares closing 2.5% lower on Monday. However, as per chief analyst at TECHnalysis Research, Bob O’Donnell, who spoke to Reuters, this will not have much impact on the company. This is because there is already a restriction on Nvidia’s most advanced chips being sold to China.

“It's clear that the Chinese government is trying to react against recent restrictions from the U.S., but their ability to impact the U.S. semiconductor industry continues to decrease over time,” O’Donnell added. The company is already famous for its AI powered GPUs, and while there are several companies rising in ranks to give competition in chips, it still remains the dominant force.