China has open investigations into Nvidia Corp. because they think the US chip company may have broken rules about fair competition. This is part of a bigger conflict as the US tightens restrictions on technology.
Recently, China’s government started looking into Nvidia’s actions and its past purchase of Mellanox Technologies Ltd., which is a significant deal from 2020. When the deal was approved, China allowed it under the condition that Nvidia would not treat Chinese companies unfairly.
China’s actions against Nvidia come as a response to growing US technology restrictions. Just last week, China banned exports of certain materials that can be used for technology and military purposes. This year, Nvidia has seen a huge increase in its value due to high demand for computer chips used for artificial intelligence (AI), making it one of the most valuable companies and a primary target in the technology trade war.
Nvidia purchased Mellanox for $7 billion, and as part of this deal, they had to share information about new products with competitors within 90 days of launching them. There has been no immediate comment from Nvidia.
Nvidia’s stock price dropped by 2% in early trading on Monday, continuing its decline after dropping 1.8% the previous Friday, which put its market value at $3.49 trillion, making it the second largest US company after Apple.
In the US, there have been new restrictions that prevent Nvidia from selling its most advanced chips to companies in China. Additionally, the US has asked its allies to do the same. For instance, the US government influenced the Netherlands to stop a company named ASML, which makes advanced chip-making machines, from selling, repairing, or maintaining its top equipment in China.
In response to these growing restrictions, the Chinese government has also targeted US companies. For example, Micron Technology Inc. announced that about half of its sales linked to customers in China might be affected by a cybersecurity investigation by the Chinese government.
Nvidia is facing scrutiny not only in the US but around the world. Their computer chips, previously popular for video games, are now crucial for training AI systems. As companies like Amazon try to challenge Nvidia’s market position, there is still high demand for these chips, which are very expensive and hard to find.
Earlier this year, the US Justice Department assessed whether Nvidia broke antitrust laws because they were worried Nvidia was making it difficult for buyers to switch to other suppliers. A similar concern in France led to the country investigating Nvidia for potential antitrust issues, and the European Union is also looking into Nvidia’s business practices regarding AI chips.
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