Nvidia targeted by China in new chip war probe

China has launched an investigation into US computer chipmaker Nvidia, targeting one of America’s leading tech companies over alleged violations of anti-monopoly laws.

The probe marks the latest salvo in an ongoing US-China tech war over the lucrative semiconductor market.

Last week, Washington tightened restrictions on sales of certain exports to Chinese companies and the clash over the industry is expected to continue when Donald Trump re-enters the White House.

Nvidia said it was “happy to answer any questions regulators may have about our business”.

“We work hard to provide the best products we can in every region and honour our commitments everywhere we do business,” the company said in a statement.

On Monday, Chinese state broadcaster CCTV said that authorities in Beijing had launched a probe “in accordance with the law”.

It said Nvidia had been accused of violating commitments made in 2020 when it acquired Mellanox Technologies, a smaller firm.

It comes after a fresh crackdown by the US last week, which saw restrictions on sales to 140 companies including Chinese chip firms such as Piotech and SiCarrier without special permission.

At the time, China responded with new tough rules restricting sales of key minerals to the US, including antimony, gallium, and germanium.

Analysts noted that the move was significant for singling out the US for such restrictions, instead of instituting blanket limits.

Several trade groups representing Chinese firms also spoke out, warning their members against buying from US companies.

Founded in 1993, Nvidia was originally known for making the type of computer chips that process graphics, particularly for computer games.

The tech giant now stands at the forefront of the development of chips that power artificial intelligence (AI), with a market value of more than $3tn.

Its growing dominance of the industry has caught the attention of competition regulators in the US and elsewhere.

Last month, Nvidia acknowledged it had been contacted by watchdogs around the world, including in the US, the UK, the European Union, South Korea and China.

But the company has also been caught in the middle of rising geopolitical and economic tensions between the US and China, as the two countries race to establish dominance over high-end chips.

Nvidia reported last month that customers based in “China, including Hong Kong” had accounted for about 13% of sales so far this year.

Story Continues

That is down since the US started ramping up restrictions of advanced technology to Chinese firms just a few years ago, citing national security fears.

Nvidia’s chief executive Jensen Huang was tight-lipped earlier this year when asked by business analysts about the political risks for the firm in the months ahead.

“We guide one quarter at a time,” he said. “Whatever the new administration decides, we’ll, of course, support the administration.”

James Lewis, researcher at the Center for Strategic and International Studies, a Washington-based think tank, said the move against Nvidia appeared to be another form of “retaliation” by Beijing.

“The timing is not a coincidence,” he said. “It’s mainly a message to the US government – the Chinese have decided they’re not just going to take sanction after sanction.”

In prior cases when the US has imposed export controls, it has only delayed not stopped the other country’s ability to gain access to the technology, Mr Lewis said, adding that he was skeptical that the AI at the heart of the dispute was as game-changing as the two sides contend.

Regardless of the reasoning, however, he said he expected the tit-for-tat to continue.

“It’s really a grudge match on both sides,” he said.