The Chinese communist regime’s State Administration for Market Regulation announced on Dec. 9 that it had launched a probe of technology company Nvidia Corp over suspected violations of China’s anti-monopoly law.
Chinese state media reported that the investigation is focused on Nvidia’s acquisition of Israeli–American chip designer Mellanox Technologies, which China approved four years ago on the condition that Nvidia does not discriminate against Chinese companies.
The announcement of the probe follows the United States’ issuing of another round of export controls on advanced semiconductor technology targeting China, banning sales to 140 new entities.
The following day, Beijing banned the export of critical minerals used in semiconductor manufacturing to the United States.
Four Chinese industry associations also warned companies the same day that U.S. chips were “no longer safe“ to buy. The Internet Society of China urged companies to expand cooperation with chip companies from other countries and prioritize using Chinese-made chips.
Nvidia is by far the world’s most dominant artificial intelligence (AI) chips company, but chip export bans to China have allowed Chinese chipmakers to establish a foothold in the domestic market.
Huawei has announced an advanced AI chip in an attempt to rival Nvidia’s offerings and plans to start mass-producing them as early as 2025.
U.S. export controls only restrict advanced chips from being sold to Chinese entities. Many chipmakers continue to sell larger “legacy” chips to Chinese manufacturers.
A spokesperson for Nvidia told The Epoch Times that the company would be happy to answer any questions that regulators may have about the company.
“Nvidia wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them,” the spokesperson said. “We work hard to provide the best products we can in every region and honor our commitments everywhere we do business.”
China remains a key client for many chipmakers, including Nvidia. The AI chip designer has designed chips specifically to sell to China.
The 2023 U.S. export control rules on chips to China prohibited the sales of chips with a certain amount of processing power. Nvidia had said that would apply to its two most advanced chips.
The Chinese market accounted for 26 percent of the company’s revenue in fiscal year 2022, before falling to 17 percent two years later following the restrictions.
At the time, U.S. Commerce Secretary Gina Raimondo said the restrictions were not for economic reasons but strategic ones. The goal was to limit breakthroughs in advanced technology such as AI that are critical to Chinese military applications, she said.
During the latest round of restrictions, officials noted that Chinese entities had a record of evading U.S. restrictions to obtain prohibited technology.
Beijing has drawn concessions from major companies with anti-trust probes before.
In 2015, Qualcomm paid a record $975 million fine to the Chinese communist regime after a 14-month investigation under China’s anti-monopoly law.
Qualcomm agreed not to contest the Chinese agency’s findings, but said, “We don’t believe it’s likely that other agencies will necessarily meet similar conclusions.”
Chinese agencies had said that Qualcomm’s practices “stifled innovation.” In addition to the fine, Qualcomm agreed to lower royalty rates for Chinese chipmakers, such as Xiaomi and Huawei, basing the rates on 65 percent of the phone’s selling price instead of the wholesale price.
China has also handed down mass penalties to Chinese tech companies such as Tencent, Baidu, and Alibaba under the anti-monopoly law.
Reuters contributed to this report.
