China’s launch of an antitrust investigation into U.S. semiconductor company Nvidia is interpreted as a head-on response to the U.S. trying to limit supply chains to China in relation to advanced technologies such as artificial intelligence (AI).
According to Xinhua News Agency and others on the 10th, China’s National Market Supervision and Management Bureau said it launched an investigation the day before, saying Nvidia violated its own anti-trust laws. Chinese anti-trust authorities said that Nvidia approved the acquisition of Israeli semiconductor company Melanox in 2020 on the condition that it would prevent anti-competitive practices and ensure supply to China, and that Nvidia violated them.
According to the Pengpai Shimbun, the Chinese anti-trust authority’s conditions include banning the sale of graphics processor accelerators and Melanox high-speed network connectors in a bundle, and maintaining open-source policies for Melanox software. The Chinese anti-trust authority did not specify which of these items Nvidia violated.
“We are working hard to provide the best products in all regions and we keep our promises wherever we do business,” Nvidia said in a statement, adding that it will faithfully engage in investigations by the Chinese authorities. Nvidia shares fell 2.55 percent on the New York Stock Exchange, which closed in the morning.
The survey was conducted a week after the U.S. announced a ban on exports of high bandwidth memory (HBM) to China, which is essential for developing AI semiconductors, by adding 140 Chinese companies to its export restrictions. Analysts say that the move has demonstrated China’s willingness to go head-to-head with the U.S. supply chain restrictions.
On the same day that the U.S. Department of Commerce announced its export restrictions on semiconductors on the 3rd, China’s four major industrial associations announced that Chinese companies should be careful about purchasing U.S. parts, saying, “U.S. parts are no longer safe.” China’s Ministry of Commerce also announced on the same day that it would control exports of dual-use items for civilian and county heads, including gallium, germanium, and antimony, which are semiconductor raw materials.
Analysts say that the investigation by China’s anti-trust authorities will not have a significant impact on Nvidia. Nvidia has been unable to supply high-end parts to China due to the U.S. regulations on exports of semiconductors to China. Nvidia’s market share, which once accounted for more than 90 percent of the Chinese market, has fallen to 17 percent.
However, it is drawing attention that China has signaled that it will not back down from U.S. sanctions.
The New York Times (NYT) analyzed that China’s move “willing to enter the supply chain war” at a time when trade and technology competition with the United States is intensifying.
It is also noteworthy that China has come up with a “precision strike” method aimed at specific companies, not a method of imposing collective tariffs on U.S. products.
“China is showing off its ability to retaliate by targeting one of the most valuable U.S. companies and showing off its strength to curb the U.S. from further aggressive actions,” University of Southern California professor Angela Zhang told the Wall Street Journal (WSJ).
Chinese President Xi Jinping said in a meeting with the head of economic and financial institutions that “there is no winner in the trade war with the United States, and China is willing to talk at any time,” according to China Central Television (CCTV). President Xi said in a congratulatory speech last month that “If the U.S. and China fight, they will get hurt.”
China fined US semiconductor company Qualcomm 6.08 billion yuan in 2015 for violating anti-trust laws.
EJ SONG
US ASIA JOURNAL
