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Nvidia Hit With China Probe in Tech War Escalation

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Bloomberg Dec 9 18:34 · 26.5k Views

China has opened a probe into Nvidia over suspicions that the US chipmaker broke anti-monopoly laws around a 2020 deal, taking aim at the AI heavyweight as Washington ramps up sanctions.

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Transcript

  • 00:00 Just go into the intricacies of this particular investigation regarding
  • 00:04 a deal made years ago.
  • 00:06 Yeah, this was a bit of a surprise.
  • 00:08 We got this news last night from state television in
  • 00:12 China where CCTV disclosed that the agency SAMR
  • 00:17 has opened this probe into NVIDIA and what it calls potentially anti monopolistic behavior.
  • 00:22 It's a little curious because as you say, they're focused in or they mentioned specifically a deal that they did four years ago
  • 00:29 to buy a company called Mellanox.
  • 00:31 It's a company in Israel that makes networking equipment.
  • 00:34 China had to approve that deal when NVIDIA decided to do it.
  • 00:37 And they did approve it, as you mentioned, in 2020.
  • 00:39 But they did with seven different conditions about Nvidia's behaviour going forward.
  • 00:44 That included giving the customers in China access to
  • 00:47 product information from Mellanox and product
  • 00:50 access for Nvidia's own chips.
  • 00:53 Now, it's not exactly clear what they're
  • 00:55 going to dig into in this case,
  • 00:57 but as you noted, NVIDIA has been this company at the
  • 01:01 at the heart of the US China conflicts over technology.
  • 01:04 Washington has cut off it, Nvidia's ability to sell its most advanced chips into China.
  • 01:09 So they're really at the heart of this conflict between the two biggest economies in the world.
  • 01:14 Now, it's worth noting that the US Justice Department itself is looking for information to NVIDIA and
  • 01:19 and potentially violating antitrust laws.
  • 01:21 It is not the only country investigating NVIDIA, but set the context of what other companies are being
  • 01:27 focused in on, on this tit for tat.
  • 01:29 Because Micron, for example, is having difficulty with its relationship with China.
  • 01:33 This just does seem to be
  • 01:36 around the context of China trying to
  • 01:39 be one up on what it and respond to the US limitations of technology into its country.
  • 01:45 Yeah, as you say, the anti monopoly concerns around NVIDIA are quite broad.
  • 01:50 It's not just China, it's also the United States.
  • 01:52 France here is taking a look at it.
  • 01:54 That's because they have essentially a monopoly 100% share, almost 100% share in the most advanced chips to train AI models.
  • 02:01 But you're exactly right.
  • 02:03 Also, there's this broader trade conflict that we've seen that creates all sorts of problems for companies in between the US and China.
  • 02:10 NVIDIA still sells a lot of chips into China.
  • 02:13 It had sold more in the past, but two years ago we got this news that Washington was going to cut off their ability to sell the most high end
  • 02:20 AI chips used to train AI models.
  • 02:23 Those restrictions have been steadily tightened since then.
  • 02:25 So NVIDIA has suffered because of that, but it's beyond that too.
  • 02:28 It's the chip equipment makers that have been restrained.
  • 02:31 ASML here in Europe has been restrained from selling their most advanced gear.
  • 02:35 So in response, Beijing has taken a number of actions that we're seeing them retaliate in certain kinds of ways where they cut off
  • 02:42 a couple minerals that are very important to the chip industry and the
  • 02:46 and the
  • 02:47 defence industry in particular, gallium and germanium.
  • 02:50 So they're beginning to show that they also have some cards to play, some leverage to pull in this broader trade conflict.