Chinese authorities lately confirmed on December 9 that they have launched an inquisition into United States-based chip giant Nvidia Corp. over suspected violations of the country’s anti-monopoly law, in an approach that will likely be seen as a retaliatory move against Washington’s recent chip restrictions.
The State Administration for Market Regulation (SAMR) brought an allegation of violating commitments it made during its acquisition of Mellanox Technologies Ltd, according to terms outlined in the regulator’s 2020 conditional endorsement of that deal. While the U.S. firm was making a $6.9 billion bid to acquire Israeli chip designer Mellanox Technologies in 2019, there were concerns that China could restrict the deal due to U.S.-China trade frictions.
Beijing, however, later approved the deal in 2020 with multiple conditions for Nvidia and the merged entity’s China operations, including prohibitions on forced product packaging and unreasonable trading terms and conditions.
However, it did not provide precise explanation on how Nvidia might have violated China’s anti-monopoly laws.
Interestingly, Nvidia did not show an immediate response to a request for comment. The company’s shares reduced 2.2% in premarket trading after the Chinese regulator’s announcement.
The investigation rolled after the third crackdown.
of the U.S. launched last week on China’s semiconductor industry, which experienced Washington curb exports to 140 companies, including chip equipment makers.
Nvidia has enjoyed pompous demand from China, including a domination in China’s AI chip market with more than 90% share, though this has been decayed over the past year by U.S. moves to stop China from acquiring the world’s most advanced chips.However, it is currently vying with domestic rivals, and Huawei is atop them.
What made China revengeful
Washington has stepped up its efforts to curb the export of advanced chips, fearing that China could use the chips to build sophisticated weapons and develop artificial intelligence.
Donald Trump’s announcement that he would be tough on China after his return as president was anticipated before.Commerce Secretary Gina Raimondo said on December 2, “Joe Biden’s presidency has been especially ineffective in strategically addressing China’s military modernization through export controls.”
Biden’s national security adviser, Jake Sullivan, said: “The United States has taken significant steps to preserve our technology from being used by our rivals in ways that threaten our national security.” Washington would continue to work with allies and partners to proactively and offensively safeguard our world-leading technologies so that they aren’t used to undermine our national security”.
The latest US rules imposed a restriction of sales to 140 companies, including Chinese chip firms Piotech and SiCarrier, without additional permission. They also impact Naura Technology Group, which makes chip production equipment, the Chinese commerce department confirmed.
Influence of the US curbs on other allies
ASML, a Netherlands-based computer chip equipment manufacturer, said the latest US restrictions would affect its export of deep ultraviolet lithography (DUV) systems to some chip-making plants in China if enforced by the Dutch government. ASML is the only producer of extreme ultraviolet lithography machines (EUV) that makes the most advanced chips. Because of existing government restrictions regarding the use of US technology, it already cannot sell EUV machines to China.
The Dutch government demonstrated concerns about the export of advanced semiconductor-making tools and ensured the reassessing of the latest US rules.
Another rule in the cluster restricts memory used in AI chips that coincide with what is known as “HBM 2” and higher technology made by South Korea’s Samsung and SK Hynix and US-based Micron.
Industry sources fear only Samsung Electronics will be affected. Analysts estimate that Samsung produces about 30 percent of its HBM chip sales from China.
However, the US plans to exempt countries that adopt similar controls, sources told Reuters.
The US restrictions to slow down China’s development of advanced AI that could change the future of warfare and impair China’s development of its own semiconductor ecosystem are just the reflection of Washington’s “small yard, high fence” policy. Chinese president Xi Jinping strongly criticized this approach last month.
Additionally, Beijing vowed to preserve its interests, with a Chinese commerce ministry spokesperson mentioning, “The US abuses export control measures and has barred conventional economic and trade exchanges”. Finally, a counter-stroke followed, resulting in a chip war.
