China just escalated its so-called "chip war" with the United States: Beijing is launching an antitrust investigation of Nvidia, the American chipmaker whose products are powering the AI revolution.
The new investigation "may be seen as a retaliation" against recent U.S. moves to limit the sale of AI technology to China, said Axios. China has a "long history" of using antitrust investigations to retaliate against American regulations. One wrinkle: The U.S. government is "also reportedly investigating Nvidia" for possible antitrust violations, Axios said.
Still, the China investigation is being regarded as a "major escalation" of the chip war, said CNN. Both China and the United States see "AI dominance" as "crucial for national security." (The chips are crucial in "artificial intelligence, cyber warfare, military equipment" and other warfighting applications, said The Wall Street Journal.) Nvidia, meanwhile, is "the face of the AI tech revolution." Undermining the company could "harm the American company's ambitions" to continue its worldwide dominance of AI chipmaking. The two countries were already engaged in a series of tit-for-tat restrictions of chips and chip-making materials, CNN said. "The Nvidia investigation ups the ante."
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"China has trade weapons to fight back," Stephen Bartholomeusz said at The Sydney Morning Herald. The U.S. has been working to "close off China's access to the most advanced semiconductors." The Nvidia investigation is a sign that Beijing has the power to "hit back" by targeting "one of America's most valuable companies." Nvidia is an easy target: It controls 90% of the advanced semiconductor market around the world. That gives China a "plausible rationale" for its antitrust investigation, Bartholomeusz said. "It would be naive" to see the investigation's timing as "coincidental."
The world's economic superpowers are now "locked in a battle over computer chips," Ian King and Debby Wu said at Bloomberg. China is vulnerable, so despite a "spending spree" on chip-making, the country's manufacturers "still depend on U.S. and other foreign technology." America has used export controls and import tariffs to try to cement its advantage. That tactic might continue, King and Wu said. "Chips are likely to remain a focal point for the incoming Trump administration."
What next?
The antitrust investigation is a signal from Beijing that China is showing "its capacity to retaliate and to deter potential further U.S. aggressive actions," Angela Zhang, a law professor at the University of Southern California, told The Wall Street Journal. The investigation could "boomerang" by pushing the U.S. and China to accelerate the "economic decoupling" between the two countries.
Indeed, business groups are now calling for Chinese companies to quit buying American chips altogether, said The New York Times. "American chip products are no longer safe and reliable," the China Semiconductor Industry Association said in a statement. That may be tough, said the Times. "No Chinese company has been able to make chips as advanced as Nvidia's."
