Nvidia, the company that makes most processors used in artificial intelligence (AI), is under renewed scrutiny from the US and China. The Information reported that the US Department of Commerce asked the chipmaker to investigate how its products ended up in China despite tight export controls. Distributors like Super Micro and Dell embed Nvidia’s AI processors in their server products. Subsequently, Nvidia asked these distributors to conduct spot checks of Southeast Asian customers. So far, during inspections by Super Micro, those smuggling the chips have evaded detection.
Although Nvidia tries to adhere to export control restrictions, the chipmaker is at the center of the ongoing US-China trade war. Technology export regulations have become a diplomatic tool for the US. The outgoing Biden administration has been cracking down on chips exported to China. These efforts include broader restrictions on advanced technology that can be sent to China to prevent Bejing from developing its own chips that could be used in AI for sophisticated military applications. Also, the US has halted exports to 140 Chinese companies.
Even so, after a review of tender documents in early 2024, Chinese universities and research institutes have been able to procure banned Nvidia chips through resellers, Reuters reports. It is not illegal to buy or sell US chips in China,which has a strong demand for Nvidia chips because of a lack of quality alternatives.
In what could be considered retaliation, a week after the Biden administration introduced the new restrictions, China began investigating Nvidia for potential violations of antitrust law in its 2020 acquisition of an Israeli-American multinational supplier of computer networking products, Mellanox Technologies. Nvidia is under scrutiny for potentially breaching commitments to provide access to GPU accelerators and networking equipment in China and prohibiting anticompetitive practices.
Also, in response to the Biden administration, China’s government introduced a ban on exports to the US of several rare minerals—gallium, germanium, and antimony—used to make semiconductors and sanctioned over a dozen US defense firms and executives.
