Nvidia in the Crosshairs: China Opens Probe into Mellanox Acquisition
As the second-largest public company in the world, behind Apple, all eyes are on Nvidia these days. And it’s not just the tech enthusiasts who are watching – the Chinese government is taking a closer look at the company’s activities. Bloomberg has reported that China Central Television (CCTV), a public TV broadcaster, is stating that China’s market regulator has opened an investigation into Nvidia’s acquisition of Mellanox.
Who is Mellanox?
For those who may not be familiar with the name, Mellanox is an Israel-based company that specializes in high-performance chips for supercomputers. In 2019, Nvidia spent nearly $7 billion to acquire Mellanox, which was approved by the Chinese government after Nvidia made several commitments.
The Commitments
As part of the deal, Nvidia and Mellanox agreed to share information about new products with Nvidia’s rivals within 90 days of release. Additionally, Nvidia allowed Chinese chipmakers to test their products with Mellanox’s technology to ensure compatibility.
Nvidia’s Current Situation
However, things have taken a turn for the worse for Nvidia. Washington has implemented restrictions on semiconductor manufacturers, including Nvidia, which prevents them from selling their most advanced AI chips to Chinese companies. This move has led to retaliations from the Chinese government, with China banning some sales of Micron products following a cybersecurity probe.
The Ongoing Economic Conflict
Today’s investigation seems to be another twist in the ongoing economic conflict between China and the US over key technologies, including state-of-the-art GPUs for generative AI training and inference. The Biden administration recently announced wider trade bans on advanced technology, with a specific focus on chips that can be used for military equipment and artificial intelligence.
The Importance of Artificial Intelligence
Financial analysts estimate that the top 7 big tech companies will report profit growth of 18% in 2025. However, if you remove Nvidia from the group, profits will only grow by 3% in 2025. This highlights just how important AI has become for economic growth.
The Impact on the Tech Industry
The ongoing investigation and restrictions on semiconductor manufacturers have significant implications for the tech industry. With AI playing an increasingly crucial role in driving economic growth, companies like Nvidia are at the forefront of this technological revolution. The Chinese government’s move to investigate Nvidia’s acquisition of Mellanox is a stark reminder of the complexities and challenges that come with navigating global trade agreements.
A Look into the Future
As we look ahead to 2025, it will be interesting to see how companies like Nvidia navigate the increasingly complex landscape of global trade. With profit growth projected to slow down without Nvidia’s inclusion in the top tech companies, the stakes are high for both the US and Chinese governments to find a solution that works for all parties involved.
Romain Dillet’s Insights
As TechCrunch’s Senior Reporter, Romain Dillet has been following the developments closely. With over 3,000 articles written on technology and startups, he is well-versed in the intricacies of the tech industry. In his opinion, the ongoing investigation into Nvidia’s acquisition of Mellanox highlights the importance of understanding the complex relationships between governments, companies, and technologies.
What Does This Mean for the Tech Industry?
As we move forward, it will be essential to closely monitor developments in the US-China trade relationship and their impact on the tech industry. With AI playing an increasingly significant role in driving economic growth, companies like Nvidia are at the forefront of this technological revolution. The Chinese government’s investigation into Nvidia’s acquisition of Mellanox is a stark reminder of the complexities and challenges that come with navigating global trade agreements.
Key Takeaways
- China has opened an investigation into Nvidia’s acquisition of Mellanox.
- Nvidia spent nearly $7 billion to acquire Mellanox in 2019.
- The deal was approved by the Chinese government after Nvidia made several commitments.
- Washington has implemented restrictions on semiconductor manufacturers, including Nvidia.
- Financial analysts estimate that profit growth will slow down without Nvidia’s inclusion in the top tech companies.
What’s Next?
As we move forward, it will be essential to closely monitor developments in the US-China trade relationship and their impact on the tech industry. With AI playing an increasingly significant role in driving economic growth, companies like Nvidia are at the forefront of this technological revolution. The Chinese government’s investigation into Nvidia’s acquisition of Mellanox is a stark reminder of the complexities and challenges that come with navigating global trade agreements.
The ongoing investigation and restrictions on semiconductor manufacturers have significant implications for the tech industry. With AI playing an increasingly crucial role in driving economic growth, companies like Nvidia are at the forefront of this technological revolution. The Chinese government’s move to investigate Nvidia’s acquisition of Mellanox is a stark reminder of the complexities and challenges that come with navigating global trade agreements.
