Nvidia, the leading manufacturer of processors used in artificial intelligence (AI), is once again at the center of a growing trade dispute between the US and China. According to The Information, the US Department of Commerce has requested that Nvidia investigate how its products are ending up in China despite stringent export controls. The company’s AI chips, embedded in servers by distributors like Super Micro and Dell, have found their way into Southeast Asia, where the chips are allegedly being smuggled into China. Nvidia has asked its distributors to conduct spot checks on their Southeast Asian clients, though early inspections by Super Micro have failed to uncover significant smuggling operations.
Despite its best efforts to comply with export restrictions, Nvidia finds itself entangled in the broader US-China trade conflict. As part of its ongoing strategy to limit China’s access to advanced technology, the US government has imposed increasingly stringent regulations on technology exports, particularly those that could assist China’s military development. These measures include halting exports to 140 Chinese companies and preventing the transfer of critical AI technologies that could aid in the development of advanced military applications.
However, even with these controls in place, China has found ways to circumvent the restrictions. In early 2024, an investigation of tender documents by Reuters revealed that Chinese universities and research institutions were able to acquire Nvidia chips through third-party resellers. While buying or selling US-made chips is not illegal in China, there is a strong demand for Nvidia’s products due to the lack of viable alternatives, especially in the high-performance AI space.
In what some may view as a retaliatory move, China launched its own investigation into Nvidia a week after the Biden administration’s new export restrictions were imposed. The focus is on Nvidia’s 2020 acquisition of Mellanox Technologies, an Israeli-American company specializing in computer networking products. China is investigating whether Nvidia violated antitrust commitments related to its provision of GPU accelerators and networking equipment in the country, possibly engaging in practices deemed anti-competitive.
In response to the US’s aggressive export controls, China has also escalated tensions by introducing a ban on the export of several rare minerals critical to semiconductor production, including gallium, germanium, and antimony. These minerals are essential for making high-performance semiconductors, and the move is seen as an attempt to counteract US sanctions. Furthermore, China has imposed sanctions on a number of US defense firms and executives, signaling that the trade war is far from over.
As the US and China continue to use technology exports as a geopolitical weapon, Nvidia remains a key player in this ongoing tug-of-war, with its chips caught in the crossfire.
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