What does China want to find out about Nvidia?

Nvidia’s China investigation could be retaliation for US sanctions, pointing to the country’s growing technological independence

China’s State Administration for Market Regulation is investigating American technology giant Nvidia for possible violation of anti-monopoly laws and a settlement over Nvidia’s 2020 acquisition of Mellanox Technologies.

The first allegation makes sense only as retaliation against the latest round of US sanctions on China, but the second may have merit. Nvidia is disputing the claims.

In any case, Nvidia denied rumors that it plans to reduce sales to China, which accounted for 15% of its revenue in the three months to October (Nvidia’s third fiscal quarter). In fact, Nvidia is expanding its presence in China with a focus on areas not subject to export controls, including autonomous driving.

It seems illogical for China to accuse Nvidia of monopolistic practices because U.S. Commerce Secretary Gina Raimondo and her department’s Bureau of Industry and Security (BIS) have already harmed the company’s core data center business in the country by banning export of its most advanced GPU processors to China.

On the contrary, perhaps China should be grateful to the US government for giving Huawei and other Chinese integrated circuit design companies the opportunity and a strong incentive to develop their own AI processor business while the hands of their most formidable competitor are tied.

In 2022, BIS banned exports of Nvidia’s high-end A100 and H100 processors to China. In 2023, it banned exports of the A800, a simplified version of the A100 designed specifically to meet BIS requirements.

The A800 was a bestseller in China, so BIS lowered the bar, forcing Nvidia to design another chip, the H20, with even lower performance. But Chinese AI processors, led by Huawei’s 910B, have proven to be competitive with the H20, which hasn’t sold well in China. And Huawei claims its successor, the 910C, matches the performance of Nvidia’s H100.

In any case, Baidu, Tencent and other Chinese customers began moving to Huawei and other domestic chips when it became clear that US sanctions were not based on strict technical criteria related to national security, as US government officials claim, but could be changed at any time simply to punish China.

Exports of Nvidia’s new and considerably more powerful Blackwell B200 AI processors to China are prohibited by existing sanctions, but a simplified version that could be called the B20 is being prepared. But why would it be more successful than the H20?

As for Mellanox Technologies, the Chinese government approved the acquisition under the condition that access to Mellanox interconnect technology remained open, that Nvidia provided Mellanox interconnect products to Chinese customers without discrimination, did not bundle them with its own GPUs, and ensured interoperability of your own GPUs with other interconnect products.

Nikkei Asia notes that “It is unclear which of these terms Nvidia allegedly broke.”

Mellanox is an Israeli company that designs and supplies InfiniBand and Ethernet interconnect adapters, switches and other devices and software for use in high-performance computing, data centers, cloud storage and financial services. Nvidia arranged to acquire 100% of the company in 2019.

Where might China have gotten the idea for an antitrust investigation? Well, last July France confirmed it was investigating Nvidia for alleged anti-competitive practices, and in September the US Department of Justice subpoenaed the company for information about its potentially restrictive marketing practices. Outside of China, Nvidia’s share of the AI ​​processor market is estimated at around 90%.

The US sanctions, which not only block the export to China of advanced AI processors made by Nvidia and its smaller competitor AMD, also prevent China from purchasing EUV lithography systems made by ASML of the Netherlands.

This makes it impossible for the Chinese to make integrated circuits (ICs) with design rules smaller than 5 nm, and 7 nm is as far as they can go with an adequate degree of efficiency. Blackwell processors, on the other hand, are made by TSMC using a 4nm process. As a result, Nvidia is currently far ahead of the Chinese in the race to develop more sophisticated AI processors.

However, chasing Nvidia isn’t the only way to advance AI. In recent months, Chinese research institutions have reportedly developed AI processors based on the RISC-V (pronounced “risk-five”) open architecture design standards and large language models for military use based on open source models. , including Llama da Meta.

The Chinese are not the only ones using RISC-V. Last February, Nvidia’s emerging U.S. competitor Tenstorrent announced an agreement to license its RISC-V CPU technology to Japan’s Leading-edge Semiconductor Technology Center for the development of an AI processor comprised of fabricated and packaged chiplets. in Hokkaido by Japan’s new IC foundry, Rapidus.

China is using chiplets as a way around its lack of access to EUV lithography tools. As explained in MIT Technology Review:

In contrast to traditional chips, which integrate all components onto a single piece of silicon, chiplets take a modular approach. Each chiplet has a dedicated function, such as data processing or storage; they are then connected to become a system.

Because each chiplet is smaller and more specialized, it is cheaper to manufacture and less likely to malfunction. At the same time, individual chiplets in a system can be swapped out for newer, better versions to improve performance, while other functional components remain the same

.

RISC-V is an open standard instruction set architecture based on Reduced Instruction Set Computer design principles. It is a free, non-proprietary platform for developing IC processors.

An alternative to Arm, Intel, AMD and Nvidia, RISC-V is not only of great interest to China, but also to the EU and smaller companies and integrated circuit designers looking to develop a lower-cost independent presence in markets. semiconductors and computing.

US sanctions have forced China to accelerate the development of a national ecosystem for advanced ICs based on RISC-V.

The RISC concept was conceived at the University of California, Berkeley in 2010. The RISC-V Foundation was established in 2015 to support and manage the technology, with the Institute of Computing Technologies of the Chinese Academy of Sciences as one of the founders. Other Chinese members of the foundation include Huawei, ZTE, Tencent and Alibaba.

In 2020, the foundation was incorporated in Switzerland as the RISC-V International Association, leaving the United States to avoid potential interference from US President Donald Trump. In addition to the scope of US sanctions, it is estimated that China is now responsible for about half of RISC-V core shipments worldwide.

Meanwhile, DigiTimes reports that Nvidia has hired “hundreds” of new employees in China to work on autonomous driving. BYD and about a dozen other Chinese auto companies have adopted its DRIVE Orin system on a chip (SoC) for autonomous electric vehicles, generating annual revenues for Nvidia of more than $1 billion a year.

Looking ahead to 2025, at least five Chinese EV manufacturers – BYD, XPeng, GAC-Aion, Li Auto and Zeekr – plan to use DRIVE Thor, the successor to DRIVE Orin. But DRIVE Thor incorporates the generative AI capabilities of Nvidia’s cutting-edge Blackwell architecture. Will the US government try to stop this too?

The Chinese are protecting themselves. BYD, Li Auto, ChangAn and many other Chinese automakers are also working with Horizon Robotics, China’s leading computing solution for advanced driver assistance systems (ADAS) and automated driving (AD) for consumer vehicles. Just like Volkswagen. In October, Horizon Robotics went public in the biggest IPO in Hong Kong this year.

With information from Asia Times*