In terms of market capitalization, Nvidia is currently the second largest publicly traded company in the world after Apple. That's why Nvidia has been getting a lot of attention lately.
And now, as reported by Bloomberg, public television broadcaster China Central Television is reporting that China's market regulator has opened an investigation into Nvidia's acquisition of Mellanox.
This name may not sound familiar, but in 2019, Nvidia spent nearly $7 billion to acquire Mellanox, an Israeli company that develops high-performance chips for supercomputers. The Chinese government approved the acquisition in exchange for several promises.
Among other things, Nvidia (and Mellanox) promised to share information about new products with Nvidia's competitors within 90 days of launch. Similarly, Nvidia has agreed to let Chinese chipmakers test Mellanox's technology to see if its products work well.
NVIDIA is currently in an uncomfortable position as the US government has introduced restrictions on semiconductor manufacturers, including NVIDIA. We cannot sell cutting-edge AI chips to Chinese companies.
This led to retaliation from the Chinese government. For example, China has banned the sale of some Micron products following a cybersecurity investigation. Today's investigation appears to be the latest development in an ongoing economic dispute between China and the United States over key technologies, including cutting-edge GPUs for generative AI training and inference.
Financial analysts estimate that the top seven largest technology companies will report 18% profit growth in 2025. However, if you remove Nvidia from that group, earnings growth in 2025 would be just 3%. This shows how important artificial intelligence has become for economic growth. .
The Biden administration announced a broad trade ban on advanced technologies last week, with a particular focus on chips that can be used in military equipment and artificial intelligence.