Nvidia Caught in the Crossfire of the US-China Tech War

The ongoing US-China tech war has escalated further, with Nvidia now caught in the geopolitical crossfire. Once a dominant force in China’s AI chip market, the US chip giant is facing scrutiny from China’s antitrust authorities, marking a significant shift in Beijing’s response to Washington’s tech sanctions. This move comes shortly after the US cracked down on TikTok, highlighting the growing tensions between the world’s two largest economies.

On December 9, 2023, China’s State Administration for Market Regulation (SAMR) announced an antitrust investigation into Nvidia, citing concerns over its 2019 acquisition of Israeli chipmaker Mellanox for $6.9 billion. At the time, China conditionally approved the deal, with Nvidia pledging to ensure fair treatment of Chinese customers and avoid bundled sales. However, deteriorating US-China relations and Washington’s tech restrictions have made it difficult for Nvidia to uphold its earlier commitments.

Once commanding over 90% of China’s AI chip market, US export controls and competition from domestic chipmakers have eroded Nvidia’s revenue in the region. By fiscal year 2024, China contributed only 17% of Nvidia’s global revenue, down from 26% two years prior.

Under China’s Anti-Monopoly Law, Nvidia could face fines of up to 10% of its previous year’s sales—potentially $1 billion—or even $2 billion to $5 billion if deemed a severe violation. This comes as France and the US Justice Department have also launched antitrust investigations into Nvidia, signaling broader concerns about its dominance in the AI chip industry.

China’s move is widely seen as a retaliatory measure following Washington’s latest restrictions on China’s chip industry. The Biden administration imposed sweeping sanctions earlier in December 2023, severely limiting China’s access to high-performance AI chips. In response, Beijing imposed export controls on gallium, germanium, antimony, and superhard materials, all critical for semiconductor manufacturing.

Furthermore, major Chinese industry associations, including the Internet Society of China and the China Semiconductor Industry Association, have urged domestic companies to reduce reliance on US chips, signaling a broader push to exclude American semiconductor firms from the Chinese market.

China’s Nvidia probe is also viewed as a preemptive strike ahead of Donald Trump’s return to office in January 2025. Trump’s previous trade policies targeted Chinese tech giants like Huawei, and his administration is expected to escalate tensions further.

Nvidia is not the only company caught in the US-China crossfire. TikTok, the hugely popular short-video platform owned by ByteDance, is facing a forced divestiture in the United States. A US federal appeals court recently rejected TikTok’s challenge, upholding a law requiring ByteDance to sell its US business to a non-Chinese entity by January 2025 or face a nationwide ban.

While TikTok plans to appeal to the US Supreme Court, the legal process is lengthy and uncertain. Many experts believe the app’s fate is already sealed, with the US determined to eliminate Chinese influence over American digital platforms.

With Nvidia and TikTok facing regulatory battles on both sides, the tech war between the US and China shows no signs of de-escalation. The key question now is whether Beijing’s move against Nvidia will give it leverage in negotiations with Trump. As a businessman and dealmaker, Trump may seek economic concessions, but his “America First” agenda suggests he may double down on containing China’s tech ambitions.

For companies like Nvidia, TikTok, and other firms linked to US-China trade, the unpredictability of geopoliticsmeans navigating a highly volatile landscape. Whether as pawns or bargaining chips, these companies will remain at the mercy of government policies, making long-term stability increasingly elusive.

The tech war between the US and China has intensified, with Nvidia and TikTok emerging as prime examples of how deeply economic and technological conflicts are shaping global trade. While China seeks to counter US sanctionsthrough regulatory pressure, the US continues to curb China’s technological rise by targeting its leading tech firms. As the geopolitical struggle escalates, the fate of multinational companies remains uncertain, caught in a battle where both nations stand to suffer significant economic consequences.