China has officially launched an antitrust investigation into Nvidia, the American chipmaker at the forefront of the artificial intelligence (AI) revolution. This marks the latest development in the intensifying tech rivalry between the United States and China, both vying for dominance in the critical semiconductor industry.

The investigation, reported by Chinese state broadcaster CCTV, centers around Nvidia's 2020 acquisition of Mellanox Technologies, a networking firm. Chinese authorities allege that the deal may violate anti-monopoly laws, although specific details on how the acquisition potentially breaches the law have not been disclosed. Despite China approving the merger in 2020, the probe reflects growing concerns over the dominance of foreign tech giants in China's domestic semiconductor market.

Nvidia, with a market value surpassing $3 trillion, is a key player in the AI sector, and its chips are widely used to power AI applications globally. The company has acknowledged being contacted by regulators around the world, including those from the U.S., the EU, South Korea, and China, amid increased scrutiny of its market power. Nvidia's rising dominance has prompted competition regulators to take a closer look, especially as the company continues to capture a significant share of the AI chip market.

In response to the investigation, Nvidia stated that it is "happy to answer any questions regulators may have about our business," emphasizing its commitment to providing top-tier products across regions.

The investigation comes on the heels of a fresh round of restrictions imposed by the Biden administration, targeting the sale of advanced semiconductor technologies to Chinese companies. In retaliation, China has introduced tougher export controls on key minerals, including gallium, germanium, and antimony, which are crucial in semiconductor manufacturing. Analysts suggest these moves signal a broader strategic response from China to US sanctions.

James Lewis, a researcher at the Center for Strategic and International Studies, described the investigation as "retaliation" by Beijing, signaling that China is no longer willing to accept ongoing sanctions without responding in kind. "The timing is not a coincidence," he noted, adding that this escalation is likely a message to the US government about the growing economic and geopolitical tensions.

Both China and the U.S. have ramped up efforts to bolster their domestic semiconductor industries in the face of rising geopolitical rivalry. The US has been using the CHIPS Act to invest billions of dollars in companies like Intel to reduce reliance on foreign semiconductor suppliers. Meanwhile, China has announced plans to establish its largest-ever semiconductor state investment fund, worth $47.5 billion, to drive its own technological advancements.

Nvidia's growing role in AI chip production has placed it at the heart of this global tech battle. The company faces increasing challenges as it navigates the shifting regulatory landscape, balancing global expansion with geopolitical risks. As the tech war intensifies, both China and the US are likely to continue using their semiconductor policies as a strategic tool in this broader competition for global technological supremacy.