Author: Ian King, Leah Nylen, Bloomberg; Translated by: Baishui, Golden Finance
The U.S. Justice Department issued subpoenas to Nvidia Corp. and other companies seeking evidence that the chipmaker violated antitrust laws, escalating its investigation into the major supplier of artificial intelligence processors.
The Justice Department is sending legally binding requests for information from companies after previously sending them questionnaires, according to people familiar with the matter, bringing the government one step closer to filing a formal complaint.
Nvidia CEO Jensen Huang said he is prioritizing customers who can use the company's products now. Photographer: Annabelle Chih/Bloomberg
Antitrust officials are concerned that Nvidia will make it more difficult for suppliers to switch to other vendors and penalize buyers who don’t use its AI chips exclusively, according to people familiar with the matter who asked not to be identified discussing private matters.
Nvidia shares plunged $279 billion to a record on Tuesday, falling further in late trading after Bloomberg reported the subpoena. Still, the stock has more than doubled this year, driven by exploding sales at the Santa Clara, California-based chipmaker.
As part of the probe, Bloomberg News previously reported in June that investigators have been contacting other tech companies to gather information. The Justice Department’s San Francisco office is leading the investigation, the people said. A Justice Department representative declined to comment.
In response to questions about the survey, Nvidia said its market dominance stems from the quality of its products, which offer faster performance.
“Nvidia wins on strength, as reflected in our benchmark results and value to customers, who can choose the solution that works best for them,” the company said in an emailed statement.
Nvidia has come under regulatory scrutiny since it became the world’s most valuable chipmaker and a major beneficiary of a spending boom on artificial intelligence, with sales more than doubling every quarter and surpassing one-time chip leaders such as Intel.
As part of the Justice Department’s investigation, regulators have been looking into Nvidia’s acquisition of RunAI, which was announced in April. The company makes software for managing AI calculations, and there are concerns that the partnership will make it harder for customers to switch from Nvidia chips. Regulators are also asking whether Nvidia offers preferential supply and pricing to customers who use its technology exclusively or buy its complete systems, according to people familiar with the matter.
Founded in 1993, Nvidia made its name by selling graphics cards to computer gamers. But its approach to chipmaking ultimately proved useful for building AI models, a process that involves bombarding software with data. The company also quickly expanded its product line to include a range of software, servers, networking and services — all designed, Nvidia argues, to speed up the deployment of AI.
Nvidia Chief Executive Jen-Hsun Huang has said he prioritizes customers who can use the products he offers immediately in existing data centers, a policy designed to prevent hoarding and speed broader adoption of AI.
The success of Nvidia’s products, and the struggles of rivals to come up with alternative chips, have made the company a key link in the supply chains of some of the world’s largest companies. Microsoft Corp. and Meta Platforms Inc., for example, spend more than 40% of their hardware budgets on Nvidia gear. At the height of the shortage of Nvidia’s H100 accelerators, a single component retailed for as much as $90,000.
Analysts expect Nvidia’s revenue to grow from $16 billion in 2020 to $120.8 billion in 2024, with the bulk of that coming from the data center segment. In fact, Nvidia’s profits this year are expected to exceed the total sales of its closest competitor, Advanced Micro Devices Inc.
Nvidia’s approach also presents broader regulatory issues. Access to AI capabilities has become a focus for governments around the world as the technology becomes increasingly important to economic power and national security.
