Market power too great?

Nvidia targeted by US authorities over AI chips

Nvidia was actually primarily known for graphics accelerators and chips for supercomputers. As it happens, however, these are also ideal for AI algorithms.(Bild: APA/AFP/GETTY IMAGES/JUSTIN SULLIVAN)

A bombshell in the semiconductor industry: according to a media report, the US Department of Justice has launched an investigation into Nvidia for alleged abuse of its market power in AI chips.

Following complaints from competitors, the authorities are investigating, among other things, whether Nvidia has pressured cloud providers to buy several of its products at the same time, wrote the news portal "The Information" on Thursday (local time).

Nvidia emphasizes that it complies with the law
The US semiconductor company is also said to have demanded higher prices for network components if customers wanted to use AI processors from rivals such as AMD or Intel. Nivida did not want to comment directly on this report, but emphasized that it would provide the authorities with all the information they requested. "We compete on the basis of decades of investment and innovation, while scrupulously complying with all laws." The US Department of Justice could not initially be reached. In response to the report on the investigation, Nvidia shares slipped by almost three percent in pre-market trading on Wall Street.

Nvidia dominates 80 percent of the global market for high-performance processors for artificial intelligence (AI). Established chip manufacturers such as AMD and start-ups such as Cerebras want to take a slice of this pie. Other technology groups such as online retailer Amazon, Alphabet subsidiary Google and Facebook parent company Meta are also working on their own AI processors. However, Nvidia has built up a software ecosystem in recent years with which it binds developers to itself. The "CUDA" program package is designed to make it easier for them to write applications for Nvidia processors.

According to earlier statements by insiders, the chip company is facing proceedings in France for anti-competitive behavior after the authorities searched the US company's business premises last year. The antitrust watchdogs are also taking a closer look at Nvidia's market dominance in AI processors and the role of "CUDA". Insiders emphasized at the time that the EU antitrust watchdogs would not expand their investigations for the time being due to the French investigations.