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EU Competition Chief Flags Nvidia AI Chip Supply Issue, Regulatory Response Unclear

 |  July 9, 2024

EU competition chief Margrethe Vestager has highlighted a significant bottleneck in the supply of Nvidia Corp.’s AI chips but indicated that regulatory intervention is not yet determined. During a recent trip to Singapore, Vestager spoke with Bloomberg about the ongoing situation, noting that while inquiries are being made, they remain preliminary and do not currently meet the criteria for regulatory action.

“We’ve been asking them questions, but that is really preliminary,” Vestager told Bloomberg. She added that the Nvidia situation “would not” so far “tick the box of being regulatory action” from the EU.

Nvidia, a key player in the artificial intelligence sector, has drawn considerable attention from regulators following its emergence as a primary beneficiary of the AI spending surge. The company’s graphics processing units (GPUs) are highly sought after by data center operators for their capability to process the vast amounts of data required for developing AI models. Nvidia’s H100 processing units, in particular, have become one of the most coveted items in the tech industry, with cloud computing providers vying for access.

Related: Nvidia Faces Global Regulatory Scrutiny Amid Antitrust Investigations

Estimates suggest that Nvidia has secured a market share of over 80%, outpacing rivals such as Intel Corp. and Advanced Micro Devices Inc. This dominant position has raised concerns among regulators about potential impacts on competition and innovation within the AI chip market.

Vestager acknowledged the challenges posed by Nvidia’s dominance but suggested that secondary markets could stimulate innovation and ensure fair competition in the EU. However, she also warned that companies with significant market power might face restrictions on their behavior to maintain competitive fairness.

“If you have that kind of dominant position in the marketplace, there are things that you cannot do that a small company can do,” Vestager said. “But other than that, as long as you do your business and are respecting that, you’re good.”

As the situation evolves, the EU’s approach to Nvidia’s market position will be closely watched by industry stakeholders and competitors alike.

Source: Bloomberg