European Commission checks AI chip market for stifled competition

No formal moves yet, but massive demand for GPUs has drawn its attention

The European Commission is said to be monitoring the AI-driven chipmakers for potential anticompetitive practices, though no formal investigation has been announced.

According to Bloomberg sources, the EC has informally collected views on possible abusive practices in the sector to determine if there may be needs for a potential intervention.

There was a claim from last week that French authorities had raided the offices of GPU maker Nvidia as part of a probe by the country's Competition Authority into the graphics card sector. Nvidia is the largest player in that market, and its GPUs dominate the market for AI accelerators.

Nvidia declined to comment on any potential EC investigation into anticompetitive practices in AI chips, and a spokesperson for the EC told The Register: "There is no formal investigation by the Commission into the matter you refer to."

However, the EC is understood to continually monitor for possible anticompetitive market practices and any abusive conduct in all sectors, including the market for computer chips. It is likely that the recent surge in demand for GPUs to accelerate AI model training and the resultant price rise has drawn its attention.

A recent report from analysts at Gartner predicted revenue in the AI chip market is likely to hit $53.4 billion this year, an increase of more than 20 percent compared with 2022. Grtner also expects the market to continue growing by double digits, reaching $119.4 billion by 2027.

Nvidia has the largest share of the discrete GPU market, placed at 87 percent by some estimates, and demand for AI accelerators has driven the company’s profits to an eyebrow-raising 843 percent increase for the three months to July 30 this year, compared with the same period last year.

There is one natural check to growth: It appears this bottom line expansion is partly driven by the company’s inability to meet the huge demand for its latest cutting-edge products. As we reported last month, a lack of packaging capacity at Taiwanese semiconductor manufacturer TSMC means that it cannot make enough: TSMC said it is only able to meet about 80 percent of demand for its chip on wafer on substrate (CoWoS) packaging, used for Nvidia’s A100 and H100 GPUs.

As a consequence, Nvidia’s top-end GPUs, which already carry a steep price tag of around $21,000 each, have been seen selling for upwards of $40,000.

There is no suggestion that any of this is due to anticompetitive practices at this stage, but it seems the EC might be keeping a watchful eye just in case. ®

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