CNN
—

China has launched an antitrust investigation into American chipmaker Nvidia, the world’s largest provider of artificial intelligence processors, according to Chinese state media.

The investigation is the latest escalation in a growing battle over AI dominance, which both the United States and China consider crucial to national security.

China Central Television said in a report on Monday that the Chinese government believes Nvidia’s purchase of Israeli networking company Mellanox may violate the country’s anti-monopoly laws. China approved the acquisition in 2020.

Shares of Nvidia (NVDA) fell less than 2% in premarket trading on Monday. The stock is among the hottest on the market, rising nearly 200% this year as the AI ​​boom has fueled demand for the company’s chips. Its market value is more than $3 trillion, second only to Apple.

The chip war between China and the US entered a new phase this month after the Biden administration a week ago imposed another round of restrictions on the sale of high-tech memory chips to China. The memory chips are different from Nvidia’s graphics processors, but are also a crucial technology that supports AI.

The government’s new export controls are the third round of such restrictions on chip sales to China. The United States fears China could use AI to gain a military advantage, and U.S. Commerce Department officials said they believed the restrictions would slow China’s development of AI chips – and industry experts believe the plan US government will function.

But China’s Commerce Ministry criticized the United States’ restrictions, saying they posed a “significant threat” to the stability of global supply chains. The Chinese government responded last week by banning the sale of materials essential to making the chips , including germanium and gallium.

A year ago, China restricted sales of these materials but created loopholes that allowed some sales to continue. These have now been closed.

Senior U.S. officials have also accused China of stealing U.S.-made AI software, which Beijing denies.

The Nvidia investigation raises the stakes. The company is the face of the AI ​​technology revolution and any damage to Nvidia could harm the American company’s ambitions to continue advancing AI around the world.

According to Bloomberg, Nvidia is also under antitrust control in the USA.

In addition to curbing material and chip sales, both China and the United States are trying to strengthen their own microprocessor development and manufacturing at home.

Through the CHIPS Act, the Biden administration has pumped billions of dollars into Intel and other companies to boost domestic production of chips and reduce America’s dependence on China and other foreign countries for technology. Meanwhile, China announced plans in May to set up its largest-ever state-owned semiconductor investment fund worth $47.5 billion, funded by investments from six of the country’s largest state-owned banks.

This story has been updated with additional developments and context.