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European Commission Eyes AI Chip Market for Anticompetitive Practices

The European Commission has been gathering information on potential abusive practices in the semiconductor industry amid rapid growth and exploding prices.

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The European Commission (EC) has reportedly set its sights on artificial intelligence (AI) chip manufacturers for potential anticompetitive practices. While no formal investigation has been announced, Bloomberg sources say that the EC has been informally gathering information on potential abusive practices in the sector. This comes amid rapid growth in the AI chip industry, with revenue expected to hit $53.4 billion this year according to a Gartner report — reflecting an increase of more than 20 percent from the previous year.

Last week, it was reported that French authorities had raided the offices of leading GPU maker Nvidia. , which holds dominant market share in AI accelerators, has seen an 843 percent profit increase in the three months to July 30 this year compared to the same period last year.

Surge in Demand Raises Questions

The unprecedented demand for GPUs for AI model training and the resultant price surge appears to have caught the attention of the EC. Analysts at Gartner project the AI chip market will continue to grow by double digits, hitting $119.4 billion by 2027. Industry leader Nvidia has an estimated 87 percent share of the discrete GPU market due to this demand uptick.

The demand for AI chips also presents production challenges. For instance, Nvidia's inability to satisfy the enormous demand for its latest cutting-edge products due to a packaging capacity shortage at Taiwan Semiconductor Manufacturing Company (TSMC) has resulted in price increases. TSMC reported that they can only meet about 80 percent of demand for chip packages used for Nvidia's A100 and H100 GPUs. This supply-demand gap has prompted sellers to raise the price of Nvidia's top-end GPUs from around $21,000 each to upwards of $40,000.

Monitoring Potential Anticompetitive Practices

While there isn't a direct suggestion of anticompetitive behavior causing the market circumstances, the EC is reportedly keeping a watchful eye on the situation. As is with all sectors, the EC continues to monitor for potential anticompetitive practices and any abusive market conduct. This surveillance is particularly important at a time where AI chips are becoming crucial components in a world increasingly reliant on AI-powered solutions.

Markus Kasanmascheff
Markus Kasanmascheff
Markus is the founder of WinBuzzer and has been playing with Windows and technology for more than 25 years. He is holding a Master´s degree in International Economics and previously worked as Lead Windows Expert for Softonic.com.