Key Points
- China launched an anti-monopoly investigation into Nvidia over alleged law violations.
- The move follows new U.S. export curbs targeting China’s semiconductor industry.
- Due to U.S. restrictions and local competition, Nvidia’s AI chip market dominance in China has waned.
- Nvidia’s shares fell 2.2% after the investigation’s announcement, highlighting rising U.S.-China tensions.
On Monday, China announced that it initiated an anti-monopoly investigation into Nvidia Corp, alleging potential violations of the country’s anti-monopoly law. The State Administration for Market Regulation (SAMR) stated that Nvidia is also under scrutiny for potentially breaching commitments it made during its 2020 acquisition of Mellanox Technologies Ltd, which Beijing had approved under specific conditions. However, SAMR did not detail the exact nature of the violations.
The investigation follows a new wave of U.S. restrictions targeting China’s semiconductor industry, marking the third crackdown in three years. Last week, Washington imposed export curbs on 140 companies, including chip equipment makers, to limit China’s access to cutting-edge technologies.
Nvidia, which had dominated China’s AI chip market with over 90% share before the U.S. restrictions, has experienced a decline in demand as domestic competitors like Huawei have emerged as significant challengers. The U.S. restrictions have further dented its business prospects in the region.
The 2020 approval of Nvidia’s $6.9 billion acquisition of Mellanox Technologies was contingent on specific conditions to ensure fair competition in China. These included prohibitions against forced product bundling, unreasonable trading practices, and discriminatory treatment of customers who opted to purchase products separately. SAMR’s probe now questions whether Nvidia has adhered to these stipulations.
Nvidia’s shares dropped 2.2% in premarket trading following the announcement. The investigation is widely viewed as a retaliatory measure against Washington’s recent chip-related curbs, which have escalated the ongoing technological and trade tensions between the U.S. and China.
