Key Points:
- China’s market regulator has stated that Nvidia has violated the country’s anti-monopoly law.
- The announcement was made on the same day as major U.S.-China trade talks.
- Nvidia is also accused of breaking promises it made during its 2020 acquisition of Mellanox.
- The company could face a massive fine of up to 10% of its $17 billion in annual sales in China.
China’s market regulator announced Monday that a preliminary investigation has found that U.S. chip giant Nvidia violated the country’s anti-monopoly law. The move represents a significant escalation in the ongoing tech war between the U.S. and China, occurring on the same day that the two countries are holding high-stakes trade talks in Madrid.
Analysts see the timing as a deliberate move by Beijing to gain leverage in the negotiations. “Both sides appear to be building leverage to negotiate from a more favorable position,” said one expert. The announcement also appears to be a direct response to the Trump administration’s decision last week to add 23 Chinese companies to a trade blacklist.
China first launched its investigation into Nvidia in December, a move widely seen as a response to U.S. export controls on advanced AI chips. The regulator’s brief statement on Monday provided few details. Still, it did say that Nvidia is also suspected of violating the commitments it made when it acquired Israeli chip designer Mellanox in 2020.
As part of that deal, Nvidia promised to continue supplying China with its powerful GPU accelerators, a promise it was later forced to break due to U.S. export controls.
If found guilty, Nvidia could face a substantial fine of up to 10% of its annual sales in China, which totaled $17 billion in 2022. The bigger concern for the company is how this will affect its ability to sell in the world’s second-largest economy. This market has become increasingly hostile to U.S. tech.
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