China Launches Investigation Into Nvidia Over Anti-Monopoly Concerns Amid US Chip Curbs

 

China’s State Administration for Market Regulation (SAMR) announced on Monday that it had launched an investigation into Nvidia, a major US chipmaker known for its artificial intelligence (AI) and gaming chips, over suspected violations of the country’s anti-monopoly laws. The investigation is widely viewed as a retaliatory move against the latest US restrictions on the Chinese semiconductor industry.

Although SAMR's statement did not specify the exact nature of Nvidia's alleged violations, it also mentioned that the company may have breached commitments made during its 2020 acquisition of the Israeli chip designer Mellanox Technologies. These conditions were outlined in Beijing’s approval of the deal, which included restrictions to prevent anti-competitive behavior such as forced product bundling and discriminatory terms for customers.

The news sent Nvidia’s shares down by 2.2% in pre-market trading on the New York Stock Exchange. Nvidia has not yet responded publicly to the investigation.

The timing of the investigation follows a new wave of US sanctions targeting China's semiconductor sector. Last week, Washington unveiled its third crackdown in three years, curbing exports to 140 Chinese companies, including critical chip equipment makers. In response, China took swift retaliatory actions, including a ban on the export of key minerals such as gallium, germanium, and antimony to the US. These minerals are crucial for the production of high-tech chips.

China’s response also included a rare joint statement from four top industry associations, advising Chinese companies to avoid purchasing US-made chips, suggesting that they were “no longer safe,” and to seek local alternatives instead.

Nvidia has been significantly impacted by the US-China trade tensions. Previously dominating China’s AI chip market with over 90% market share, the company saw a dramatic decline in its revenue from China after the US imposed export curbs on its most advanced AI chips. In response, Nvidia created China-specific versions of its chips to comply with US export controls.

China now accounts for about 17% of Nvidia’s total revenue, down from 26% two years ago. Despite the curbs, Nvidia still faces fierce competition from domestic rivals, with Chinese tech giant Huawei emerging as a significant challenger.

The anti-monopoly investigation into Nvidia is the first of its kind in recent years, following a similar probe in 2013 when China investigated Qualcomm for overcharging and abusing its market dominance in wireless communications. Qualcomm ultimately agreed to a $975 million fine, which was the largest penalty China had ever imposed on a company at the time.

As the investigation unfolds, the outcome could have significant ramifications not only for Nvidia but also for the broader US-China tech rivalry. The case underscores the growing complexities in the global semiconductor market, with both countries leveraging regulatory tools in their ongoing economic and geopolitical struggle.