What China Claims Nvidia Did Wrong
Chinese regulators, through the State Administration for Market Regulation (SAMR), have launched a preliminary anti-monopoly investigation into Nvidia. The focus is on Nvidia’s 2020 acquisition of Mellanox Technologies—a deal worth around US$6.9 billion. SAMR alleges that Nvidia has not complied with conditions attached to the merger when approval was originally granted.
No penalties have been announced yet; authorities say the probe is ongoing. The investigation comes amid increasing regulatory pressure from Beijing on foreign tech companies, especially those in the semiconductor and AI chip industries.
Context: Trade Tensions, Chips, and Strategic Rivalry
This move by China comes at a sensitive time. U.S.-China trade talks are underway in Madrid, during which semiconductor exports and access are high on the agenda. The probe is seen by many as part of Beijing’s strategy to push back against U.S. export restrictions and to assert more leverage in tech sector competition.
China has also recently banned certain domestic firms from buying Nvidia’s newest AI chip (the RTX Pro 6000D) and ordered cancellation of existing orders, in a bid to promote local alternatives and reduce reliance on U.S.-made technology.
Nvidia’s Response
Nvidia has stated that it complies with the law in all respects. The company says it will continue to cooperate with the Chinese regulator and other relevant agencies as the investigation continues.
Importantly, this allegation regards compliance with conditions tied to the Mellanox acquisition. Whereas much of the current tension around Nvidia is over export controls (e.g. which chips China is permitted to buy) or concerns over technology transfer, this antitrust probe is focused on past corporate transactions and whether obligations were met.
What’s at Stake
- Penalties: If found guilty of violations, Nvidia could face fines under China’s anti-monopoly law—typically ranging from 1% to 10% of previous year’s sales for such offences.
- Business Disruption: Already, sales of some Nvidia chips in China are being restricted. The company could lose market access or face more restrictions in doing business in a country that has been one of its key markets.
- Geopolitical Messaging: China is signalling that it will more aggressively use regulatory tools—not just tariffs, but antitrust law—to protect its domestic tech ambitions and push back in the tech rivalry with the U.S.
What to Watch Next
- Details of the Violations: The specific conditions Nvidia failed to meet in the Mellanox merger will be important. Whether those are procedural, operational, or related to supply commitments could determine how serious the consequences are.
- Outcome of Trade Talks: Since this announcement came during U.S.-China negotiations, outcomes there may be affected (or used for leverage) depending on how both sides respond.
- Potential Retaliation or Regulatory Ripple: China might extend similar investigations to other foreign tech firms. Also, how the U.S. government reacts—whether through diplomatic channels, or in regulatory or export-control adjustments—will matter.
- Stock Market Response and Investor Sentiment: Nvidia shares have already seen some volatility amid these developments. Depending on how confident investors are in Nvidia’s position, further sharp movements could follow.
