Nvidia, the world's leading chipmaker and a central figure in the artificial intelligence revolution, is under scrutiny from Chinese regulators for alleged antitrust violations. The announcement from China's State Administration for Market Regulation (SAMR) comes at a time of heightened tensions between the United States and China over semiconductor dominance, fueling a fierce geopolitical rivalry.
The SAMR's investigation focuses on Nvidia's 2020 acquisition of Mellanox, an Israeli networking company, which China had previously approved. The regulator alleges potential breaches of anti-monopoly laws but has not provided specifics regarding the suspected violations.
"In recent days, due to Nvidia's suspected violation of China's anti-monopoly law and the State Administration for Market Regulation's restrictive conditions around Nvidia's acquisition of Mellanox shares, the SAMR is opening a probe into Nvidia in accordance with the law," Chinese state media reported on Monday.
Shares of Nvidia fell nearly 2% in premarket trading following the announcement. Despite this dip, Nvidia's stock has been a market standout, surging almost 200% this year, driven by explosive demand for AI chips amid a global tech boom.
The Chinese investigation signals a significant escalation in the ongoing chip war between the world's two largest economies. Just last week, the Biden administration announced a new round of restrictions on the sale of advanced semiconductor technology to China. These measures aim to curb China's ability to develop AI technologies that could bolster its military capabilities, according to U.S. officials.
China, in response, has banned the export of key materials essential for chip production, including gallium and germanium, tightening controls on resources crucial to the semiconductor supply chain. The United States' restrictions pose "a significant threat to the stability of global supply chains," the Chinese Commerce Ministry said in a recent statement.
The investigation into Nvidia underscores the strategic importance of semiconductors. With chips powering everything from smartphones to advanced AI systems, control over production has become a geopolitical battleground. Nvidia's dominance in AI chips makes it a key player in this struggle, and the investigation could have far-reaching implications for its operations in China.
Adding to the company's challenges, Nvidia is reportedly under antitrust scrutiny in the United States as well, according to Bloomberg. This dual regulatory pressure highlights the increasing complexity of operating in the global semiconductor industry.
China's antitrust probe also coincides with broader efforts by both nations to bolster domestic chip production. In the U.S., the CHIPS Act has allocated billions to boost manufacturing and reduce reliance on foreign suppliers. Meanwhile, China has announced a $47.5 billion state-backed semiconductor investment fund, its largest to date, to enhance its domestic capabilities.
