Monday, June 23, 2025

Nvidia Faces Antitrust Scrutiny from China: Could This Change the Game?

China has launched an investigation into U.S. chip giant NVIDIA for potential antitrust violations, alleging non-compliance with regulatory conditions set during its 2020 acquisition of Israeli network solutions firm Mellanox. / Reuters Yonhap
China has investigated U.S. chip giant NVIDIA for potential antitrust violations, alleging non-compliance with regulatory conditions set during its 2020 acquisition of Israeli network solutions firm Mellanox. / Reuters Yonhap

China has launched an investigation into NVIDIA for potential antitrust violations, triggering a sharp decline in the company’s share price on Monday.

According to international media outlets, including CNBC, China’s State Administration for Market Regulation (SAMR) announced that it had initiated an investigation into NVIDIA’s acquisition of Mellanox and related agreements.

Mellanox, a joint Israeli-American venture acquired by NVIDIA in 2020, specializes in developing network solutions for data centers and servers.

SAMR’s statement read, “Due to suspicions of violations of Chinese antitrust laws and SAMR’s regulatory conditions concerning the Mellanox share acquisition, SAMR has recently initiated an investigation into NVIDIA by relevant laws.”

China’s SAMR imposed conditions on NVIDIA’s 2020 Mellanox acquisition, like other nations.

These included non-discrimination against Chinese firms and required NVIDIA to inform competitors within 90 days when Mellanox released and provided new products to NVIDIA.

Similar conditional approvals were granted by regulatory bodies in Europe, Mexico, and the United States.

As the Biden administration tightens regulations on major semiconductor companies, including NVIDIA, preventing the export of advanced semiconductors to China, China appears to retaliate with direct sanctions against the company.

This move suggests that if the U.S. blocks NVIDIA’s advanced semiconductor exports to China, China may respond by restricting imports of low-end semiconductors.

This implies that China has no reason to import low-performance semiconductors, such as those from NVIDIA if it cannot access high-performance chips.

By potentially blocking NVIDIA’s lower-spec chip exports, Chinese authorities could boost the competitiveness of domestic semiconductor firms, which currently lag behind NVIDIA in performance. This antitrust investigation is a tool to restrict NVIDIA’s exports of low-end semiconductors.

If importing NVIDIA’s high-performance chips for AI development becomes difficult, China may pressure the U.S. to ease its regulatory stance by threatening restrictions on lower-spec semiconductor exports.

NVIDIA, which has been developing new low-end semiconductors to circumvent U.S. regulations, could face significant setbacks from this antitrust probe.

Following the announcement of the investigation, NVIDIA’s stock price plunged $3.84 (2.69%) to $138.60 in afternoon trading on the New York Stock Exchange.

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