Navigating the complex U.S.-China relationship is becoming increasingly challenging for tech companies, including Nvidia, a key player in the AI boom.
On Monday, Chinese state media reported that the State Administration for Market Regulation (SAMR) had launched an antitrust investigation into Nvidia. The inquiry focuses on the U.S. chipmaker’s 2020 acquisition of Mellanox Technologies, an Israeli producer of networking equipment, for $6.9 billion. Although China initially approved the deal with the condition that both companies continue supplying Chinese customers, regulators now suspect potential violations of monopoly laws.
This news sent Nvidia’s stock down 2.5% on Monday, wiping out $89 million in market value. Despite this dip, the company’s shares remain up by over 180% this year.
China’s antitrust laws require companies operating within its borders to obtain SAMR approval for mergers and acquisitions, even if neither entity is Chinese. The regulator’s decisions carry significant weight; last year, Intel abandoned its bid to acquire Israeli firm Tower Semiconductor after failing to secure approval from Chinese authorities, despite personal lobbying efforts by then-CEO Pat Gelsinger.
Analysts suggest Beijing’s scrutiny of Nvidia may be a strategic move ahead of a potential return to power by Donald Trump, whose administration previously escalated tech-related export controls targeting China. “This could be Beijing positioning itself for tougher negotiations,” said Linghao Bao, senior analyst at Trivium China.
In a statement, Nvidia emphasized its commitment to fair competition, stating, “We work hard to provide the best products in every region and honor our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business.”
U.S.-China Trade Tensions
Nvidia’s troubles are unfolding against the backdrop of heightened trade restrictions. The Trump administration targeted Chinese tech firms like Huawei and SMIC, banning access to U.S. technologies. The Biden administration expanded these measures in 2022, placing broad limits on chip sales to China.
As a leader in AI hardware, Nvidia has been significantly impacted. The company has developed China-specific processors to comply with U.S. regulations, only for Washington to tighten rules further, forcing Nvidia to make additional adjustments. In July, reports surfaced that Nvidia was working on a new, U.S.-compliant version of its Blackwell series chips specifically for China.
Beijing has retaliated by restricting exports of key semiconductor materials like gallium and germanium to the U.S., while promoting domestic chip production. Chinese industry groups have urged local companies to prioritize homegrown chips, citing security concerns with U.S.-made products.
Balancing a Key Market
Despite the trade restrictions, China remains a critical market for Nvidia and other chipmakers. Before U.S. sanctions, China accounted for 25% of Nvidia’s revenue, a figure that has since dropped to 12%. Nvidia CEO Jensen Huang has stressed the importance of global collaboration in science and technology, underscoring his company’s continued engagement with China.
Other major players also rely heavily on China: the country represents approximately 15% of AMD’s revenue and 27% of Intel’s. Meanwhile, U.S. allies like the Netherlands’ ASML and Japan’s Tokyo Electron are also feeling the strain of Washington’s push to restrict chipmaking technology sales to China, despite the financial importance of the Chinese market.
Nvidia now finds itself under scrutiny on both sides of the Pacific. In September, the U.S. Department of Justice subpoenaed the company over allegations of monopolistic practices in the AI market. As tensions between the U.S. and China continue to escalate, Nvidia and other tech giants must navigate increasingly uncertain waters.
Source: https://finance.yahoo.com/news/nvidia-slapped-chinese-antitrust-probe-104950432.html
On Monday, Chinese state media reported that the State Administration for Market Regulation (SAMR) had launched an antitrust investigation into Nvidia. The inquiry focuses on the U.S. chipmaker’s 2020 acquisition of Mellanox Technologies, an Israeli producer of networking equipment, for $6.9 billion. Although China initially approved the deal with the condition that both companies continue supplying Chinese customers, regulators now suspect potential violations of monopoly laws.
This news sent Nvidia’s stock down 2.5% on Monday, wiping out $89 million in market value. Despite this dip, the company’s shares remain up by over 180% this year.
China’s antitrust laws require companies operating within its borders to obtain SAMR approval for mergers and acquisitions, even if neither entity is Chinese. The regulator’s decisions carry significant weight; last year, Intel abandoned its bid to acquire Israeli firm Tower Semiconductor after failing to secure approval from Chinese authorities, despite personal lobbying efforts by then-CEO Pat Gelsinger.
Analysts suggest Beijing’s scrutiny of Nvidia may be a strategic move ahead of a potential return to power by Donald Trump, whose administration previously escalated tech-related export controls targeting China. “This could be Beijing positioning itself for tougher negotiations,” said Linghao Bao, senior analyst at Trivium China.
In a statement, Nvidia emphasized its commitment to fair competition, stating, “We work hard to provide the best products in every region and honor our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business.”
U.S.-China Trade Tensions
Nvidia’s troubles are unfolding against the backdrop of heightened trade restrictions. The Trump administration targeted Chinese tech firms like Huawei and SMIC, banning access to U.S. technologies. The Biden administration expanded these measures in 2022, placing broad limits on chip sales to China.
As a leader in AI hardware, Nvidia has been significantly impacted. The company has developed China-specific processors to comply with U.S. regulations, only for Washington to tighten rules further, forcing Nvidia to make additional adjustments. In July, reports surfaced that Nvidia was working on a new, U.S.-compliant version of its Blackwell series chips specifically for China.
Beijing has retaliated by restricting exports of key semiconductor materials like gallium and germanium to the U.S., while promoting domestic chip production. Chinese industry groups have urged local companies to prioritize homegrown chips, citing security concerns with U.S.-made products.
Balancing a Key Market
Despite the trade restrictions, China remains a critical market for Nvidia and other chipmakers. Before U.S. sanctions, China accounted for 25% of Nvidia’s revenue, a figure that has since dropped to 12%. Nvidia CEO Jensen Huang has stressed the importance of global collaboration in science and technology, underscoring his company’s continued engagement with China.
Other major players also rely heavily on China: the country represents approximately 15% of AMD’s revenue and 27% of Intel’s. Meanwhile, U.S. allies like the Netherlands’ ASML and Japan’s Tokyo Electron are also feeling the strain of Washington’s push to restrict chipmaking technology sales to China, despite the financial importance of the Chinese market.
Nvidia now finds itself under scrutiny on both sides of the Pacific. In September, the U.S. Department of Justice subpoenaed the company over allegations of monopolistic practices in the AI market. As tensions between the U.S. and China continue to escalate, Nvidia and other tech giants must navigate increasingly uncertain waters.
Source: https://finance.yahoo.com/news/nvidia-slapped-chinese-antitrust-probe-104950432.html
