China has initiated an antitrust investigation into Nvidia, escalating its competition with the US over advanced technologies like artificial intelligence.
On Monday night, Chinese state media reported that the State Administration of Market Regulation had recently begun probing Nvidia for suspected violations of the country’s anti-monopoly laws.
The report also mentioned that regulators are examining whether Nvidia breached commitments made during its $6.9 billion acquisition of Mellanox, a supplier of networking products with Israeli-American ties. China approved the deal conditionally in 2020.
This acquisition, Nvidia’s largest to date, expanded its presence in the data center and high-performance computing sectors.
Nvidia has since become a global leader in AI chips, with its GPUs playing a key role in developing leading AI models. However, US export restrictions have limited Nvidia to selling less advanced GPUs in China, sparking a black market for smuggled high-performance chips.
“This seems more like a political move than a legal one,” said a Chinese antitrust expert who requested anonymity, noting that it was unprecedented for state media to announce an investigation.
The investigation comes shortly after Washington imposed stricter export controls on advanced memory chips and chipmaking tools bound for China. In response, Beijing promptly banned critical material exports to the US.
These sanctions pose challenges for Huawei, Nvidia’s Chinese competitor, which relies on high-bandwidth memory (HBM) chips for its AI processors.
“Nvidia succeeds on merit, as shown in our benchmarks and the value we provide to customers,” the company stated. “We’re committed to delivering the best products globally and are ready to address regulators’ concerns.”
Last week, four Chinese government-backed semiconductor industry groups urged members to reconsider buying US-made chips, with three describing them as “unsafe and unreliable.”
This public stance follows months of private pressure from Chinese officials for tech giants to favor Huawei’s AI processors over Nvidia’s, sources said.
Despite this, Nvidia sold $5.4 billion worth of chips to Chinese buyers last quarter, accounting for 15% of its revenue.
Analysts say the H20 chips Nvidia sells in China, while restricted, remain powerful AI tools for companies like ByteDance, Alibaba, and Tencent. Nvidia is projected to sell 1 million H20 chips this year—about twice Huawei’s expected AI sales.
US sanctions have made it harder for Chinese firms to build large-scale computing clusters, seen as critical for AI advancement.
Nvidia shares dropped 3% in New York trading on Monday morning.