China Launches Antitrust Investigation into Nvidia
Santa Clara, Monday, 9 December 2024.
China’s market regulator is investigating Nvidia over suspected antimonopoly violations related to its 2020 acquisition of Mellanox Technologies, causing Nvidia’s stock to drop by 2.2%.
Investigation Details
The State Administration for Market Regulation (SAMR) announced on December 9, 2024, that it’s investigating Nvidia Corporation (NASDAQ: NVDA) for potential violations of China’s antimonopoly laws [1][2]. The probe specifically focuses on Nvidia’s compliance with conditions set during its $7 billion acquisition of Mellanox Technologies in 2020 [2]. According to Chinese regulators, Nvidia was required to notify competitors about new products within 90 days of making them available to the company [2][6].
Market Impact and Context
The announcement has had an immediate impact on Nvidia’s market performance, with shares dropping 2.2% in premarket trading [2]. This investigation comes at a crucial time for Nvidia, which has seen its stock surge by nearly 188% in 2024 [3]. The probe is particularly significant given Nvidia’s dominant position in the high-performance computing and AI chip markets, with the company deriving substantial revenue from its Chinese operations [6].
Broader Geopolitical Tensions
This investigation unfolds against a backdrop of escalating US-China tech tensions. Just last week, China’s commerce ministry announced restrictions on exports of key chip-making materials to the United States [2]. Additionally, Nvidia faces scrutiny in other markets, including an ongoing antitrust investigation by the U.S. Department of Justice examining potential abuse of market dominance [2].
Strategic Implications
The probe aligns with China’s broader strategy to strengthen competition within its domestic markets and reduce dependence on foreign technology [6]. For Nvidia, which has already been restricted from selling advanced AI chips to China under recent U.S. export controls [3], this investigation could further complicate its position in one of the world’s largest technology markets [6].