China’s SAMR says Nvidia violated anti-monopoly law; shares fall
News Summary
China’s State Administration for Market Regulation (SAMR) announced preliminary investigations indicate Nvidia violated China’s anti-monopoly law, specifically related to commitments made during its 2020 acquisition of Israeli chip designer Mellanox Technologies. SAMR did not disclose specific violations or potential penalties but confirmed the probe would continue. The announcement coincided with ongoing US-China trade negotiations in Madrid, highlighting technology as a flashpoint in bilateral relations. Nvidia's shares fell 2.5% in premarket trading. This move follows Beijing’s recent anti-dumping probes into US chips and a review of American export restrictions. Analysts suggest the antitrust action against Nvidia could be part of a broader strategy by China to counter US measures limiting its access to advanced processors.
Background
In 2020, Nvidia’s $7 billion acquisition of Mellanox Technologies was cleared by Chinese regulators on the condition that the US firm guarantee supplies of its chips to the Chinese market. This approval preceded Washington’s sweeping restrictions on the sale of advanced semiconductors to China. Nvidia has since faced a precarious position amid US-China tech rivalry. US export bans on advanced chips have limited its ability to sell cutting-edge AI hardware to Chinese customers. Earlier this year, Chinese authorities blocked shipments of its H20 chip, designed to comply with US export controls. Last month, Nvidia struck a deal with Washington to resume some semiconductor sales to China, in exchange for handing over 15% of related revenue to the US government. Furthermore, Chinese regulators have pressed companies like Tencent and ByteDance regarding H20 chip purchases and summoned Nvidia itself to address concerns about potential backdoor risks in its products, reflecting Beijing's growing sensitivity to reliance on US technology and data security.
In-Depth AI Insights
What are the true underlying motivations behind China's anti-monopoly probe? - This move is less about pure anti-monopoly enforcement and more about a calculated strategic play by China in its intense geopolitical tech rivalry with the Trump administration. - The timing, coinciding with trade talks in Madrid, serves as a clear signal to the US that Beijing will leverage its vast domestic market and regulatory power as a bargaining chip against American export restrictions on advanced semiconductors. - It aims to increase pressure on US tech companies to lobby Washington for eased restrictions, while simultaneously creating breathing room for domestic Chinese chipmakers like Huawei to develop and reduce reliance on Western technology. How will Nvidia's long-term strategy in China likely evolve? - Nvidia will face a continuous tightrope walk, balancing US export controls with the imperative of market access in China. CEO Jensen Huang has warned that ceding the Chinese market risks handing it to local rivals. - It may be compelled to further develop