China has dealt Nvidia another blow, finding the chipmaker in violation of the country’s anti-monopoly Law and escalating a long-running regulatory headache into a full investigation.
China’s State Administration for Market Regulation (SAMR) said on Monday that its preliminary investigation found Nvidia violated the country’s competition rules, as well as the terms of a conditional approval it granted in 2020 for one of Nvidia’s acquisitions.
“Recently, after preliminary investigation, Nvidia violated the Anti-Monopoly Law of the People’s Republic of China,” the regulator asserted in a brief statement, translated by The Register.
With that box ticked, SAMR has escalated the case to a formal probe – a process that could end with hefty fines for Nvidia and potentially new operational restrictions on how it sells kit in the country.
The watchdog’s statement didn’t say exactly what Nvidia had done wrong, but pointed squarely at conditions imposed when it initially waved through the company’s $6.9 billion takeover of Mellanox Technologies. Those conditions were designed to stop Nvidia from using its newly acquired networking arm to squeeze Chinese rivals and to maintain interoperability with other vendors.
Nvidia didn’t immediately respond to The Register’s request for comment, but the company’s stock was quick to react – dipping 2 percent in pre-market trading on Monday.
This is just the latest flare-up in what’s been a tense year for Nvidia in China. In July, Beijing summoned the company over security concerns about its H20 AI accelerators, claiming there were “serious security vulnerabilities” in Nvidia’s China-specific product line. These chips were hastily cooked up after Washington tightened export rules in 2023 to stop China from getting its hands on top-tier AI silicon for military and surveillance use.
China is one of Nvidia’s most important markets, worth an estimated $17 billion in sales last fiscal year – roughly 13 percent of the chipmaker’s global revenue. Any fines or behavioral remedies will add further strain to a business already squeezed by Washington’s export controls and forced to flog watered-down GPUs to keep the cash flowing. ®