China Launches Antitrust Probe Against Nvidia, Heightening US Chip Tensions
China launches antitrust probe into Nvidia over suspected violations of anti-monopoly laws. Nvidia faces scrutiny for alleged breaches related to its acquisition of Mellanox Technologies. US-China tensions escalate as China responds to US export restrictions on semiconductor industry.
The State Administration for Market Regulation made a statement announcing the probe but did not specify how Nvidia, renowned for its artificial intelligence and gaming chips, may have breached China's anti-monopoly laws.
The investigation also involves Nvidia's alleged failure to comply with commitments made during its acquisition of Israeli chip designer Mellanox Technologies, as stipulated in the regulator's conditional approval of the deal in 2020. Following this news, Nvidia's shares closed 2.5% lower on Monday. A spokesperson from Nvidia expressed the company's dedication to delivering top-quality products globally and upholding its commitments in all regions of operation.
The timing of China's probe comes shortly after the US implemented its third crackdown in three years on China's semiconductor industry, restricting exports to 140 companies, including manufacturers of chip equipment. Analyst Bob O'Donnell from TECHnalysis Research believes that the investigation is unlikely to have an immediate impact on Nvidia, as most of its advanced chips are already restricted from sale in China.
In response to the US actions, China has taken a strong stance by prohibiting exports of critical minerals like gallium, germanium, and antimony to the United States. Additionally, four major industry associations in China cautioned local companies against purchasing US chips, advocating for domestic alternatives due to safety concerns. Nvidia, like many other firms, has become entangled in the US-China tensions, with previous export restrictions prompting the company to develop China-specific chip versions compliant with US regulations.
Despite China's efforts to counter recent US restrictions, O'Donnell notes that the Chinese government's influence on the US semiconductor industry is diminishing over time. Nvidia, which previously held over 90% of China's AI chip market, now faces growing competition from domestic competitors, particularly Huawei. China represented 17% of Nvidia's revenue in the past year, down from 26% two years earlier.
In 2020, China granted approval for Nvidia's acquisition of Mellanox Technologies, subject to various conditions for Nvidia's operations in China. These conditions included restrictions on product bundling, trading terms, purchase limitations, and discriminatory practices towards customers. The last high-profile foreign tech firm to face an anti-monopoly investigation in China was Qualcomm in 2013, resulting in a substantial fine of US$975 million, the largest at that time imposed by China on a company.
China launches antitrust probe into Nvidia over suspected violations of anti-monopoly laws.
Nvidia faces scrutiny for alleged breaches related to its acquisition of Mellanox Technologies.
US-China tensions escalate as China responds to US export restrictions on semiconductor industry.
Source: REUTERS