China investigates Nvidia over antitrust law

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Photo:Reuters

China’s antitrust authority has announced that it has found American chipmaker Nvidia in violation of the country’s competition laws. The regulator said it will continue investigating Nvidia, which could lead to penalties against the company. This move comes amid growing tensions between the United States and China in the technology sector.

The State Administration for Market Regulation (SAMR), China’s top antitrust body, stated that Nvidia broke both China’s antitrust rules and the conditions set when it approved Nvidia’s $6.9 billion purchase of Israeli company Mellanox Technologies in 2019. The deal had received conditional approval from China in April 2020. One of the main conditions required Nvidia to keep selling its graphics and interconnect products in China in a fair, reasonable, and non-discriminatory way while ensuring they work with other companies’ products.

The investigation into Nvidia began in December last year. The SAMR has now confirmed that the probe is ongoing but has not provided details about possible penalties or specific violations. Nvidia has not yet responded to the regulator’s announcement.

Analysts say the investigation is part of the broader tensions between the U.S. and China over trade and technology. Some experts believe Nvidia could face fines of up to $1 billion if found guilty. This comes as both countries are taking stronger actions in the semiconductor industry. For example, the U.S. recently added 23 Chinese companies to a trade blacklist, while China launched an anti-dumping investigation against American analog chip manufacturers.

China’s investigation also follows months of scrutiny over Nvidia’s AI chips in the country. The Cyberspace Administration of China summoned Nvidia in July to discuss potential security risks linked to its H20 chips. Chinese authorities have warned buyers to be cautious about these products, while Nvidia has denied that its chips have any tracking or remote-control features.

Nvidia CEO Jensen Huang has been working to expand the company’s AI chip sales in China. Last month, he said the company hopes to bring its latest Blackwell processors to Chinese buyers. However, China is encouraging domestic companies to develop their own AI chips, which adds complexity for foreign tech companies operating in the country.

This investigation echoes previous cases where China has fined U.S. technology companies for antitrust violations. In 2015, Qualcomm faced a fine of about $1 billion for similar issues.

Industry experts say the timing of the Nvidia probe is significant. It comes during renewed talks between China and the U.S. on economic and trade issues, including discussions about popular apps like TikTok. Some analysts see the investigation as a message from China that it is serious about enforcing its rules and expects tangible results, rather than letting the case fade quietly.

The antitrust probe adds to the challenges Nvidia faces as it navigates U.S. export restrictions and China’s push for domestic technology development. While Nvidia has won permission from Washington to export certain chips, local Chinese authorities have discouraged purchases of those products, highlighting the delicate balancing act the company must perform to operate in both markets.

Experts note that the investigation is not likely a simple act of retaliation against U.S. export policies. Instead, it reflects China’s long-term strategy to maintain control over its domestic technology development while ensuring foreign companies comply with local laws.

This news highlights the ongoing tech rivalry between the U.S. and China and underscores the increasing scrutiny foreign companies face in the Chinese market. Nvidia is now caught between adhering to Chinese regulations, responding to U.S. export restrictions, and competing with the growing domestic AI chip industry in China.

Nvidia, China antitrust, Mellanox acquisition