Nvidia Under Investigation Amid Rising US-China Trade Tensions

China Probes Nvidia’s Mellanox Acquisition

Nvidia’s shares have dipped following China’s decision to investigate its 2020 acquisition of Mellanox Technologies over alleged violations of anti-monopoly regulations. The probe, led by China’s State Administration for Market Regulation (SAMR), comes at a time of heightened US-China trade tensions, further escalating the global tech conflict.

Details of the Investigation and Regulatory Scrutiny

The focus of the investigation is Nvidia’s $7 billion acquisition of Mellanox Technologies, which was initially approved by Chinese authorities under specific conditions. One such requirement mandated that Mellanox share product information with competitors at least 90 days before releasing new technologies. SAMR now alleges that Nvidia may have failed to comply with this obligation, raising concerns about its business practices in the Chinese market.

Escalating US-China Tech War

This investigation coincides with the Biden administration’s recent decision to impose strict export controls on AI chips to China, affecting 140 Chinese companies. China has condemned these measures as “unilateral bullying” and responded by restricting exports of critical semiconductor materials like gallium and germanium. These developments reflect deepening trade tensions, as both nations continue imposing countermeasures affecting the global semiconductor industry.

Market Impact and Nvidia’s Position in China

Following news of the investigation, Nvidia’s stock fell by 2.6%, with broader impacts seen across the semiconductor industry, affecting companies like ASML. Despite the setback, Nvidia remains a dominant player in the global chip market, with a market cap of $3.4 trillion. The company’s data center business has grown significantly, particularly in China, where recent US restrictions have already disrupted sales. In the last quarter, China accounted for approximately 12% of Nvidia’s total revenue.

The Future of US-China Tech Relations

Nvidia’s ongoing regulatory scrutiny highlights broader tensions between the US and China in the semiconductor and AI industries. As both nations continue clashing over security concerns, intellectual property, and market access, companies like Nvidia must navigate increasingly complex trade regulations. The outcome of this investigation could influence Nvidia’s long-term prospects in China and reshape global semiconductor trade policies.