China launches anti-monopoly investigation into Nvidia amid escalating US-China tech tensions

China has opened an anti-monopoly investigation into Nvidia Corp, targeting the US chipmaker for suspected breaches of competition laws, the State Administration for Market Regulation (SAMR) announced on 9 December 2024.

The probe is also scrutinising Nvidia’s adherence to commitments made during its 2020 acquisition of Mellanox Technologies.

SAMR’s statement, as reported by Chinese media, did not provide details on how Nvidia’s practices might have violated anti-monopoly laws.

However, it noted concerns about Nvidia’s compliance with conditions set during the Mellanox acquisition.

These conditions included restrictions on product bundling, purchase limitations, and customer discrimination.

The investigation comes amidst escalating tensions in the semiconductor sector.

In response, Beijing barred exports of critical minerals, including gallium, germanium, and antimony, to the US.

Chinese chip industry groups have also urged businesses to favour domestic suppliers, claiming that US chips are “no longer safe”.

This coordinated push reflects Beijing’s strategy to counteract Washington’s measures and foster self-reliance in critical technologies.

Nvidia, which previously dominated China’s AI chip market with over 90% share, has faced significant setbacks from earlier US restrictions.

These curbs blocked the sale of its most advanced AI chips to China, forcing the company to develop modified versions tailored to US export regulations.

Nvidia’s revenue from China dropped to 17% in the fiscal year ending January 2024, compared to 26% two years prior.

Analysts believe the latest Chinese probe is a retaliatory measure against the US.

Nvidia’s acquisition of Mellanox Technologies was pivotal in 2020, gaining approval from Beijing despite tensions in US-China trade relations.

The deal allowed Nvidia to expand into high-performance computing, data centres, and networking. However, China’s approval came with strict stipulations, including fair trading practices and restrictions on tying products.

This marks China’s first anti-monopoly probe into a high-profile foreign tech firm since its 2013 investigation of Qualcomm.

In that case, Qualcomm was fined US$975 million for overcharging and abusing its dominance in wireless communication standards.

The precedent underscores China’s willingness to impose severe penalties on major global players.

The outcome of the Nvidia investigation could influence the company’s operations in China, a crucial market despite shrinking contributions to its revenue.

It also adds another layer to the US-China tech rivalry, highlighting the fraught dynamics as both nations vie for dominance in critical technologies.

As the investigation unfolds, Nvidia has yet to comment on the matter.