Just two weeks after Nvidia CEO Jensen Huang lauded China’s contributions to A.I. research in Hong Kong, the Chinese government has launched an antitrust investigation into the Santa Clara, Calif.-based company amid escalating geopolitical tensions with the U.S. and uncertainties around the incoming Trump administration.
China’s State Administration of Market Regulation is looking into Nvidia’s 2020 acquisition of Mellanox, an Israeli company that makes computer networking equipment, Chinese media reported today (Dec. 9). China approved Nvidia’s $6.9 billion purchase of Mellanox under the condition that the Israeli company would provide samples of new products to rivals within 90 days of making them available to Nvidia, according to Bloomberg, which noted that China’s approval was needed due to the size of its economy and semiconductor market. The deal also received merger control approval from authorities in the U.S., Israel, Mexico and the European Union.
In a statement to Observer, Nvidia said it is happy to answer any questions regulators have about its business. “Nvidia wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them,” said the chipmaker. “We work hard to provide the best products we can in every region and honor our commitments everywhere we do business.”
The investigation is the latest jab in an escalating semiconductor battle between the U.S. and China, which was described by China’s Commerce Ministry as an “abuse of control measures” and a “typical act of economic coercion.”
Earlier this month, the Biden administration enacted another round of chip export controls in the country, following previous efforts to curb China’s access to advanced A.I. chips. The country retaliated by banning the export of gallium, germanium, antimony and other superhard materials to the U.S. These materials have various high-tech and military applications.
Previous measures from the U.S. have limited Nvidia from selling advanced GPUs to China since 2022. President-elect Donald Trump is expected to maintain these measures and the Biden administration’s tough-on-China stance.
Nvidia stock drops amid antitrust probe
Nvidia shares fell more than 3 percent today in response to the news. The past year has been lucrative for the chipmaker, which has seen its stock surging by nearly 200 percent to claim a market cap of $3.38 trillion, making it the world’s second most valuable company behind Apple and boosting the wealth of its founder and CEO to an estimated $120.5 billion.
Surging demand for the GPUs underpinning A.I. applications has propelled Nvidia to become the industry leader in A.I. chips, with a 70 percent to 95 percent share of the market, according to Mizuho Securities. The chipmaker, which reported a 94 percent jump in revenue year-over-year to $35 billion during the last quarter, counts tech giants like Meta, Microsoft, Google and Amazon among its largest clients.
In China, however, Nvidia has lost ground amid tough export controls. Its sales in the country made up 15 percent of its total sales in the quarter ended September, a dip from 26 percent a year ago.
Huang himself has urged for a positive relationship between the U.S. and China when it comes to technological advances, lauding China’s contributions to A.I. research. “Open research is one of the miracles of modern science and perhaps the ultimate form of global cooperation—one that we must protect,” the CEO said while receiving an honorary doctorate from the Hong Kong University of Science and Technology last month.