China Opens Nvidia Antitrust Probe After US Sanctions

China’s antitrust regulator has opened an investigation into Nvidia over concerns related to its $7 billion (£5.5bn) acquisition of Israel’s Mellanox Technologies in 2019.

The move, coming a week after the US’ third round of export restrictions aiming to restrict the development of China’s chip industry, was widely seen as a retaliatory measure.

The announcement by China’s State Administration for Market Regulation (SAMR) has additional relevance with the imminent return to office of former president Donald Trump, whose first administration initiated the current trade hostilities between China and the US.

The SAMR said in a statement on Monday that Nvidia was suspected of violating Chinese competition law in its acquisition of Mellanox, which makes high-speed interconnection products.

Sanction response

China’s market regulator approved the deal in 2020 on condition that Nvidia’s GPU accelerator chips, Mellanox interconnect equipment and related software and accessories continue to be supplied to the Chinese market on fair, reasonable, and non-discriminatory terms.

Nvidia’s shares fell 2 percent on the news in US trading.

Last week, the US launched new restrictions on China, adding 140 companies to a trade blacklist, including chip equipment makers.

Previous rounds of restrictions have barred Nvidia from selling its most advanced GPUs to China, requiring it to develop China-specific versions.

Shortly after the latest US sanctions were announced, China banned exports to the US of the critical minerals gallium, germanium and antimony.

‘No longer safe’

At the same time four of China’s top industry associations issued a coordinated warning to Chinese companies to avoid buying US chips as they were “no longer safe, no longer reliable” and to buy domestic products instead.

In May 2023 the Cyberspace Administration of China (CAC) regulator banned Micron products from being used by mainland operators of critical information infrastructure, saying the US company had failed to pass a security review, in a move also seen as a reaction to US export controls.