Nvidia Under Fire: China Claims Anti-Monopoly Violations After Probe

• Nvidia (NVDA) experienced a 1.25% share decline to $175.60 in premarket trading after China’s State Administration for Market Regulation preliminarily ruled its $7 billion 2020 acquisition of Mellanox Technologies Ltd. violated anti-monopoly laws, despite prior conditional approval.
• This development occurs during US-China negotiations in Madrid on tariffs, trade, TikTok’s US operations, and potential Trump-Xi meetings, with Nvidia central to AI chip tensions including US export bans and redesigns for compliance.
• China also launched an anti-dumping probe into US semiconductors, affecting companies like Texas Instruments Inc. (TXN) with a 2% share drop, while urging avoidance of Nvidia’s H20 chips amid ongoing scrutiny and US allowances for limited AI sales.

Nvidia Corp. (NVDA) faces intensified scrutiny from Chinese regulators amid ongoing US-China trade discussions, with its shares declining 1.25% to $175.60 in premarket trading following a determination that the company’s 2020 acquisition of Mellanox Technologies Ltd. breached anti-monopoly laws. The State Administration for Market Regulation announced the preliminary finding, highlighting concerns over the $7 billion deal that Beijing had conditionally approved four years prior, stipulating no discrimination against local firms. This development underscores Nvidia’s pivotal position in artificial intelligence technologies, where it supplies critical chips to global entities including Meta Platforms Inc. (META) and DeepSeek, fueling advancements in AI services and systems.

The ruling arrives as US and Chinese officials engage in Madrid negotiations covering tariffs, trade, and economic matters, with the first session extending nearly six hours. These talks also address ByteDance Ltd.’s TikTok, which confronts a looming deadline for US operations, potentially extended by the Trump administration, alongside preparations for a possible Trump-Xi Jinping meeting in October during a South Korea summit. President Trump indicated that TikTok’s future hinges on Beijing’s conduct, stating it could cease or persist based on China’s responses. Nvidia’s situation exemplifies broader tensions, as the company has navigated US export restrictions barring sales of advanced AI chips like the H100 to Chinese buyers over national security issues, prompting redesigns to enable compliant products such as the H20, though Beijing has urged domestic entities to shun it citing similar concerns.

Compounding pressures, China initiated an anti-dumping probe into semiconductors from US firms, including Texas Instruments Inc. (TXN), whose shares dropped roughly 3% to $177.42 in premarket trading. This follows December’s launch of the Mellanox investigation targeting Nvidia, the world’s most valuable company at times due to its dominance in AI hardware. Recent US allowances for Nvidia and Advanced Micro Devices Inc. (AMD) to supply certain AI chips to China have not alleviated frictions, with the regulator withholding details on remedies while pledging deeper scrutiny. Nvidia’s role in AI extends to high-performance computing and data centers, where Mellanox’s networking expertise bolstered its offerings in interconnects essential for large-scale AI training, yet these integrations now draw antitrust focus amid escalating geopolitical rivalries over technological supremacy.

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