China Initiates Antitrust Investigation on Nvidia, Accusing Potential Breaches in Mellanox Acquisition
In a significant development, Nvidia is currently under a preliminary antitrust investigation by Chinese regulators, specifically the State Administration for Market Regulation (SAMR). The investigation centres around Nvidia's 2020 acquisition of Mellanox Technologies, a deal valued at approximately US$6.9 billion.
The probe is focused on past corporate transactions and whether obligations were met, rather than on export controls or technology transfer concerns. This investigation is seen as part of Beijing's strategy to push back against U.S. export restrictions and to assert more leverage in tech sector competition.
China has recently banned certain domestic firms from purchasing Nvidia's newest AI chip (the RTX Pro 6000D) and ordered the cancellation of existing orders, in an effort to promote local alternatives and reduce reliance on U.S.-made technology. Sales of some Nvidia chips in China are already being restricted, and the company could lose market access or face more business restrictions.
The allegation is that Nvidia has not complied with conditions attached to the merger when approval was originally granted. The specific conditions Nvidia failed to meet were not detailed by the Chinese authority, but the issue triggered a deeper review of the acquisition's compliance with China’s competition rules.
Nvidia has stated that it complies with the law in all respects and will continue to cooperate with the Chinese regulator and other relevant agencies. No penalties have been announced yet, as the probe is ongoing. However, Nvidia shares have already seen some volatility amid these developments, and further sharp movements could follow depending on investor sentiment.
The outcome of the investigation and the U.S.-China trade talks, currently underway in Madrid, could have significant implications for the tech sector and the broader relationship between the U.S. and China. The U.S.-China trade talks are high on the agenda, with semiconductor exports and access being key topics of discussion.
China might extend similar investigations to other foreign tech firms, and the U.S. government's reaction could involve diplomatic channels, regulatory adjustments, or export-control changes. This situation underscores the broader context of strategic rivalry between the U.S. and China, with both nations using regulatory tools to protect their domestic tech ambitions and assert dominance in the tech sector.
The investigation and trade talks are part of a broader geopolitical messaging, signaling China's intent to use antitrust law to protect its domestic tech ambitions and push back in the tech rivalry with the U.S. This move by China is a clear indication of its efforts to promote local technology and reduce reliance on foreign tech companies, particularly in the semiconductor and AI chip industries, which are under increasing regulatory pressure from Beijing.
In conclusion, the ongoing antitrust probe of Nvidia by Chinese regulators is a significant event with far-reaching implications. The resolution of this investigation and the U.S.-China trade talks could shape the tech sector and the broader relationship between the two nations for years to come.
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