China said on Monday it had launched an investigation into Nvidia over suspected violations of the country’s antitrust law, in a move widely seen as retaliation against Washington’s recent restrictions on China’s chip sector.
The statement from the State Administration for Market Regulation announcing the investigation did not explain how the US company, known for its artificial intelligence and gaming chips, violated Chinese antitrust laws.
The US chipmaker is also suspected of violating commitments it made during its acquisition of Israeli chip designer Mellanox Technologies under terms outlined in the regulator’s 2020 conditional approval of that deal, it said.
Nvidia shares closed down 2.5% on Monday. An Nvidia spokesperson said the company worked hard to “deliver the best products we can in every region and deliver on our commitments everywhere we do business.” We are happy to answer any questions organizers may have about our work.”
The investigation comes after the United States last week launched its third crackdown in three years on China’s semiconductor industry, which saw Washington restrict exports to 140 companies, including chip equipment makers.
“(The investigation) is unlikely to have a significant impact on the company, especially in the near term, because most of Nvidia’s most advanced chips are already banned from sale in China,” said Bob O’Donnell, senior analyst at TECHnasis. research.
In an indication that China intends to respond strongly to the latest move, this came shortly after Washington announced that Beijing would ban exports of the important minerals gallium, germanium, and antimony to the United States.
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On the same day, four of the country’s largest industry associations issued a rare, coordinated response, saying Chinese companies should be wary of buying American chips because they are “no longer safe” and buy domestically instead.
Nvidia was one of many companies caught up in the friction between the US and China. An earlier round of US export restrictions prevented Nvidia from selling its most advanced AI chips to China, prompting it to create new China-specific versions that comply with US export controls.
“It is clear that the Chinese government is trying to respond to the recent restrictions imposed by the United States, but its ability to influence the US semiconductor industry continues to decline over time,” O’Donnell said.
Nvidia dominated the AI chip market in China with a share of more than 90% before these restrictions. However, it faces increasing competition from local competitors, the most important of which is Huawei. China accounted for about 17% of Nvidia’s revenue in the year to the end of January, down from 26% two years ago.
In 2020, the company received key approval from China for its acquisition of Mellanox Technologies, despite concerns that Beijing might block the deal due to trade frictions between the US and China.
Beijing’s approval placed multiple conditions on Nvidia and the combined entity’s operations in China, including a ban on forced product bundling, unreasonable trading terms, purchase restrictions, and discriminatory treatment of customers who purchase products separately.
The last time China launched an antitrust investigation into a high-profile foreign technology company was in 2013 when it investigated its local affiliate Qualcomm for overcharging and abusing its market position in wireless communications standards.
Qualcomm later agreed to pay a $975 million fine, which at the time was the largest fine China had ever given to a company.
