Chip war: China launches antitrust probe into US semiconductor giant Nvidia in sign of escalation

The action is an apparent response to Washington’s tightened chip restrictions against China

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Nvidia chief executive Jensen Huang delivers a speech at an event on artificial intelligence in Tokyo on November 13, 2024. Photo: Kyodo

Xinmei Shenin Hong KongandChe Panin Beijing

Published: 8:03pm, 9 Dec 2024Updated: 9:20pm, 9 Dec 2024

China’s antitrust regulator has launched an investigation into American semiconductor giant Nvidia in an apparent move to hit back at the US government’s escalated chip restrictions.

Nvidia, which has complied with US regulations in restricting exports of advanced chips to China, is suspected of violating China’s antimonopoly law in its US$6.9 billion acquisition of Israeli interconnect products and solutions provider Mellanox Technologies, the State Administration for Market Regulation said in a notice on Monday.

The Nvidia-Mellanox deal was announced in 2019. China’s market regulator approved the deal in April 2020 on the condition that Nvidia’s graphics processing unit (GPU) accelerators, Mellanox high-speed network interconnect equipment, and related software and accessories continue to be supplied to the Chinese market based on “fair, reasonable, and non-discriminatory principles”.

The Nvidia antitrust probe “marks the start of what is likely to be a systematic strategy to retaliate against the US [and] a harbinger of more aggressive measures to come”, said Nigel Green, CEO of deVere Group, a financial advisory firm. “This isn’t just a regulatory issue; it’s a calculated geopolitical manoeuvre,” he said, adding that China was sending a strong message that it won’t hesitate to push back.

Nvidia did not immediately respond to a request for comment on Monday. Its US-listed shares fell 1.8 per cent to US$142.44 in pre-market trading on Monday.

Beijing’s regulatory move against Nvidia comes just days after China’s state-backed industry associations urged their members to be cautious about purchasing US chips, a response to Washington’s latest round of restrictions. The China Semiconductor Industry Association, which includes Nvidia Technical Service (Beijing) as a member, for instance, called on its members to shun chips from US suppliers, saying they are “no longer safe, no longer reliable”.