China Rules Nvidia Violated Antitrust Regulations in Mellanox Acquisition
China’s State Administration for Market Regulation (SAMR) announced on Monday that Nvidia breached the country’s antitrust laws in connection with its 2020 acquisition of Mellanox Technologies, a $7 billion deal that expanded Nvidia’s footprint in computer networking hardware. This development was first reported by Bloomberg.
While the regulator has yet to impose any formal penalties, it confirmed that the investigation is ongoing. The ruling comes amid heightened semiconductor trade tensions between China and the United States, particularly as both countries engage in tariff negotiations in Madrid.
Impact on U.S.-China Semiconductor Trade
The antitrust ruling coincides with a fraught period in U.S.-China relations over technology exports, especially AI chips. Although the current trade discussions are not exclusively focused on semiconductors, access to Nvidia’s chips remains a critical and contentious issue.
Nvidia responded with a statement affirming its compliance with legal requirements and its intent to cooperate fully with regulatory authorities assessing export control impacts on market competition.
Export Controls and Policy Uncertainty
The backdrop to this ruling includes evolving U.S. policies on AI chip exports to China. The Biden administration’s AI Diffusion Rule, introduced in January, aimed to restrict the sale of U.S.-made AI chips to China and other adversarial nations. However, this rule was repealed by the U.S. Department of Commerce in May.
Under the Trump administration, licensing requirements were imposed on chip sales to China in April but were subsequently relaxed in July, allowing sales to resume temporarily. More recently, a revenue-sharing agreement requires companies selling chips to China to remit 15% of sales revenue to the U.S. government.
China has actively discouraged firms from purchasing Nvidia chips, and according to a recent Nvidia earnings call, no shipments have cleared the updated export approval process.
Looking Ahead
This antitrust ruling adds a new layer of complexity to the already strained semiconductor trade relationship between the U.S. and China. It remains to be seen how this will influence the ongoing tariff negotiations and future export policies.
FinOracleAI — Market View
The ruling against Nvidia by China’s antitrust regulator introduces additional regulatory risk for the company and could dampen investor sentiment, particularly in the semiconductor sector. The absence of immediate penalties tempers the impact somewhat, but ongoing investigations and geopolitical tensions continue to create uncertainty.
Market participants should monitor further developments in the antitrust case, export control policies, and U.S.-China trade negotiations. Any escalation could affect Nvidia’s access to the Chinese market and broader supply chain dynamics.
Impact: negative
