China Targets Nvidia For Potential Breach of Monopoly Law

(Bloomberg) — China has opened a probe into Nvidia Corp. over suspicions that the US chipmaker broke anti-monopoly laws around a landmark 2020 deal, taking aim at the AI heavyweight as Washington ramps up sanctions.

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The State Administration for Market Regulation opened an investigation into the company’s recent behavior as well as the circumstances surrounding the acquisition of Mellanox Technologies Ltd., China Central Television said in a report on Monday. Beijing gave approval for the deal four years ago, on condition that Nvidia not discriminate against Chinese firms.

Nvidia’s position as the leading provider of artificial intelligence chips has put it in the crossfire of the US and China’s battle for tech supremacy. Washington has barred the company from selling its most advanced semiconductors to Chinese companies — undermining their ability to develop AI services — which has drawn sharp rebukes from Beijing.

The Chinese government had approved Nvidia’s $7 billion acquisition of the Israeli computer networking equipment maker on condition that included that Mellanox provide information about new products to rivals within 90 days of making them available to Nvidia. Nvidia also agreed that Chinese chipmakers would get a chance to make sure their products work well with Mellanox’s technology.

The company’s shares fell 2% in early trading on Monday before US exchanges opened. The stock had declined 1.8% on Friday to close at $142.44.

A representative for Nvidia didn’t immediately respond to a request for comment.

Nvidia has repeatedly tried to develop AI chips that will comply with US controls and give Chinese customers some ability to work on the critical new technology.

The US Justice Department had also sought information into whether Nvidia violated antitrust laws earlier this year, Bloomberg News has reported. Antitrust officials were concerned that Nvidia was making it harder to switch to other suppliers and penalizes buyers that didn’t exclusively use its artificial intelligence chips, people familiar with the matter had said.

France has also publicly named Nvidia as a target of its own probe into chips used in AI. The company may face antitrust charges “one day” there, Benoit Coeure, the head of France’s antitrust agency, said at a press conference in July.

–With assistance from Daniel Zuidijk, Pei Li, Debby Wu and Lynn Doan.

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