China targets Nvidia with antitrust action over Mellanox deal
Make us a preferred source
Make us a preferred source on Google
The news: China launched an antitrust investigation into Nvidia for suspected violations of anti-monopoly laws and conditions tied to the regulator’s approval of its USD6.9 billion ($10.67 billion) Mellanox Technologies acquisition in 2020.
Beijing’s approval of the deal imposed several conditions on the American company’s operations in China, such as banning forced product bundling, unreasonable trade terms, purchase restrictions and discriminatory practices against customers who opted to buy products individually, Reuters noted.
State media reported the State Administration for Market Regulation (SAMR) had recently opened an investigation into the American semiconductor giant, according to The Financial Times.
As part of the investigation, the regulator is also reviewing possible violations of commitments Nvidia made during the 2019 acquisition of the Israeli-American supplier of networking products, according to the state media reports.
The numbers: Nvidia shares dropped as much as 3.7% following the news, coming amid heightened tensions between the US and China over AI and chip technologies.
The context: The move comes days after the US imposed fresh restrictions on Chinese chipmakers, a move quickly countered by China with US export bans on critical chipmaking minerals.
Nvidia, which commanded over 90% of China’s AI chip market before its dominance waned due to the US export controls, now faces increasing local competition from the likes of Huawei.
The American AI chipmaker has been adapting to the US export curbs by selling modified chips to Chinese customers, but the tensions have spurred Beijing to urge companies to buy domestic alternatives such as Huawei’s AI processors.
What they said: “Due to NVIDIA's suspected violation of the Anti-Monopoly Law of the People's Republic of China… the State Administration for Market Regulation has initiated an investigation into NVIDIA in accordance with the law,” the regulator said in a statement, according to a translation of its website.
“This probe appears to be a political action rather than a legal one,” an unnamed Chinese antitrust expert told the FT, adding: “Never before has state media taken the lead in announcing an investigation.”
The sources: SAMR , The Financial Times , Bloomberg
