NVIDIA: We comply with China's anti-monopoly law in all respects - CNBC

NVIDIA: We comply with China's anti-monopoly law in all respects - CNBC

China's market regulator has accused NVIDIA of violating the country's anti-monopoly law in relation to its 2020 acquisition of Mellanox Technologies. The preliminary probe, announced by the State Administration for Market Regulation (SAMR), states that NVIDIA failed to comply with certain conditions set by Beijing when approving the $6.9 billion deal .

The investigation stems from NVIDIA’s acquisition of Mellanox, an Israeli networking company that specializes in data center and server networking solutions. The acquisition was subject to conditions aimed at preventing monopolistic practices, such as forced product bundling and restrictive trading terms. Despite these conditions, SAMR has found that NVIDIA did not adhere to them, leading to the ongoing investigation .

The announcement comes as U.S. and Chinese trade officials are meeting in Madrid to discuss a range of issues, including semiconductors and advanced AI chips. Experts view the SAMR's ruling as a retaliatory measure by Beijing in response to recent U.S. export controls that have restricted China's access to NVIDIA's latest AI chips .

The potential penalties for NVIDIA are significant. Under China's anti-monopoly law, companies can face fines of up to 10% of their previous year’s revenue. NVIDIA's 2024 fiscal year sales from China totaled approximately $10 billion, representing about 13% of its global revenue. Any penalty could have a substantial impact on the company's financial performance .

NVIDIA has not yet issued an official response to the preliminary ruling. The company previously tailored its H20 AI chip specifically for the Chinese market to comply with U.S. export controls, but this has not shielded it from Beijing’s scrutiny .

The investigation is part of a broader pattern of increased scrutiny by Chinese authorities. Separately, China has launched an anti-dumping probe into U.S.-made analog chips and summoned domestic tech companies like Tencent and ByteDance to explain their purchases of NVIDIA's chips, citing potential security risks .