Nvidia pre-market down 1.4% as China orders domestic tech firms to halt Nvidia AI chip purchases

Nvidia pre-market down 1.4% as China orders domestic tech firms to halt Nvidia AI chip purchases

Nvidia Corporation (NVDA) saw its shares fall 1.4% in pre-market trading on September 12, 2025, following an order from Chinese regulators for domestic tech firms to halt purchases of Nvidia's AI chips. This directive underscores the ongoing tension between the U.S. and China over technology and self-sufficiency in semiconductor manufacturing.

China's market regulator has accused Nvidia of violating its anti-monopoly law, citing concerns about the company's 2020 acquisition of Mellanox Technologies. The regulator alleges that Nvidia may have failed to ensure uninterrupted chip supply, a condition of the acquisition . This investigation adds to the growing list of regulatory hurdles Nvidia faces in China, where it had sales of $17 billion in its most recent fiscal year .

The latest move by China comes as U.S. and Chinese officials meet in Madrid for trade talks, with chips being a central topic of discussion. The U.S. has implemented export controls that restrict Nvidia's ability to sell its most advanced AI chips in China, complicating compliance with Beijing's conditions . This regulatory environment has led to a temporary suspension of Nvidia's H20 chip sales in China over cybersecurity concerns .

The order for domestic firms to halt Nvidia AI chip purchases is part of China's broader push for self-sufficiency in technology. This strategy aims to minimize reliance on U.S. tech and develop domestic alternatives. The move is likely to intensify competition in the AI chip market, with companies like Broadcom Inc. (NASDAQ:AVGO) positioning themselves as potential beneficiaries .

While the immediate impact on Nvidia's financials remains to be seen, the regulatory pressure in China could have long-term implications for the company's market share and growth prospects. Investors should closely monitor the developments as they unfold, particularly in light of the ongoing trade negotiations between the U.S. and China.