China Accuses Nvidia of Antitrust Breach Amid Trade Talks

• Beijing’s preliminary probe into Nvidia’s business practices adds pressure to U.S.-China trade negotiations and raises questions about future chip sales.

Regulatory Tensions Surface During Madrid Talks

China’s State Administration for Market Regulation (SAMR) announced on Monday that Nvidia may have violated the country’s anti-monopoly law, marking a new escalation in the ongoing trade dispute with the United States. The statement followed a preliminary investigation and coincided with bilateral trade talks in Madrid, where semiconductor policy is expected to be a key topic. U.S. Treasury Secretary Scott Bessent criticized the timing of the announcement, suggesting it could be a strategic move to gain leverage. Analysts noted that the probe likely responds to Washington’s recent decision to blacklist 23 Chinese companies.

Over the past six months, both nations have exchanged trade measures, including tariffs and regulatory actions targeting major tech firms. President Donald Trump imposed steep tariffs on Chinese goods before reducing them to 30%, while also threatening to ban TikTok. In return, China launched antitrust investigations into U.S. companies such as Alphabet and now Nvidia. The latest move signals Beijing’s intent to challenge American dominance in critical technology sectors.

Nvidia’s China Strategy Faces New Obstacles

China’s announcement adds uncertainty to Nvidia’s operations in the region, which accounted for 13% of its global sales last year. CEO Jensen Huang has made multiple visits to China this year, emphasizing the importance of AI collaboration and market access. Despite strong demand from firms like Tencent and ByteDance, Beijing has reportedly discouraged purchases of Nvidia chips as part of a broader effort to reduce reliance on U.S. technology. Last month, authorities asked Nvidia to clarify whether its H20 chip, designed for the Chinese market, posed any data security risks.

Although the U.S. approved export licenses for the H20 in exchange for 15% of Nvidia’s China revenue, shipments have yet to begin due to unresolved payment procedures. This delay has weighed on Nvidia’s stock, which fell 2% on Monday before recovering slightly. In a statement, the company said it was cooperating with regulators and complying with applicable laws. No further details were provided regarding its discussions with the U.S. government on revenue-sharing terms.

Mellanox Deal Under Renewed Scrutiny

The SAMR did not specify how Nvidia may have breached antitrust rules, which carry penalties ranging from 1% to 10% of annual sales. Five years ago, China approved Nvidia’s acquisition of Mellanox Technologies on the condition that GPU supplies to the Chinese market would continue. Export controls introduced under the Biden administration later forced Nvidia to halt sales of its most advanced chips. The regulator confirmed that investigations into Nvidia’s conduct would proceed.

Mellanox produces high-speed networking gear for data centers, which Nvidia integrates with its chips to offer advanced cloud solutions. Analysts warn that China could restrict Nvidia’s ability to sell these bundled products, potentially impacting a multibillion-dollar business. Ray Wang of Futurum Group emphasized Mellanox’s importance, ranking it just behind Nvidia’s CUDA platform in strategic value. Lian Jye Su of Omdia suggested that regulators might require Nvidia to sell chips without Mellanox components in China.