China’s State Administration for Market Regulation (SAMR) has announced a preliminary finding that Nvidia breached the country’s anti-monopoly law in relation to the American chipmaker’s acquisition of Mellanox Technologies, an Israeli networking and hardware company, in 2020. The regulator flagged that Nvidia did not fully respect conditions tied to China’s approval of the deal.
The acquisition, for about US$ 6.9 billion at the time, was conditionally approved in April 2020. One of the key requirements was that Nvidia must supply Mellanox’s interconnect hardware, network equipment, and relevant software to Chinese customers under principles of fairness, reasonableness and nondiscrimination. Although the deal involved an US and an Israeli company, Beijing’s approval was required because the combined business had significant operations in China.
SAMR, which opened the antitrust probe last December, has not yet publicly specified which of those obligations Nvidia is believed to have violated. The regulator says it will continue investigating and may impose further penalties. Under China’s anti-monopoly law, violations can carry fines of between 1% and 10% of the previous year’s sales.
The market reaction was swift: Nvidia’s shares dropped around 2% in pre-market trading in response to SAMR’s announcement. Investors appear concerned about the risk of sanctions, and the possibility that China may restrict future hardware sales by Nvidia.
Political edge
This development comes amid tense US-China relations over semiconductors and export controls. Nvidia has already faced export restrictions from the US, particularly concerning its AI-orientated chips, and Chinese authorities have been scrutinising its “H20” chip, the variant designed to comply with American export limitations.
The timing may also be politically loaded. The announcement coincides with US-China trade talks in Madrid, where high tech, market access and regulation are high on the agenda. China’s move may strengthen its bargaining position, especially as both sides negotiate over tariffs, chip export policy, and the supply chain for AI and data centre infrastructure.
