China Launches Antitrust Investigation into Nvidia Over Mellanox Acquisition

China has initiated an antitrust investigation into Nvidia, focusing on potential violations of anti-monopoly laws linked to the company’s 2020 acquisition of Mellanox Technologies, an Israeli chipmaker. The $7 billion deal was initially approved by Chinese regulators under strict conditions, including a requirement that Nvidia and Mellanox not discriminate against Chinese companies. Additionally, Mellanox was mandated to provide samples of new products to competitors within 90 days of their release to Nvidia, ensuring fair competition and performance parity in the market.

China Launches Antitrust Investigation into Nvidia Over Mellanox Acquisition

This development comes at a time when Nvidia faces increasing scrutiny due to ongoing US sanctions restricting the export of advanced technologies to China. The investigation’s specifics remain undisclosed, but it underscores the growing tension in the global semiconductor market and China’s response to US trade policies.

US Sanctions and Nvidia’s Workarounds

US sanctions have severely limited Nvidia’s ability to export its cutting-edge products, such as advanced GPUs, to China. In response, Nvidia has attempted to navigate these restrictions by developing modified versions of its products tailored to the Chinese market. For instance, after the US Department of Commerce imposed restrictions on the RTX 4090 GPUs in 2023, Nvidia quickly introduced the RTX 4090 D. Nvidia specifically designed this export-only model for China, adhering to the technical limitations set by US export controls.

However, this strategy has drawn sharp criticism from US officials. At the Reagan National Defense Forum in December 2023, US Commerce Secretary Gina Raimondo took a firm stance, saying, “We cannot let China get these chips, period.” She further warned against attempts to bypass restrictions, stating, “If you redesign a chip around a particular cut line that enables them to do AI, I’m going to control it the very next day.”

Declining Revenue and Rising Competition

China has historically been a significant market for Nvidia, but its contribution to the company’s revenue has dwindled due to the sanctions. According to The Guardian, China accounted for 17% of Nvidia’s revenue in the year ending January 2024, a noticeable decline from 26% just two years earlier. US sanctions and the rise of domestic competitors in China’s semiconductor industry have caused this drop.

Broader Context: China’s Pushback Against US Sanctions

The Nvidia investigation is part of China’s broader strategy to counteract US sanctions on its technology sector. In recent months, China has taken measures to restrict the sale of critical materials used in semiconductor and electric vehicle production, such as gallium, germanium, and antimony. These materials play a vital role in global supply chains, and experts view their restricted availability as a direct response to the escalating trade war.

Nvidia’s Response

Nvidia has maintained its stance on cooperation and compliance with regulatory requirements. A company representative stated, “Nvidia wins on merit, as reflected in our benchmark results and value to customers. We work hard to provide the best products we can in every region and honour our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business.”

As this investigation unfolds, it reflects the increasing complexities of the global semiconductor industry, where political, economic, and technological interests intersect. The outcome could significantly influence Nvidia’s operations in China and reshape the broader tech landscape.

See Also: US Tightens Export Restrictions on Semiconductor Technology to China