China Calls Initial Investigation Finds Indications Of Nvidia Violating Anti-Monopoly Law

Nvidia is suspected of violating the anti-monopoly law (photo: x @Yukmushi_m)

JAKARTA China's market authority on Monday, September 15 stated that an initial investigation found Nvidia was suspected of violating the country's anti-monopoly law. This finding is the latest blow to the US chip giant, amid trade tensions between Washington and Beijing.

The announcement from the State Administration for Market Regulation (SAMR) was delivered in conjunction with the US-China trade negotiations in Madrid, which also discussed chip issues, including Nvidia products.

According to analysts, this move is most likely meant to provide Chinese political leverage. Both sides seem to be building a bargaining position through very measurable measures, as they understand the size of the stakes in these negotiations," said Alfredo Montufar-Helu, Managing Director at strategic advisor firm GreenPoint.

Zhengyuan Bo, partner at the Plenum research institute, assessed that SAMR's initial decision was a response to the Donald Trump administration's recent move to blacklist 23 Chinese companies on the US trade blacklist. This is a kind of warning: if the US continues export control patterns like in recent years, then there will be consequences, and China is ready to hurt US companies," he said.

SAMR's findings also have the potential to complicate the efforts of Nvidia CEO Jensen Huang, who this year visited China three times to show his commitment to selling special chips for the Chinese market. Nvidia's own shares fell 2.1% in pre-market trading Monday.

The regulator did not specify any form of violation, but said that Nvidia allegedly violated the commitments made when it acquired Mellanox Technologies in 2020. At that time, Nvidia promised to continue supplying GPU accelerators to the Chinese market, but in recent years sales of its most advanced products have stalled due to export controls from the US.

According to China's anti-monopoly law, the company could be fined 1% to 10% of total previous annual sales. Based on the latest financial report, Nvidia earned around $17 billion in revenue from China in the fiscal year ending January 26, equivalent to 13% of its total sales.

Lian Jye Su, the principal analyst at the Omdia consultant, assesses that the impact of SAMR's decision is still unclear. However, one scenario is that Nvidia is required to sell chips in China without Mellanox technology. "As long as there is no total ban on the sale of Nvidia GPUs, demand in China will still exist," he said.

China is currently aggressively encouraging the independence of the technology sector so as not to rely on US chips. Authorities have even summoned large companies such as Tencent and ByteDance regarding the purchase of the Nvidia H20 chip, as well as asked for clarification on potential data security risks.

However, Bo stressed that SAMR's decision did not immediately mean China was trying to expel Nvidia. "This step is more about strengthening the bargaining position, while the real threat to Nvidia is China's efforts to develop domestic AI chips as a substitute," he said.