Nvidia again part of the long-running trade tech-war between China and US.

The issue

Last December 9th, China has initiated an antitrust investigation into Nvidia, wellknown leading American chipmaker, over suspected violations of the country's anti-monopoly laws.
This inquiry, announced by China's State Administration for Market Regulation (SAMR), particularly focuses on Nvidia's $6.9 billion acquisition of Mellanox Technologies- Israeli-based networking company.

Context

This move follows the U.S. Department of Commerce's announcement of new export restrictions that added 140 Chinese firms to its Entity List, further complicating U.S.-China trade relations. Most of Nvidia’s most advanced chips are already restricted from being sold into China.

Probe

The inquiry is examining whether Nvidia has adhered to the conditions set by Chinese regulators
Specifically
(1) interoperability of its GPUs with other networking products,
(2) provide Mellanox's interconnect technology to Chinese customers without discrimination,
(3) Prohibition from bundling its GPUs with Mellanox's networking products.

Potentials impacts ?

Beyond Nvidia's stock price dropped by 2.55% as a very first Market reaction following the announcement of the investigation, we could see:

1. Competition: opportunities for Chinese competitors to capture market share (Huawei?)
2. Compliance costs: legal and operational costs (penalties or restrictions)
3. Revenue: possible sliding revenue in China (around 17%)
4. Stock market: further volatility in stock performance
5. Geopolitical implications: considering the actual Nvidia position in AI field = further escalation = disruption of global semiconductor supply chain.
6. Besides the probe is part of a larger pattern of scrutiny faced by Nvidia globally, as it is also under investigation in the U.S. for potential monopolistic practices.

Response from Nvidia

Nvidia has expressed its willingness to cooperate with the investigation and has denied any wrongdoing regarding its compliance with Chinese regulations. "We work hard to provide the best products we can in every region and honor our commitments everywhere we do business. [...] We are happy to answer any questions regulators may have about our business.

Precedent case

The last time China conducted an anti-monopoly investigation into a major foreign tech firm was in 2013, when it scrutinized Qualcomm's local subsidiary for overcharging and abusing its market position.
Qualcomm consented to pay a $975 million fine, the largest ever imposed by China on a company at that time.

Credits (among all):
- Fierce Electronics:Nvidia gets dinged with China probe
- Always good article from Reuter:China targets Nvidia with antitrust probe
- AOL stock market today: Indexes fall as Nvidia faces China probe
- IG analysis: Why is NVIDIA stock falling?
- Investing: Nvidia: Does China Investigation Change Outlook?
- Tecex: Nvidia Overcomes US Export Regulations With Compliant AI Chips For China