Nvidia Hit With China Probe in Global Tech War Escalation

(Bloomberg) — China has opened a probe into Nvidia Corp. over suspicions that the US chipmaker broke anti-monopoly laws around a 2020 deal, taking aim at the AI heavyweight as Washington ramps up sanctions.

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The State Administration for Market Regulation opened an investigation into the company’s recent behavior as well as the circumstances surrounding the acquisition of Mellanox Technologies Ltd., the government said in a statement on Monday. Beijing gave approval for the deal four years ago, on condition that Nvidia not discriminate against Chinese companies.

The move against Nvidia is Beijing’s latest riposte to escalating US technology curbs, coming just a week after the Chinese government banned exports of several materials with tech and military applications. Nvidia’s market value has ballooned this year on demand for chips that can run artificial intelligence programs, making it one of the most valuable publicly traded companies and China’s largest corporate target in the tech trade war so far.

China had approved Nvidia’s $7 billion acquisition of Mellanox on condition that the Israeli computer networking equipment maker provide information about new products to rivals within 90 days of making them available to Nvidia.

A representative for Nvidia didn’t immediately respond to a request for comment.

Nvidia gets about 15% of its revenue from customers in China, according to its most recent financial report. Shares of Nvidia fell as much as 3.5% to $137.42 on Monday after markets opened in New York.

Washington has sought to slow China’s development of advanced chip technology and has barred Nvidia from selling its most advanced semiconductors to companies there. The US has also pushed allies to make similar moves. The Biden administration pressured the Dutch government to prevent ASML Holding NV, which has a monopoly on machines that make the most advanced chips, from not only selling its highest-performing equipment to China, but repairing and maintaining it as well.

These export restrictions have drawn sharp rebukes from Beijing, which has also targeted US companies. Micron Technology Inc. warned last year that about half of its sales tied to China-headquartered clients may be affected by a cybersecurity probe being carried out by the Chinese government. China’s cybersecurity regulator had said Micron’s products failed to pass a review and barred the company’s chips from “critical infrastructure.”

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