China’s Antitrust Probe Spells Trouble For Chip King Nvidia!

By Lisa Pelgin | Tuesday, 10 December 2024 05:15 AM
Views 1.6K
Image Credit : Benzinga

Nvidia, the renowned chipmaker, is currently under scrutiny by Chinese regulators over potential violations of the nation's antimonopoly law, causing a slight dip in the company's shares.

The State Administration for Market Regulation in China has launched an investigation into Nvidia's acquisition of Mellanox, a move that has raised eyebrows and led to a 2% drop in Nvidia's shares in pre-market trading.

According to CNBC, the Chinese government released a statement, translated into English, stating, "In recent days, due to Nvidia's suspected violation of China's anti-monopoly law and the State Administration for Market Regulation's restrictive conditions around Nvidia's acquisition of Mellanox shares ... the State Administration for Market Regulation is opening a probe into Nvidia in accordance with law." Nvidia has yet to comment on the ongoing investigation.

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This development comes amidst an escalating rivalry between the U.S. and China in the realm of chipmaking capabilities. The Biden administration recently announced a series of restrictions targeting semiconductor toolmakers on December 2. Over the past few years, the U.S. has tightened restrictions on chip sales to China, barring Nvidia and other key semiconductor manufacturers from selling their most advanced AI chips. This move is seen as an attempt to prevent China from bolstering its military capabilities.

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Despite these challenges, Nvidia has been proactive in creating new products for the Chinese market that comply with U.S. regulations. The company's shares have performed exceptionally well this year, surging nearly 188%. This rally is largely due to increased investor interest in the sector, which has been growing since the launch of ChatGPT over two years ago. Nvidia's performance has also contributed to the broader technology sector's push to new market highs. The unfolding situation with Chinese regulators, however, poses a potential challenge to Nvidia's continued success.

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