Nvidia (NVDA) stock dipped more than 2.5% Monday after China opened an antitrust investigation into the chip giant amid escalating tensions between Beijing and Washington over AI dominance.
The probe is aimed at Nvidia’s practices over possible anti-monopoly violations. It is also set to examine its 2020 acquisition of Mellanox, a merger that was approved by China’s State Administration for Market Regulation under the condition that the chipmaker would avoid discriminating against Chinese companies.
According to a Chinese media report, the government believes Nvidia’s $7 billion purchase of the Israeli computer networking equipment maker may have violated Beijing’s anti-monopoly rules.
The probe comes about a week after the Biden administration implemented another round of semiconductor export restrictions aimed at limiting China’s access to advanced chips.
The latest US measures include curbing high bandwidth memory chips shipped to China, crucial components for AI training.
“As China constitutes to struggle to keep up with the most leading edge AI chips, they probably want to do what they can to slow US firms down, “The Futurum Group CEO Daniel Newman told Yahoo Finance on Monday morning.
Nvidia did not immediately respond to a request for comment.
The Chinese probe against the most important US chipmaker also comes ahead of Donald Trump’s return to the White House next month. Trump has threatened increased tariffs as part of his policy.
“This isn’t just a regulatory issue; it’s a calculated geopolitical manoeuvre. China is sending a strong message that it won’t hesitate to push back, and Nvidia’s targeting is a harbinger of more aggressive measures to come,” Nigel Green, CEO of financial advisory deVere Group, said on Monday.
Nvidia shares have not participated in the overall Trump post-election rally over the past month. The stock is up slightly more than 1% since Trump’s win.
Nvidia stock is up almost 190% so far this year.
