China says preliminary probe shows Nvidia violated anti-monopoly law

People take a look to Nvidia''s new products during the Computex 2025 exhibition in Taipei, Taiwan, Wednesday, May 21, 2025. (AP Photo/Chiang Ying-ying, File)

China’s market regulator on Monday said that a preliminary investigation had found that Nvidia had violated the country’s anti-monopoly law, marking the latest hit for the U.S. chip giant.

The announcement from the State Administration for Market Regulation comes as the U.S. and China hold trade talks in Madrid, where chips, including the ones made by Nvidia, are expected to be on the agenda.

The announcement from the SAMR was likely timed to give China clout while trade talks are ongoing, analysts told Reuters.

“Both sides appear to be building leverage to negotiate from a more favorable position, but they are doing this through very calculated moves because they understand the stakes at play,” said Alfredo Montufar-Helu, managing director at strategic advisory firm GreenPoint.

Controls to have ‘consequences’

Zhengyuan Bo, partner at research company Plenum, said that SAMR’s preliminary ruling was likely part of a counterpunch to the Trump administration’s decision on Friday to place 23 Chinese companies on a U.S. trade blacklist.

“It’s a warning that if the U.S. export control paradigm operates in the same way as in the past several years there will be consequences, and China is willing to inflict damage on U.S. companies,” Bo said.

The SAMR announcement could also complicate Nvidia CEO Jensen Huang’s aspirations to overcome U.S.-China tensions to sell modified versions of its advanced chips in the world’s second-largest economy.

Huang has been on a charm offensive in China this year, visiting the country three times to signal the U.S. company’s commitment to the Chinese market, which has in recent years had its access to Nvidia’s most cutting-edge chips repeatedly restricted by U.S. export controls.

Nvidia’s shares fell 2.1% in pre-market trading on Monday.

The brief SAMR statement did not elaborate on how the U.S. company, known for its artificial intelligence and gaming chips, might have violated China’s anti-monopoly laws.

China in December launched an investigation into Nvidia over what it said were suspected violations of the country’s anti-monopoly law, a probe that was widely seen as a retaliatory shot against Washington’s curbs on the Chinese chip sector.

Acquisition terms covered GPU tech

The Chinese regulator also said the U.S. chipmaker was suspected of violating commitments it made during its acquisition of Israeli chip designer Mellanox Technologies, under terms outlined in its 2020 conditional approval of that deal.

One of those terms was that Nvidia would continue to supply the Chinese market with GPU accelerators, used in computing. In recent years, the company has been forced to end sales of its most advanced accelerators due to export controls implemented by the administration of former President Joe Biden.

The SAMR on Monday added that it would continue its investigations. Nvidia did not immediately respond to a request for comment.

According to China’s antitrust law, companies can face fines of between 1% and 10% of their annual sales from the previous year. China generated $17 billion in revenue for Nvidia in the fiscal year ending January 26, or 13% of total sales, based on its latest annual report.

Beyond the fine, the impact of SAMR’s decision remains unclear, but Nvidia could going forward be required to sell chips in China that have no Mellanox technology in them, according to Lian Jye Su, chief analyst at consultancy Omdia.

But Su added that as long as there is no outright ban of Nvidia GPU sales, demand in China will remain.

Growing headwinds for Nvidia in China

The extent to which China can have access to cutting-edge AI chips is one of the biggest flashpoints in the U.S.-Sino war for tech supremacy.

Nvidia, the world’s top maker of AI chips whose fortunes have soared with the AI wave, has been at the center of the fray. U.S. President Donald Trump’s administration has imposed and then relaxed some of its more severe restrictions on the company’s sales of advanced chips to China.

At the same time, China is keen for its tech industry to wean itself off U.S. chips. Chinese authorities have summoned companies, including Tencent 0700.HK and ByteDance, over their purchases of Nvidia’s H20 chip, asking them to explain their reasons and expressing concerns over information risks, sources said last month

Also last month, China’s cyberspace regulator summoned Nvidia representatives to explain whether the H20 chip, which Nvidia tailored for China, posed backdoor security risks that could affect Chinese user data and privacy.

Plenum’s Bo said that the SAMR issuing an unfavorable ruling for Nvidia on its antitrust probe was unlikely to affect Nvidia’s bottom line as much as China’s efforts to foster domestic substitutes to the U.S. chipmaker’s most powerful AI chips.

“This should not be taken as a sign that China is trying to kick Nvidia out of the country,” he said.

(Reporting by Eduardo Baptista, Liam Mo and Beijing NewsroomEditing by Bernadette Baum and Sharon Singleton)