The leading chipmaker’s stock price dropped almost 3% on Monday morning after a Chinese regulator ruled it had broken anti-monopoly laws.
Nvidia (NVDA) shares fell in early trading after Chinese regulators accused the US chipmaker of breaking the country’s anti-monopoly law. The company’s stock price dropped nearly 3% on Monday morning as investors questioned the future of Nvidia’s operations in China.
China’s State Administration for Market Regulation (SAMR) said a preliminary investigation found Nvidia broke commitments relating to its 2020 acquisition of Mellanox Technologies. Officials confirmed the case remains open, with further inquiries planned.
Five years ago, China approved Nvidia’s $7 billion purchase of Mellanox on the condition that certain promises were upheld. However, SAMR now claims Nvidia ignored those commitments, creating grounds for possible punishment under Chinese antitrust rules. It has warned that the firm could face penalties on sales of up to 10%.
Should the watchdog impose such a sanction, it could cost Nvidia billions of dollars in lost profit. In the last financial year, China represented around 13% of total company sales, totalling more than $17 billion.
The announcement came as senior officials from the US and China officials met in Madrid for high-level trade negotiations. Semiconductors form a central part in these discussions, and Nvidia’s name has featured heavily during talks between the two major economies.
China continues to target US chip firms
China’s actions against Nvidia came only two days after another move targeting US chip companies. The Commerce Ministry launched an anti-dumping probe into analog integrated circuits imported from America, following complaints from Chinese industry groups.
Authorities said imports of these chips increased by 37% between 2022 and 2024 while average prices fell 52%. Officials argued that falling prices hurt domestic manufacturers and justified a lengthy investigation that could last until 2026.
Beijing insists the anti-dumping case will follow international rules and remain evidence-based, despite ongoing tensions with Washington. The government stressed it would protect all parties’ rights, while also defending the competitiveness of its local semiconductor sector.
Nvidia at the centre of US-China trade dispute
Nvidia finds itself at the heart of the ongoing trade war between the US and China, with Beijing increasing scrutiny and Washington restricting advanced chip exports. US authorities initially banned Nvidia from selling its most powerful AI chips to Chinese customers, citing national security concerns.
To comply with restrictions, Nvidia redesigned some products to meet American export rules, after which the US lifted the restrictions. Despite this, Beijing has pushed local companies to favour domestic chips, further limiting Nvidia’s opportunities in a huge growth market.
The case also highlights Nvidia’s global importance, with the company dominating chips powering artificial intelligence (AI) technologies. Investors have driven its shares up more than 28% this year, making it the best performer among the so-called “Magnificent Seven.” The chipmaker made history in July after becoming the first company to reach a market cap of $4 trillion.
For now, markets will monitor whether Beijing escalates the investigation and how US-China talks unfold. Nvidia is yet to respond to today’s news, as investors patiently wait to see how it all plays out in the weeks ahead.
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