China Launches Antitrust Probe into Nvidia, U.S.–China Tensions Escalate over AI Chips

Chinese Regulator Releases Preliminary Findings
Violation of 2020 Mellanox Acquisition Approval Conditions
Announcement During Trade Talks Seen as Pressure Tactic

Chinese regulators have announced preliminary findings indicating that Nvidia violated China’s antitrust law and signaled a follow-up investigation. The company allegedly breached conditions set when Beijing approved its 2020 acquisition of Mellanox, which required Nvidia to continue supplying chips to the Chinese market. Supply was halted after the U.S. government imposed export restrictions, prompting Chinese authorities to deem the conditions violated. The move underscores the dual pressure Nvidia faces from U.S. export controls and China’s regulatory scrutiny amid intensifying competition over AI semiconductors.

Supply Disruption under U.S. Export Controls

On September 15 local time, China’s State Administration for Market Regulation (SAMR) confirmed it had launched a probe into Nvidia. In a brief statement released on its official social media account, the agency said: “Preliminary findings show Nvidia violated antitrust law and conditions attached to the Mellanox acquisition approval. In accordance with the law, we have decided to proceed with a further investigation.” While details were not disclosed, under Chinese antitrust law, violators can be fined between 1% and 10% of the previous year’s revenue and be forced to forfeit illicit gains.

Nvidia acquired Israel-based Mellanox in 2019 for $6.9 billion, and SAMR conditionally approved the deal in April 2020. The approval reportedly required Nvidia to ensure continued supply of its GPU accelerators, Mellanox’s high-speed interconnect equipment, and related software and accessories to the Chinese market. However, following U.S. government export restrictions, Nvidia suspended shipments of certain GPU accelerators. In December 2024, Chinese regulators formally initiated an antitrust investigation into the company.

Losses in Chinese Market amid Geopolitical Frictions

Observers suggest the move extends beyond law enforcement, reflecting geopolitical maneuvering amid U.S.–China trade tensions. The timing of SAMR’s announcement—during a high-level trade dialogue in Madrid—reinforces the view that the probe is being wielded as leverage. Just days earlier, Beijing launched an anti-dumping investigation into U.S. analog chips while also reviewing alleged U.S. discrimination against China’s semiconductor industry. Despite limited progress on issues such as TikTok’s divestment and tariff suspension, semiconductor disputes have become a flashpoint in bilateral frictions.

For Nvidia, access to China has already been significantly curtailed. In April, the Trump administration abruptly banned exports of Nvidia’s H20 chip, which had been designed to comply with earlier restrictions. The expanded rules closed even this workaround, with Nvidia losing about one-third of its projected $7.1 billion in Chinese H20 sales for Q2.

CEO Jensen Huang publicly criticized Washington’s policy and met directly with President Trump, after which restrictions were partially eased. Nvidia agreed to remit 15% of revenues from certain chip exports to the U.S. government as part of a compromise. Negotiations are now under way over the export of its more advanced Blackwell-based AI chips, but in the meantime Chinese firms have been increasing market share domestically, narrowing Nvidia’s position further as regulatory probes compound its difficulties.

Chinese Push to Reduce Nvidia Dependency

Beijing has also taken steps to reduce reliance on Nvidia hardware. In March, Chinese energy regulators issued new efficiency standards for data center semiconductors, interpreted as effectively targeting Nvidia’s power-hungry H20 chips. While the detailed provisions were not disclosed, domestic chips are believed to meet the benchmarks while Nvidia’s products do not.

In July, the Cyberspace Administration of China (CAC) summoned Nvidia executives to address potential security concerns with the H20 chip. The watchdog cited U.S. AI experts who claimed Nvidia chips contained advanced location tracking and remote shutdown features. CAC demanded supporting documentation, but Nvidia denied embedding any backdoor capabilities, stressing its commitment to cybersecurity.

Still, experts caution that China cannot easily sever ties. Demand for Nvidia’s H20 chips remains overwhelming across autonomous driving, AI training, data centers, military programs, state research institutes, and universities. Reuters reported that Nvidia had already placed orders with TSMC for 300,000 H20 chipsets, underscoring insatiable market demand. The report noted that this demonstrates Beijing’s dilemma: while working to develop domestic alternatives and tighten oversight, China still relies heavily on Nvidia’s technology to keep pace in the global AI race.