Nvidia finds itself at the heart of an antitrust probe initiated by China’s State Administration for Market Regulation (SAMR). This investigation reexamines Nvidia’s 2019 acquisition of Mellanox Technologies, a deal that received the green light from Beijing in 2020, albeit with stringent conditions. These conditions mandated that Nvidia offer its GPUs and interconnect products to the Chinese market under “fair, reasonable, and non-discriminatory terms,” and ensure these products worked well with hardware from other manufacturers.
This inquiry is a response to Nvidia adhering to U.S. export limits, which curtailed the distribution of sophisticated GPUs to China. SAMR claims that Nvidia has violated the stipulations linked to its purchase of Mellanox. If these allegations are confirmed, Nvidia could be hit with fines up to $1.03 billion, or 10% of its anticipated 2024 revenues from China, marking one of the stiffest antitrust penalties ever imposed by Beijing.
This action appears to be part of China’s wider backlash against American trade policies that have placed severe export constraints on semiconductor technologies, citing national security issues. As a major force in AI and high-performance computing, Nvidia has been significantly affected by these embargoes, resulting in restricted supplies to China.
The antitrust probe underscores escalating frictions within the global semiconductor sector. China, which depends heavily on imported microchips, perceives U.S. restrictions as a hindrance to its technological progress. The situation with Nvidia highlights the challenges foreign corporations face amidst the intricate political dynamics of the U.S.-China trade tensions.
China’s decision to reassess an already sanctioned merger signals a more aggressive stance in enforcing antitrust regulations, particularly in industries it views as vital to national security. This could dissuade foreign investment, with companies potentially facing intense regulatory scrutiny long after transactions have been finalized.
While Nvidia has yet to formally address these charges, it remains a pivotal entity in the semiconductor landscape. Its GPUs are crucial for advancing AI technology, a domain where both the U.S. and China are eager to lead. A loss of access to the Chinese market or substantial financial penalties could severely affect Nvidia’s future growth prospects.
Additionally, recent reports from the New York Times have pointed fingers at Nvidia’s CEO, Jensen Huang, accusing him of being among the top tax evaders in America. Positioned as the 10th wealthiest American with a net worth of $127 billion, the NYT alleges that through various tax avoidance strategies, his family could potentially reduce their estate tax bill by approximately $8 billion.
