Nvidia Faces Chinese Antitrust Probe: Stock Declines

Nvidia Faces Chinese Antitrust Probe: Stock Declines

Nvidia's stock dropped early Monday following news that Chinese antitrust regulators have launched an investigation into the company. Shares of the artificial intelligence chip maker fell 2.2% to $139.35 in premarket trading, after a 1.8% decline on Friday.

China's State Administration for Market Regulation announced the probe, citing a suspected violation of antimonopoly laws. According to a translated statement, the investigation relates to commitments Nvidia made during its $6.9 billion acquisition of Mellanox in 2020. Specific concerns have not been disclosed. Nvidia has yet to issue a response to the news.

This is not the first time Nvidia's market dominance in AI processors has attracted regulatory scrutiny. U.S. and French authorities have previously examined the company's practices. Despite this, Nvidia has consistently argued that its success is driven by the quality of its products rather than anti-competitive practices.

Competitors, including major players like Advanced Micro Devices and emerging startups, as well as Nvidia’s customers like Microsoft and Amazon, have not been able to challenge its market-leading position effectively.

However, the company may face additional risks from escalating trade tensions between the United States and China. Last week, the U.S. government introduced new restrictions aimed at limiting China's access to advanced semiconductor technologies, further complicating the business landscape.

China currently plays a limited role in Nvidia's revenue stream. The company is already barred from selling its most advanced AI chips in the country, and revenue from the Chinese market has fallen below 20% in recent quarters. Moreover, sales growth in China is lagging behind other regions, reducing its overall impact on Nvidia's financial performance.