Nvidia falls after Chinese regulator said it violated the country’s antitrust laws in 2020 deal
Nvidia dropped as much as 2.9% in early trading on Monday after China’s State Administration for Market Regulation ruled that the chipmaker violated the country’s antitrust laws after acquiring Mellanox Technologies, an Israeli American network solutions supplier.
In 2020, Beijing approved Nvidia’s ~$7 billion acquisition under the condition that the chipmaker would not discriminate against Chinese companies. Since then, Nvidia has had to redesign its chips to comply with the US government regulations that temporarily banned the company from selling its advanced chips, including the H100, in China.
Monday’s preliminary finding from the SAMR comes amid ongoing trade talks between US and Chinese officials in Madrid, with the tariff truce between the world’s two largest economies set to expire in November.
As Sherwood News’ Luke Kawa wrote in August, China has appeared determined to “wean itself off of any dependence on Nvidia and US technology to develop its AI capabilities.”
According to Reuters, under Chinese antitrust law, companies can “face fines of between 1% and 10% of their annual sales from the previous year.” Nvidia’s sales in China generated $17.1 billion of revenue in its most recent fiscal year. Assuming the maximum penalty, the impact would be ~$1.7 billion, less than 1% of Wall Street’s forecast for Nvidia’s total revenue this fiscal year.
