The State Administration for Market Regulation, a government agency responsible for supervision of market and management, has opened an investigation into Nvidia under the antitrust law. The focus of investigation is the $6.9 billion dollar deal which prompted Nvidia to acquire Mellanox Technologies back in 2020.
The Chinese regulators are investigating the largest AI chip maker for violating its anti monopoly law. Moreover the US department of justice is also investigating Nvidia for abusing its market monopoly. Allegations of Nvidia penalizing customers for engaging with its competitors are currently under investigation. As a result the chip maker is facing legal issues both from home and outside.
Nvidia became the highest valued company in the world with its groundbreaking advancement in AI chip production. The company reached a market cap of $3.4 Trillion and their stock price saw a steady increase over the year. Even though the company gained 191.27% over the last year. The steady rise in stock price has faced several mishaps in the recent month as their stocks lost 6.39% of its value over the last month. With the opening of the investigation the company lost 3.63 point closing at $138.81 during the last closing which was 2.55% lower than the previous closing day.
Analysts and market speculators are thinking it’s nothing more than a tit for tat as the trade war between China and the US fuels more rivalries between the two top economies. With the new US regulations to curb the export of chips to China, the top economic giant of Asia has hit back with the ban of rare materials like gallium and germanium to the US.
China accounts for 15% of the market for Nvidia. But still this recent development is not seen as a threat to the business of Nvidia. During the last quarter the company announced a total revenue of $35.08 billion which is a leap from the previous quarter. Moreover the company has adopted a strategic move to expand its business in China by partnering up with Inspur, a Chinese firm to deliver specially made AI chips just for the Chinese market by 2025. This will enable Nvidia to hold their market of AI chips in China even with the ongoing scrutiny the company faces from the US and China.
Nvidia is not the first company to face a probe from overseas government agencies. Intel also faced investigation for the allegation of surveillance and data collection from the Cybersecurity Association of China. Besides, the launching of the probe can also be summed up as a prelude to China’s capability of hitting back if the Trump administration expedites the trade war.