China’s State Administration for Market Regulation (SAMR) has announced that Nvidia could be in violation of the country’s antitrust laws stemming from its 2020 acquisition of the Israeli company Mellanox Technologies. Although the acquisition received approval from SAMR at the time, the regulatory body has now indicated that Nvidia has not complied with certain unspecified conditions associated with that approval. This development has prompted the agency to continue its investigation into the matter.
In response to the news, Nvidia’s stock experienced a decline of 2%. The situation comes amid ongoing trade negotiations between China and the United States, which are currently taking place in Madrid. These talks are essential as both nations grapple with escalating trade tensions. Recently, the U.S. government added 23 Chinese companies to a blacklist, effectively prohibiting them from purchasing American technology due to concerns over security.
The heightened scrutiny from China also extends to American integrated circuit suppliers. In July, the Cyberspace Administration of China (CAC) initiated an investigation into these suppliers, compelling Nvidia to provide an explanation regarding potential “backdoor security risks” linked to its H20 computing chips. The CAC has requested documentation concerning these alleged risks, purportedly uncovered by American AI experts.
Adding to the friction, the Federal Communications Commission (FCC) announced last week its decision to initiate proceedings to revoke the recognition of seven laboratories that evaluate and approve electronics for the U.S. market. The agency has accused these labs, many of which are based in China, of posing national security risks.
Nvidia’s CEO, Jensen Huang, has actively advocated for American companies to maintain their presence in China, arguing that a withdrawal could allow Chinese firms, such as Huawei, to dominate the artificial intelligence market. In a recent agreement, the U.S. government required Nvidia to share 15% of its revenues generated in the Chinese market.
Compounding the situation, NASA has barred Chinese nationals from accessing its facilities, materials, and networks to enhance security measures in its operations. This decision follows instances where Chinese workers who contributed to NASA’s research were locked out of IT systems and censured from attending in-person meetings.
