• China's regulators found Nvidia in violation of anti-monopoly laws after a preliminary probe.
• The investigation stems from Nvidia's $6.9 billion acquisition of Mellanox Technologies.
• This escalation occurs during ongoing US-China trade talks in Madrid.
• Nvidia's business in China, accounting for 13% of its total sales, is at risk due to increased scrutiny.
• The conflict highlights tensions in the tech rivalry between the two nations amidst US export restrictions.

On September 15, China's State Administration for Market Regulation (SAMR) accused Nvidia of violating anti-monopoly laws, claiming findings from a preliminary investigation into the company’s practices linked to its acquisition of Mellanox Technologies. The probe is seen as part of the broader technological rivalry between the US and China, especially as both nations engage in trade discussions in Madrid, which include considerations about semiconductors, according to Reuters, South China Morning Post, and Channel News Asia.

The SAMR launched an investigation into Nvidia in December 2022, suspecting violations stemming from the $6.9 billion acquisition of Mellanox, approved in April 2020 under the condition that Nvidia would keep supplying its GPUs and related products to the Chinese market. In contrast, ongoing US export restrictions on high-end AI chips have complicated Nvidia's business strategy in China, as highlighted by reports from Business Insider and Los Angeles Times.

As both governments pursue trade talks, the timing of China's allegations raises concerns that regulators may leverage this situation to gain an advantage in negotiations, a sentiment echoed by U.S. Treasury Secretary Scott Bessent. Analysts suggest that these events serve as a warning from China regarding potential retaliatory actions against U.S. firms, according to CBS News and The Hill.

Nvidia's involvement in the ongoing U.S.-China trade clash has led to heightened scrutiny of its operations. The company's shares dipped on news of the allegations, reflecting concerns over the potential impact on its significant market share in China—accounting for approximately 13% of total revenue, as reported by The Jakarta Post and India Times.

The investigation underscores the fragile nature of business relations in the semiconductor sector, where any unfavorable ruling could lead to more stringent restrictions on sales and operations in China—raising further challenges for Nvidia in an already complex geopolitical landscape, as discussed in coverage by Reuters and Al Jazeera.