Nvidia is under increased regulatory pressure in China after an initial probe found the company in violation of anti-monopoly laws. The investigation, conducted by the State Administration for Market Regulation, centres around a high-profile deal from 2020. While the specific details of the violation remain undisclosed, the regulator stated that Nvidia breached antitrust regulations.
The announcement has already impacted Nvidia's stock, with shares dropping in pre-market trading. This development arrives amidst sensitive trade negotiations between the US and China, potentially adding another layer of complexity to the discussions. The investigation also scrutinises Nvidia's compliance with commitments made during its acquisition of Mellanox Technologies, a deal that received conditional approval in 2020.
Depending on the outcome of the investigation, Nvidia could face fines ranging from 1% to 10% of its previous year's annual sales. In the fiscal year ending January 2025, China accounted for $17 billion of Nvidia's revenue, representing 13% of its total sales. The ongoing investigation and potential penalties could significantly affect Nvidia's operations and market position in China.
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