TLDR:
- Nvidia stock dropped 2.6% after China launched an antitrust probe into the company
- The investigation focuses on possible anti-monopoly violations and Nvidia’s 2020 Mellanox acquisition
- This comes a week after new U.S. semiconductor export restrictions to China
- The probe is viewed as a response to increasing U.S.-China tech tensions
- Nvidia’s stock is up 190% in 2024 despite recent pressure
Nvidia Corporation experienced a 2.6% decline in its stock price on December 9, 2024, after Chinese regulators announced an antitrust investigation into the semiconductor giant’s business practices.
China’s State Administration for Market Regulation launched the probe to examine potential violations of the country’s anti-monopoly laws, with particular focus on Nvidia’s $7 billion acquisition of Mellanox Technologies in 2020.
The investigation specifically looks at whether Nvidia violated conditions set during the Mellanox purchase approval, which required the company to avoid discriminating against Chinese businesses.
Responding to the probe, an Nvidia spokesperson stated that the company works diligently to provide quality products in every region and honors its business commitments. The company expressed willingness to address any regulatory questions.
The timing of the investigation is notable, coming just one week after the Biden administration implemented new semiconductor export restrictions aimed at limiting China’s access to advanced chips.
These latest U.S. measures specifically target high-bandwidth memory chips, which are essential components for AI training, further tightening controls on technology exports to China.
The probe also emerges as President-elect Donald Trump prepares to return to the White House in January, having campaigned on promises of increased tariffs on Chinese goods.
Industry analysts view the investigation as more than just a regulatory matter. Nigel Green, CEO of deVere Group, suggested it represents a strategic geopolitical move by China to demonstrate its willingness to push back against U.S. restrictions.
The news has impacted Nvidia’s recent market performance, with the company’s stock showing limited participation in the broader market rally following Trump’s election victory, gaining just over 1% in the past month.
Despite the current pressure, Nvidia’s stock has shown remarkable performance throughout 2024, rising approximately 190% year-to-date, driven by strong investor interest in artificial intelligence technology.
The U.S. government has increasingly restricted chip sales to China, preventing Nvidia and other semiconductor manufacturers from selling their most advanced AI chips to the country, citing concerns about military applications.
In response to these restrictions, Nvidia has developed new products specifically for the Chinese market that comply with U.S. regulations while maintaining business relationships.
The Chinese investigation adds another layer of complexity to the ongoing technology trade tensions between the United States and China, as both countries compete for dominance in artificial intelligence and semiconductor technology.
Futurum Group CEO Daniel Newman suggested that China’s actions might be aimed at slowing down U.S. firms as it struggles to keep pace with leading-edge AI chip development.
The probe’s announcement triggered immediate market reaction, with Nvidia shares closing at $138.81, down $3.63 for the trading session.
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