China’s State Administration for Market Regulation (SAMR) has accused NVIDIA of violating anti-monopoly laws, raising fresh concerns about the company’s future in one of its biggest markets. The allegations stem from the 2020 acquisition of Mellanox Technologies, a deal worth nearly $7 billion, which was cleared by China under strict conditions.
In December 2024, SAMR launched a probe into NVIDIA’s compliance with those conditions. Now, early findings suggest that NVIDIA may have failed to meet obligations, which could result in hefty fines or operational restrictions.
Why NVIDIA is Under Fire
According to regulators, the main issue lies in whether NVIDIA respected commitments around supply fairness and competitive neutrality. When China approved the Mellanox merger in 2020, it demanded that NVIDIA continue providing networking hardware and services fairly to Chinese companies without bias or bundling practices that favored certain partners.
The regulator now claims NVIDIA may have violated those terms — a charge that could have major financial and political consequences.
The Stakes: $17 Billion in China Revenue
China is a key market for NVIDIA. Reports indicate that the company generated about 13% of its annual revenue (≈ $17 billion) from China in recent years.
If penalties are imposed, China’s anti-monopoly law allows fines between 1% and 10% of annual sales. That could amount to billions of dollars in potential risk for NVIDIA.
Beyond fines, the company could face stricter controls, delayed product approvals, or limits on its ability to work with Chinese firms — especially in AI infrastructure and data center networking, where Mellanox hardware plays a critical role.
Why This Matters Globally
This probe isn’t just about NVIDIA — it’s about the geopolitical chess game between the US and China:
- US Export Controls: Washington has already restricted NVIDIA from selling its most advanced AI chips to Chinese firms.
- China’s Countermove: By targeting NVIDIA with antitrust action, Beijing is signaling it won’t hesitate to use domestic laws to pressure foreign tech companies.
- Global Chip Race: NVIDIA dominates AI chip sales worldwide. Any disruption in China could accelerate the rise of domestic rivals and push Beijing to double down on semiconductor self-reliance.
What Could Happen Next
✅ Possible Outcomes:
- Fines: Between 1–10% of China revenue.
- Business Restrictions: Adjusting contracts, ensuring fair supply, or stopping bundling practices.
- Longer-Term Risk: Strained ties could cut NVIDIA out of critical parts of China’s growing AI and cloud markets.
⚠️ Risks to Watch:
- Whether SAMR reveals the exact violations NVIDIA is accused of.
- How this probe intersects with US-China trade negotiations.
- Whether Chinese firms, like Huawei or domestic chipmakers, gain from any restrictions on NVIDIA.
Background: The Mellanox Deal
In 2020, NVIDIA acquired Mellanox Technologies, a company specializing in high-speed networking for data centers. The deal strengthened NVIDIA’s role in powering AI systems and cloud computing.
China only approved the takeover after demanding conditions that guaranteed continued supply and fair competition. Nearly five years later, regulators now argue NVIDIA has not fully respected those conditions.
Conclusion
China’s accusation that NVIDIA violated anti-monopoly laws marks a new flashpoint in the global tech rivalry. With $17 billion in Chinese revenue at risk, NVIDIA faces not only regulatory pressure but also a potential weakening of its market dominance if rivals step in.
As the investigation deepens, investors, governments, and the tech world will be watching closely to see whether this is a regulatory dispute — or a strategic move in the US-China tech war.
