Chipmaker Gaint NVIDIA Corporation (NVDA, Financial) shares fell Sunday at around 2% in premarket trading following news that China's State Administration is investigating the company for Market Regulation SAMR for an antitrust matter. The focus is Nvidia's $6.9 billion purchase of Mellanox Technologies, which was completed last April.
Nvidia said the Chinese regulator's push is due to the Broadcom litigation, legal issues of the anti-monopoly law, and the company's conditions in the Mellanox deal. This is another layer of pressure for Nvidia, already struggling with US export controls meant to halt the sale of highly sophisticated AI computer chips to China.
Such an investigation was timely in view of the increased rivalry between the US and China in the semiconductor market. In recent months, the Biden administration has imposed new restrictions to stop the export of US chipmaking abilities to discourage China from softening its military muscles. As a response to this regulation, Nvidia has moved to develop China-compliant chips that can still reach this market.
Nevertheless, Nvidia shares are up about 188% so far this year as investors await the pursuit of artificial intelligence chip technology leadership. The tech market index's double-digit stock price of 15 in 2024, with better fundamentals, has helped the tech market index immensely.
According to the findings, geopolitical and regulatory risks are intensifying for the semiconductor industry, with the United States and China fighting to dominate the tech world.
