Nvidia Corporation (NASDAQ: NVDA) stock continued to fall on Tuesday, dropping more than 3% after Chinese regulators said they were investigating the chipmaker for possible violations of the country’s antitrust laws.
On Monday, December 9, the Chinese government announced that the State Administration for Market Regulation (SAMR) has opened an investigation into Nvidia’s acquisition of Mellanox and certain agreements entered into during the acquisition. Nvidia’s acquisition of Mellanox Technologies in 2020 required approval from Chinese antitrust regulators given its substantial business operations in China.
The country’s competition authority approved the $7 billion acquisition, provided NVIDIA Corporation (NASDAQ: NVDA) notifies competitors within 90 days of gaining access to new Mellanox products. The current investigation aims to determine whether Nvidia did or did not comply with this requirement.
(AI) chip giant Nvidia could be fined up to $1 billion as a result of the Chinese government’s antitrust investigation, the South China Morning Post has revealed. The move, seen as retaliation for the U.S. government’s chip restrictions, marks the first time China’s market regulator has released its books on closed trades.
According to China’s antitrust law, companies that violate antitrust laws can be fined 1% to 10% of the previous year’s annual sales. However, it is not specified whether this applies to global sales or sales in China.
China, which includes Hong Kong, is Nvidia’s third-largest market by revenue, with revenue of US$10.3 billion (about 17% of total revenue) in the fiscal year ended January 24. However, it is too early to determine exactly what fines NVIDIA may face.
“NVIDIA wins on merit, as reflected in our benchmark results and value to our customers, allowing customers to choose the solution that works best for them. “We work hard to deliver and honor our commitments wherever we do business. We are happy to answer any questions regulators may have about our operations.”
The leading AI chip maker slumped despite significant sales growth from supplier TSMC. TSMC’s strong sales highlight strong demand for Nvidia’s GPUs and AI chips, but investor sentiment has likely been overshadowed by the ongoing antitrust investigation. Nvidia’s continued decline today could also be due to traders choosing to sell “early pop.” Historically, December hasn’t been kind to Nvidia. According to Benzinga, large semiconductor companies often enter a temporary bearish phase after reporting their third-quarter results.
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