The State Administration for Market Regulation (SAMR) opened a probe into Nvidia and is specifically looking at its acquisition of Mellanox Technologies — a $6.9 billion deal that closed back in 2020.
The Chinese antitrust agency’s probe is looking into Nvidia’s “suspected violation” of China’s anti-monopoly laws. Notably, Chinese authorities greenlit the Mellanox deal back in April 2020.
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Nvidia’s share price took a slight dip in the wake of the news, dropping around 2% in pre-market US trading.
China is one of Nvidia’s most important markets, having previously accounted for 26% of its turnover — a number that’s dropped to around 17% following the introduction of US export controls on advanced semiconductors.
Although Nvidia is unable to ship some of its most powerful hardware units to China, local developers and startups continue to regard Nvidia as the market leader. In the past, some firms have even resorted to desperate measures to obtain more powerful Nvidia hardware, including repurposing gaming graphics cards.
Alternative chips like Huawei's Ascend AI chips have failed to turn the heads of Chinese developers, though that hasn’t stopped Chinese authorities from pushing for a domestic GPU market.
Chinese efforts to build out a domestic GPU market suffered a setback earlier this month after the US extended semiconductor export controls to cover manufacturing equipment and software tools for chip development.
Earlier this week, the Beijing-based think tank, the China Academy of Information and Communications Technology (CAICT), recommended that Chinese AI developers continue using Nvidia hardware rather than switching to domestic alternatives. They advised Chinese firms against shifting due to the "complex engineering" involved in transferring models that were previously trained on Nvidia systems.
“If the conditions allow, [data centres] can choose [Nvidia’s] A100 and H100 high-performance computing units,” the report read. “If the need for computing power is limited, they can also choose H20 (Nvidia’s custom chip for the Chinese market) or alternative domestic solutions.”
Nvidia’s share slip in the wake of the China probe is the latest dip for a company still riding high. Prices dropped slightly after its third-quarter earnings announcement despite once again shattering expectations.
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