NVIDIA (NVDA) the stock slipped 2.5% Monday after China has opened an antitrust agreement investigation into the chip giant amid escalating tensions between Beijing and Washington over the dominance of artificial intelligence.
The investigation targets Nvidia’s practices regarding possible antimonopoly violations. It is also expected to review its acquisition of Mellanox in 2020, a purchase that was approved by China’s State Administration for Market Regulation on the condition that the chipmaker avoids discriminating against Chinese companies.
According to to a Chinese media report, The government believes Nvidia’s $7 billion purchase of the Israeli maker of computer networking equipment may have violated Beijing’s anti-monopoly rules.
In a statement released Monday morning, an Nvidia spokesperson wrote: “We work hard to deliver the best possible products in every region and honor our commitments wherever we do business. We will be happy to answer any questions regulators may have about our activities. “
The investigation comes about a week after the Biden administration implemented another cycle of semiconductor export restrictions aimed at limiting China’s access to advanced chips.
The latest U.S. measures include cutting back on high-bandwidth memory chips shipped to China, crucial items for AI training.
“As China continues to struggle to keep pace with the most advanced AI chips, it likely wants to do what it can to slow down U.S. companies,” Daniel Newman, CEO of Futurum Group, told Yahoo Finance Monday morning (video above).
The Chinese investigation against the largest US chip maker also comes before Donald Trump returns to the White House next month. Trump has threatened to raise tariffs as part of his policy.
“This is not just about regulation; it is a calculated geopolitical maneuver,” Nigel Green, CEO of financial consultancy deVere Group, wrote Monday. “China is sending a strong message that it will not hesitate to push back, and the targeting of Nvidia portends more aggressive measures to come.”
Nvidia shares have not participated in Trump’s overall post-election rally over the past month. The stock is up just over 1% since Trump’s victory.
Nvidia stock is up nearly 190% so far this year.
Ines Ferre is a senior economics reporter for Yahoo Finance. Follow her on @ines_ferre.
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