China says Nvidia violated antitrust regulations

Trade tensions between China and the U.S. regarding semiconductors just got even more strained.

On Monday, China’s State Administration for Market Regulation ruled that semiconductor giant Nvidia was in violation of the country’s antitrust regulations, as first reported by Bloomberg. The ruling was in reference to Nvidia’s 2020 acquisition of Mellanox Technologies, a computer networking supplier, for $7 billion.

An Nvidia spokesperson supplied the following statement: “We comply with the law in all respects. We will continue to cooperate with all relevant government agencies as they evaluate the impact of export controls on competition in the commercial markets.”

China didn’t announce any consequences tied to its findings and will continue to investigate. Still, the ruling is likely to cast a pall over ongoing tariff negotiations between the U.S. and China, currently taking place in Madrid. While these trade discussions aren’t specifically about semiconductors, the question of Chinese access to Nvidia chips is a major point of contention between the two regimes.

The outgoing Biden administration announced its AI Diffusion Rule back in January that was meant to restrict U.S.-made AI chips to many countries, with further restrictions specifically for China and other adversaries.

While the U.S. Department of Commerce formally repealed Biden’s AI rule in May, the future of AI chip exports to China remains in flux. The Trump administration slapped licensing agreements on chips heading to China in April. A few months later, in July, these companies were given the green light to start selling these chips again.

Just a few weeks after that the country struck a deal requiring companies selling chips to China to give the U.S. a 15% cut of the revenue made on those sales. China has discouraged firms from buying Nvidia chips and, as of a recent earnings call, none of the company’s chips have made it through the new export process.