china says nvidia violated antitrust regulations

Escalating Semiconductor Trade Disputes Between China and the U.S.

Recent developments have indicated a further deterioration in trade relations between China and the United States, specifically concerning the semiconductor industry.

Nvidia Antitrust Ruling in China

China’s State Administration for Market Regulation has determined that Nvidia, a leading semiconductor manufacturer, violated the nation’s antitrust laws. This decision, initially reported by Bloomberg, centers on Nvidia’s $7 billion acquisition of Mellanox Technologies, a supplier of computer networking solutions, which occurred in 2020.

Nvidia responded with the following official statement: “Full legal compliance is maintained by our organization. We will continue to collaborate with all pertinent governmental bodies as they assess the effects of export controls on market competition.”

Impact on Trade Negotiations

Currently, no penalties have been announced by China in connection with this ruling, and investigations are ongoing. However, this decision is anticipated to negatively influence the current tariff negotiations between the U.S. and China, which are being held in Madrid.

Although these trade talks do not directly address semiconductors, access to Nvidia chips for Chinese entities is a significant point of disagreement between the two governments.

U.S. Export Control Policies

In January, the previous U.S. administration introduced the AI Diffusion Rule, designed to limit the export of U.S.-manufactured AI chips to several countries, with particularly stringent restrictions placed on China and other nations considered adversaries.

Despite the formal repeal of this AI rule by the U.S. Department of Commerce in May, the future of AI chip exports to China remains uncertain.

Fluctuating Regulations and Revenue Sharing

The Trump administration initially imposed licensing requirements on chips exported to China in April. Subsequently, in July, companies were authorized to resume sales of these chips.

Shortly thereafter, an agreement was reached stipulating that companies selling chips to China must remit 15% of the generated revenue to the U.S.

Current Export Challenges

China has actively discouraged the purchase of Nvidia chips, and, according to a recent earnings report, no chips have successfully navigated the new export procedures.

This situation highlights the complex and evolving landscape of semiconductor trade between the two global powers.