China accuses Nvidia of violating antimonopoly laws post preliminary investigation; Here's why

Chinese regulators announced on Monday that a preliminary investigation into Nvidia has revealed that the chipmaker has violated China's anti-monopoly laws.

The State Administration for Market Regulation released a one-sentence statement confirming that it would conduct “further investigation” into the semiconductor giant.

Regulators said the probe, which began last year, is centred on Nvidia's $6.9 billion acquisition of Mellanox in 2019. According to an AP news report, the acquired company specialises in network and data transmission.

Nvidia shares move in pre-market trading

The world's most valuable company by market capitalisation, Nvidia, saw a decline in its share price during pre-market trade on September 15, following the investigation report of violating China's anti-monopoly laws.

Nvidia's share price declined by 2.16% to $174.23 in early pre-market trading, valuing the company at $4.32 trillion.

The semiconductor behemoth closed the session at $177.82 in overnight trade in the US, according to data compiled from MarketWatch.

US-China trade relations

The development comes amid Beijing's tightening scrutiny of the US chip industry. On Saturday, China's Ministry of Commerce launched an anti-dumping investigation into certain analogue IC chips imported from the US, including commodity chips commonly manufactured by companies such as Texas Instruments and ON Semiconductor.

This move is ramping up pressure on America as officials from Washington are holding trade talks with Beijing's representatives in Spain this week to resolve tensions between the two countries, the AP report said.

Ongoing trade talks between the two countries

US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are currently engaged in trade talks in Madrid, the capital city of Spain.

The talks are scheduled from Sunday to Wednesday. They will cover topics ranging from tariff negotiations to national security issues related to the ownership of the social media platform TikTok.

This is the fourth round of discussions between the two largest economies of the world after prior meetings in London, Geneva and Stockholm. The two governments have reached an agreement on several 90-day pauses on a series of increasing reciprocal tariffs to prevent a full-blown trade war.

Trump and Xi to attend summit soon

The latest round of negotiations in Madrid came as the world’s two largest economies increased their engagement ahead of a potential meeting between Donald Trump and Xi Jinping.

The leaders are scheduled to attend a summit in South Korea as soon as next month. Bloomberg reported that the countries’ foreign ministers and defence ministers also held calls last week to help clear the path for a possible summit, Bloomberg reported.