Nvidia shares slide as China launches an antitrust investigation into the AI ​​chip heavyweight

Nvidia (NVDA) shares slipped more than 2.5% on Monday after China launched an antitrust investigation into the chip giant amid escalating tensions between Beijing and Washington over the dominance of artificial intelligence.

The investigation targets Nvidia’s practices with regard to possible violations of antitrust law. It also plans to explore acquiring Mellanox in 2020, a takeover approved by China’s State Administration for Market Regulation on the condition that the chipmaker would avoid discrimination against Chinese companies.

The government believes Nvidia’s $7 billion purchase of the Israeli computer networking equipment maker may have violated Beijing’s anti-monopoly rules, according to a Chinese media report.

The investigation comes about a week after the Biden administration introduced another round of semiconductor export restrictions aimed at restricting China’s access to advanced chips.

Recent U.S. actions include restricting the supply of high-bandwidth memory chips shipped to China, key components for AI training.

“As China continues to struggle to keep up with the most advanced AI chips, they likely want to do everything they can to slow down U.S. companies,” Daniel Newman, CEO of Futurum Group, told Yahoo Finance on Monday morning.

Nvidia did not immediately respond to a request for comment.

The Chinese investigation into the top US chipmaker also comes ahead of Donald Trump’s return to the White House next month. Trump has threatened higher tariffs as part of his policy.

“This is not just a regulatory issue; it is a calculated geopolitical maneuver,” Nigel Green, CEO of financial consultancy deVere Group, wrote on Monday. “China is sending a strong signal that it will not hesitate to strike back, and Nvidia’s attacks are a harbinger of more aggressive action to come.”

Nvidia shares have not participated in Trump’s broader post-election rally over the past month. The stock is up just over 1% since Trump’s election victory.

Nvidia stock is up nearly 190% so far this year.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her to X @ines_ferre.

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