Nvidia shares fall 3% as it faces an antitrust investigation in China

Nvidia’s (NVDA-2.21%) shares fell nearly 3% during midday trading on Monday following an announcement from the Chinese government Investigations against the chip manufacturer. Fellow chip maker Advanced Micro Devices (AMD-4.64%) and Marvell (MRVL-5.34%) also saw their shares fall by 4.4% and 5.2%, respectively.

China’s state market regulator said Monday that it had opened an investigation into the U.S.-based chipmaker may violate anti-monopoly laws with the acquisition of Israeli chip designer Mellanox Technologies, according to China Central Television.

Nvidia bought the chip developer in 2020 for $6.9 billion and received conditional approval from Chinese authorities that included a requirement not to bundle or link its products with Mellanox. The two chipmakers also had to continue to deliver on fair terms and ensure that the technology was compatible with chips made by Chinese companies.

Further measures should address the tightening of US export controls against China’s chip companies.

In September, Nvidia and Microsoft (MSFT+0.62%) have been sued by Texas-based startup Xockets for monopolistic practices, patent infringement and violations of federal antitrust laws. The suit claims that Nvidia has been infringing on Xockets’ patents since its inception Acquisition of Mellanoxwhich adopted the startup’s technology in 2016 without its knowledge or permission.

The lawsuit accuses Nvidia and Microsoft Infringement of Xockets patent for advanced data processing units (DPUs).“that enable accelerated computing and artificial intelligence” in data centers.

Meanwhile, the Biden administration recently announced further restrictions on the sale of high-bandwidth memory and chip-making tools to China, including tools made abroad by U.S. companies. The new rules include controls for 24 types of semiconductor manufacturing equipment as well as three types of software tools that can be used to develop or produce chips, the Commerce Department’s Bureau of Industry and Security (BIS) said.

Another 140 unnamed Chinese companies — including semiconductor factories, tool makers and investment firms — accused of working on behalf of the Chinese government have also been added to the U.S. trade blacklist.