Nvidia Photo: VCG

China's top market regulator announced on Monday that an initial review shows Nvidia has violated the country's anti-monopoly law and it has decided to open a further investigation into the US chip giant.

The decision, based on the result of a preliminary investigation, is reasonable and necessary to ensure fair market competition in line with relevant laws and regulations, an industry expert said on Monday.

According to a statement posted on the website of the State Administration for Market Regulation (SAMR), a preliminary review found that Nvidia breached China's Anti-Monopoly Law as well as the SAMR's notice on the conditional approval of Nvidia's acquisition of Mellanox Technologies.

The regulator said that it has decided to further investigate Nvidia in accordance with the law, according to the statement.

The announcement came after the SAMR in December 2024 officially launched an investigation into Nvidia for suspected violations of China's Anti-Monopoly Law as well as the SAMR's notice on the conditional approval of Nvidia's acquisition of Mellanox Technologies, the regulator said in a statement at the time.

"China's actions are both reasonable and lawful because they are strictly grounded in domestic law, which seeks to prevent anti-competitive practices and protect market fairness," Ma Jihua, a veteran telecom industry analyst, told the Global Times on Monday.

"Nvidia was given clear restrictive conditions when the Mellanox deal was approved years ago, such as prohibitions on forced bundling or imposing unfair trading terms. Any potential violation of those obligations warrants legal actions," Ma said.

On April 16, 2020, the SAMR issued an announcement approving Nvidia's acquisition of Mellanox Technologies, with additional restrictive conditions. The announcement noted that Mellanox, established in Israel in 1999, specializes in the research, development, production, and sales of network interconnection products. In March 2019, Nvidia signed an agreement to acquire all shares of Mellanox, making it a wholly owned subsidiary, according to an official statement by the SAMR.

The SAMR received the antitrust declaration for this operator concentration case on April 24, 2019, but the declaring party withdrew the case with the SAMR's approval about 10 months later. On February 12, 2020, the SAMR accepted the resubmitted declaration for review, the statement noted.

The regulator concluded in the statement that this acquisition has or may have the effect of excluding or restricting competition in the global and Chinese markets for GPU accelerators, dedicated network interconnection equipment, and high-speed Ethernet adapters.

To approve the acquisition, the SAMR imposed seven obligations on Nvidia, Mellanox, and the post-acquisition entity, including ensuring that sales of Nvidia GPU accelerators and Mellanox high-speed network interconnection equipment in China were not subject to forced bundling or unreasonable trading conditions.

Nvidia bought Mellanox for $6.9 billion in 2020 and the acquisition helped the chipmaker to step up into the data center and high-performance computing market where it is now a dominant player, according to the Financial Times.

Ma said that Nvidia's acquisition of Mellanox has consolidated its market power, and it is inevitable to raise concerns about potential monopolistic behavior. "This dominance could lead to reduced competition, higher prices for Chinese consumers, and barriers for domestic firms seeking access to advanced technologies," Ma said.

"Nvidia has an obligation to prove that its conduct complies not only with competition law but also with China's security regulations," he said, adding that the SAMR's move is a standard regulatory practice aimed at safeguarding fair competition and protecting consumer interests in China's rapidly growing high-performance computing market.

Meanwhile, the US chip giant has also raised security concerns over its products, as the US is escalating restrictions and crackdowns on China's technology sector. 

China's cyberspace regulator summoned Nvidia over security risks concerning its H20 chips sold to China in line with relevant laws on July 31, asking the company to provide explanations and submit relevant evidence to address security risks associated with vulnerabilities and potential backdoors in its H20 computing chips, which were designed specifically by the company for the Chinese market.

The latest measure is aimed at safeguarding the cybersecurity and data security of Chinese users, in accordance with relevant provisions of the Cybersecurity Law, the Data Security Law and the Personal Information Protection Law, said the Cyberspace Administration of China.

US restrictions on the Chinese technology sector have intensified in recent years. In May 2025, US lawmakers from both parties introduced the Chip Security Act, seeking to require any covered integrated circuit product to be outfitted with chip security mechanisms that implement location verification, Reuters reported.

A Reuters report in August revealed that US authorities have secretly installed location-tracking devices on high-risk AI chips "they see as being at high risk of illegal diversion to China."