Nvidia shares fall as China opens antitrust probe into AI chip heavyweight

Nvidia ( NVDA ) shares fell more than 3% on Monday after China opened an antitrust probe into the chip giant amid escalating tensions between Beijing and Washington over artificial intelligence dominance.

The investigation is targeting Nvidia’s practices regarding possible antitrust violations. It is also poised to explore its 2020 acquisition of Mellanox, a purchase that was approved by China’s State Administration for Market Regulation on the condition that the chipmaker avoid discriminating against Chinese companies.

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

In a statement released Monday morning, an Nvidia spokesperson wrote: “We work hard to deliver the best products we can in every region and honor our commitments everywhere we do business. We are happy to answer any questions that regulators may have have about our business.”

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

The latest US measures include limiting high-bandwidth memory chips shipped to China, crucial components for AI training.

“As China continues to struggle to keep up with the most advanced AI chips, they will likely do what they can to slow down American companies,” Futurum Group CEO Daniel Newman told Yahoo Finance on Monday morning (video above).

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

“This is not just a regulatory issue; it is a calculated geopolitical maneuver,” Nigel Green, chief executive of financial advisory firm deVere Group, wrote on Monday. “China is sending a strong message that it won’t hesitate to push back, and Nvidia’s targeting is a harbinger of more aggressive moves to come.”

Nvidia shares have not participated in the overall post-election Trump rally over the past month. The stock is up a little more than 1% since Trump’s victory.

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

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

Click here for an in-depth analysis of the latest stock market news and events that move stock prices

Read the latest financial and business news from Yahoo Finance