China eyes up NVIDIA in chip war probe

The State Administration for Market Regulation (SAMR) is leading the probe, focusing on whether Nvidia adhered to the conditions set during the Mellanox acquisition, which included obligations to notify competitors of new products within 90 days of informing Nvidia.

Nvidia stated it was "happy to answer any questions regulators may have about our business." The company added: "We work hard to provide the best products we can in every region and honour our commitments everywhere we do business."

This investigation follows recent U.S. actions tightening restrictions on semiconductor exports to China, aiming to curb China's advancements in artificial intelligence and high-performance computing. In response, China has implemented measures such as restricting exports of critical minerals like gallium and germanium to the U.S.

Analysts view China's probe into Nvidia as a strategic response to U.S. sanctions targeting its semiconductor industry. James Lewis, a researcher at the Centre for Strategic and International Studies, remarked: "The timing is not a coincidence. It's mainly a message to the U.S. government—the Chinese have decided they're not just going to take sanction after sanction."

Founded in 1993, Nvidia is renowned for its graphics processing units (GPUs) and has become a leader in AI chip development. The company's dominance has attracted scrutiny from regulators worldwide, including in the U.S., the European Union, and South Korea.

Nvidia's financial exposure to China is significant, with the country accounting for approximately 12% of its global revenue. However, U.S. export controls have limited Nvidia's ability to sell its most advanced AI chips to Chinese customers, compelling the company to offer modified versions for the Chinese market.

The escalating tensions between the U.S. and China over semiconductor technology have led to a series of retaliatory measures, including export restrictions and regulatory probes, affecting companies like Nvidia operating in both markets.

Investors on notice

China launching an antitrust probe into US AI chip giant Nvidia marks the start of what is likely to be a systematic strategy to retaliate against the US, as both nations prepare for an economic showdown fuelled by tariffs and technology dominance.

This is the warning from Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and asset management organizations, as Chinese state media reports that the country’s market regulator has opened an investigation into Nvidia for alleged antitrust violations.

He warns: “The antitrust probe into Nvidia, a leader in the semiconductor sector, signals the critical importance of this industry in the ongoing geopolitical battle and should be a wake-up call for investors to act decisively.

“Semiconductors are at the heart of global innovation, driving advancements in artificial intelligence, 5G, electric vehicles, and defence technologies.

“China’s move to investigate Nvidia, citing its acquisition of Mellanox Technologies, is part of a broader effort to weaken America’s edge in this field.

“This follows the Biden administration’s recent restrictions on exporting advanced chips and chipmaking equipment to China—a policy Trump is expected to amplify when he takes office.”

He continues: “This isn’t just a regulatory issue; it’s a calculated geopolitical manoeuvre. China is sending a strong message that it won’t hesitate to push back, and Nvidia’s targeting is a harbinger of more aggressive measures to come.

“For investors, the time to prepare is now.”

As Trump’s new administration approaches, deVere Group anticipates the return of sweeping tariffs aimed at reducing reliance on Chinese imports and bolstering domestic manufacturing.

However, history has shown that such policies often result in reciprocal actions, raising costs for businesses and consumers globally.

China’s latest move underscores its willingness to retaliate against US interests, particularly in sectors deemed strategically vital, like semiconductors.

“Semiconductor companies are at the epicentre of these tensions. Nvidia’s dominance in AI chips and its reliance on the Chinese market for growth make it a prime target, setting a precedent that could extend to other US tech giants. This dynamic amplifies the risks and opportunities for investors who are prepared to pivot quickly,” notes Nigel Green.

The semiconductor industry is not just another sector—it’s the backbone of modern technology and innovation. Chips power everything from smartphones to supercomputers and autonomous vehicles. The escalating trade war will likely spur governments and corporations to invest heavily in domestic semiconductor production, creating both challenges and opportunities for global markets.

“The semiconductor sector’s importance cannot be overstated. It’s a key battlefield in the Tech Cold War, and the fallout from these tensions will roll out across industries. Investors need to closely monitor developments and position themselves in companies with diversified supply chains and robust R&D pipelines,” adds the deVere chief executive.

This is not the time for complacency. The unfolding trade tensions and regulatory battles demand a proactive approach.

Diversification remains critical, with a focus on sectors and companies that can adapt to a fragmented global economy.

Opportunities may arise in firms leading the charge on semiconductor innovation, as well as those benefiting from government subsidies for domestic production.

In addition, the likelihood of a prolonged trade war calls for hedging against increased volatility. Defensive assets and non-US equities could offer stability, while targeted investments in technology and green energy could yield significant returns as governments prioritize these areas for strategic independence.

Nigel Green concludes: “This latest development puts investors around the world on notice.

“The US-China economic rivalry is entering a new phase, and the semiconductor industry is at the heart of it. Those who act decisively sooner rather than later will be the ones reaping the rewards.”