NVIDIA's Troubles in China: Antitrust Investigation and Supply Cut Rumors Shake the Market

NVIDIA's Troubles in China: Antitrust Investigation and Supply Cut Rumors Shake the MarketAccording to a report in the Southern Metropolis Daily on December 13, 2024, the root of the current turmoil can be traced back to 2019. That year, NVIDIA spent nearly $7 billion to acquire all equity in Israeli chipmaker Mellanox

NVIDIA's Troubles in China: Antitrust Investigation and Supply Cut Rumors Shake the Market

NVIDIA, globally renowned for its technological prowess and innovation in AI and chip manufacturing, enjoys an almost unparalleled position in the tech world. However, this tech giant has recently been embroiled in a series of controversies that have drawn significant market attention. On December 10, 2024, Chinese regulatory authorities announced an antitrust investigation into NVIDIA, causing its market capitalization to plummet by hundreds of billions of dollars. Following this, on December 12, rumors circulated online that NVIDIA had removed all products from its official flagship store and was about to cease supplying the Chinese market, further exacerbating market volatility. NVIDIA swiftly issued a statement denying these rumors, emphasizing the importance of the Chinese market and pledging to continue providing high-quality and efficient products and services. However, behind these events lies a merger from over four years ago, and the subsequent antitrust scrutiny and related issues.

According to a report in the Southern Metropolis Daily on December 13, 2024, the root of the current turmoil can be traced back to 2019. That year, NVIDIA spent nearly $7 billion to acquire all equity in Israeli chipmaker Mellanox. While seemingly an ordinary acquisition, antitrust regulations require review of such transactions when the parties involved exceed certain revenue thresholds. NVIDIA's acquisition clearly came under the scrutiny of regulatory authorities.

A year after the acquisition, regulatory concerns arose that the market share gained by NVIDIA through this acquisition could negatively impact market competition, potentially disrupting market order. Consequently, the regulatory authorities imposed seven restrictive obligations on NVIDIA. This means NVIDIA must fulfill these obligations or face investigation and penalties. For a company as large as NVIDIA, any violation would have immense consequences.

In recent years, NVIDIA's performance in the Chinese market has indeed sparked some controversy. It has frequently suspended the supply of several CPU accelerator products to the Chinese market, citing export controls. While China may show some understanding, this doesn't excuse NVIDIA from fulfilling its legal obligations. If NVIDIA fails to comply with the stipulated conditions, it should adjust its business policies accordingly to mitigate negative impacts, instead of ignoring the issue.

Currently, Chinese regulatory authorities have launched an investigation, indicating a possible violation of one or more of the seven previously imposed obligations. However, the specific violation remains unclear, pending further investigation results.

This incident dealt a severe blow to NVIDIA's share price. According to a report by the China Business News on December 10, 2024, following the announcement of the antitrust investigation, NVIDIAs global market capitalization ranking was surpassed by Apple, a significant setback.

In recent years, the US has increasingly tightened its chip control measures against China, placing immense pressure on NVIDIA as a chip giant. Its current predicament in the Chinese market is undoubtedly adding to its challenges. In September of this year, the US Department of Justice issued a subpoena to NVIDIA investigating its monopolistic practices. These signs indicate that NVIDIA is facing unprecedented challenges.

America's long-standing blockade of chip technology to China has, from another perspective, spurred the development of indigenous chip research and development in China. Currently, China's semiconductor and chip industries are exhibiting robust growth, fueled by both policy support and market demand. Despite the US recently further tightening its restrictions on semiconductor exports to China under the guise of national security, China has firmly opposed these measures and urged both domestic and foreign companies to actively use chips manufactured in China.

The future of the US-China "chip war" remains uncertain. China will continue to resolutely pursue independent R&D and actively address various challenges. China has been the world's largest semiconductor market for many years, accounting for about 35% of the global market share. As NVIDIA stated in its announcement, "China is a very important market," and abandoning it would be a huge loss. China hopes to achieve win-win cooperation with NVIDIA, but will not tolerate any violations of regulations.

Online, netizens have voiced their opinions. Some believe that even powerful tech giants must respect the policies and regulations of various countries, achieving sustainable development only through compliance. Others have expressed support for domestic tech companies, hoping they can catch up and ultimately surpass their foreign counterparts. Still others have analyzed NVIDIA's predicament from a deeper perspective, suggesting that it needs to adjust its strategies to avoid greater trouble.

NVIDIA's situation serves as a wake-up call for the entire tech industry: pursuing rapid development must be accompanied by strict adherence to relevant laws and regulations to ensure survival and growth in fierce market competition. This event further highlights the complexity and severity of global technology competition, as well as the efforts of various countries to protect their interests and promote fair competition. NVIDIA's future trajectory and the impact of this incident on the global tech landscape remain to be seen.

This incident also reminds us that in a globalized context, corporate development should always adhere to compliant operations and respect the laws and regulations of all countries to achieve stable and long-term success in the international market. Simultaneously, China's independent innovation and development in the chip field are even more critical, requiring continued investment in R&D to enhance its core competitiveness and secure a winning position in future competition. The ultimate outcome of the NVIDIA incident will have a profound impact on the global semiconductor industry and warrants continued attention. This event also reminds all multinational companies that when operating in the global market, they must fully understand and comply with local laws and regulations to avoid legal sanctions and market losses due to violations. NVIDIA's future development in the Chinese market will depend on how it handles its relationship with Chinese regulatory authorities and adapts to the regulatory environment in the Chinese market.

NVIDIAs predicament also reflects the complexity and ruthlessness of global tech competition. In the game between technological hegemony and market competition, companies need to carefully weigh risks and rewards, seeking sustainable development based on compliant operations. The importance of the Chinese market, as the world's largest semiconductor market, is self-evident. Whether NVIDIA can ultimately resolve this crisis and continue to succeed in the Chinese market will be a case worth watching. The subsequent development of the event will continue to affect the global technology industry landscape, and we will wait and see.

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