US artificial intelligence (AI) chip giant Nvidia could be fined up to $1 billion under Beijing’s antitrust investigation, which experts said was widely seen as a retaliation against Washington’s escalated chip restrictions.
The investigation will apply the country’s anti-monopoly law to Nvidia’s 2019 acquisition of Israeli interconnect products and solutions provider Mellanox Technologies, according to a statement from China’s State Administration for Market Regulation on Monday.
China granted “conditional” approval for the deal in April 2020, noting that Nvidia agreed to supply its graphics processing unit (GPU) and interconnect products to the Chinese market based on “fair, reasonable and non-discriminatory principles”, and that it would ensure that they are compatible with other companies’ hardware.
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However, Nvidia has restricted exports of its high-end GPUs to China to comply with US regulations, a move that has not pleased Beijing. The investigation into a previously approved transaction marks the first time that China’s market regulator has opened the books on a closed deal.
Jensen Huang, CEO and founder of Nvidia, takes part in a press conference in Hanoi, Vietnam, December 5, 2024. Photo: AFP alt=Jensen Huang, CEO and founder of Nvidia, takes part in a press conference in Hanoi, Vietnam, December 5, 2024 . Photo: AFP>
Chinese media reported on Monday that Nvidia could face fines under the country’s antitrust law of up to $1.03 billion, equivalent to 10 percent of China’s revenue in fiscal 2024. The law stipulates that companies that violate antitrust rules will be fined can receive ranging from 1 to 10 percent of their annual sales from the previous year, although it is not specified whether this applies to global or Chinese sales.
China, including Hong Kong, represents Nvidia’s third-largest market by revenue, with revenues of $10.3 billion for the financial year ended Jan. 24, or nearly 17 percent of total revenue.
It is still too early to determine the exact amount of the fine, said Liu Xu, a researcher at Tsinghua University’s National Strategy Institute. Liu said fines could range from 1 percent to 10 percent of the previous year’s sales if regulators find evidence of unlawful market dominance through practices such as tied sales, in which customers are forced to buy one product to gain access to another.
