Credit：Nvidia
Nvidia stocks tumbled as much as more than 3.7% at midday before finishing nearly 2.6% lower on Monday. Share of the company pared almost all their gains this month over a Chinese antitrust probe into its deal with Mellanox Technologies, an Israel-based network hardware maker.
The State Administration for Market Regulation of China (SAMR) announced on Monday it has opened an investigation into Nvidia for suspected violation of the country's anti-monopoly law and the terms of a conditional approval that was granted on Nvidia's acquisition of Mellanox. The top market regulator said the decision was made in accordance with the law. It didn’t specify how Nvidia might have violated China’s laws and any commitments it made under terms in the regulator’s approval of that deal.
Nvidia completed in March 2019 acquisition of Mellanox for about US$6.9 billion in cash, marking the biggest the third largest-ever takeover of an Israeli high-tech company till that month. That was then the Santa Clara, California-based chip company’s biggest acquisition. China’s market regulator gave its conditional approval about a year later. The SAMR said in a statement in April 2020 that the deal was given the green light after Nvidia and Mellanox had agreed to provide an uninterrupted supply of graphics-processing units (GPUs) and networking equipment to China. It said Nvidia also promised not to discriminate against customers in China.
The SAMR’s investigation is the market regulator’s legal approach to regulate and maintain fair market competition order, which plays a leading role in China’s domestic chip industry and is expected to boost the market sentiment of domestic computing power and chips in the short term, CITIC Securities Co., Ltd. Said in a note. The latest probe, combined with the domestic authorities and industry associations’ increasing attention to independence that are free from any overseas shocks, the Chinese investment firm expected that the overall localization pace of the domestic semiconductor industry will accelerate further, and semiconductor manufacturers are also anticipated to benefit from the trend.
The probe is unlikely to have much of an impact on the company, particularly in the near term, because most of Nvidia’s most advanced chips are already restricted from being sold into China, commented TECHnalysis Research chief analyst Bob O'Donnell.
A company spokesperson responded China's probe that Nvidia strives to "provide the best products we can in every region and honor our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business."
The investigation marks escalation of China-U.S. high-tech wars. The Biden administration last week launched its third crackdown in three years on China's semiconductor industry. The U.S Department of Commerce’s Bureau of Industry and Security (BIS) on December 2 unveiled a package of rules designed to further impair China’s capability to produce advanced-node semiconductors that can be used in the next generation of advanced weapon systems and in artificial intelligence (AI) and advanced computing.
The rules include new controls on 24 types of semiconductor manufacturing equipment and 3 types of software tools for developing or producing semiconductors; new controls on high-bandwidth memory (HBM); new red flag guidance to address compliance and diversion concerns; 140 Entity List additions and 14 modifications spanning Chinese tool manufacturers, semiconductor fabs, and investment companies involved in advancing the Chinese government’s military modernization; and several critical regulatory changes to enhance the effectiveness of the previous controls, according to a press of the BIS.
China firmly opposes the United States' latest control measures on semiconductor export, a spokesperson with the China’s Ministry of Commerce (MOFCOM) responded a question about the U.S. government’s new announcement of export control, according to a statement of the ministry on December 2. The spokesperson slammed the move as a typical economic coercion and non-market practice. The spokesperson warned China will take necessary measures to resolutely safeguard its legitimate rights and interests.
China has lodged solemn representations with the United States over its latest control measures on semiconductor export and sanctions on Chinese companies, Lin Jian, a foreign ministry spokesperson said on December 3. Four Chinese industry bodies call for cautious purchase of U.S.-made chips the same day.The China Semiconductor Industry Association (CSIA), the China Association of Automobile Manufacturers (CAAM), the Internet Society of China (ISC) and the China Association of Communication Enterprises (CACE) on Tuesday released statements respectively, voicing their firm opposition to the U.S. abuse of export control measures.
