Today, as U.S. and Chinese officials continued their talks in Madrid, Beijing dropped a surprise announcement: it was taking action against Nvidia.
China’s State Administration for Market Regulation (SAMR), the country’s antitrust regulator, posted a very short notice on its official WeChat blog saying Nvidia had violated China’s antitrust law and that the agency would be opening a further investigation.
Recently, following a preliminary investigation, it was determined that NVIDIA Corporation had violated the Anti-Monopoly Law of the People’s Republic of China and the Decision of the State Administration for Market Regulation on the Antitrust Review of the Acquisition of Mellanox Technologies, Ltd. by NVIDIA Corporation with Additional Restrictive Conditions. In accordance with the law, the State Administration for Market Regulation has decided to conduct a further investigation into the company.
This isn’t the first time the issue has come up. On December 9, 2024, SAMR had already said it suspected Nvidia might be engaging in monopolistic behavior in China, by not living up to the commitments it made when it got the Mellanox deal cleared. At that point, the wording was only “suspected.” The core concern has always been whether Nvidia abused its dominant position in GPUs and high-speed networking gear to shut out rivals.
Back in 2019, Nvidia announced it was buying Mellanox, a leader in high-performance networking chips, for about $6.9 billion. Because the two companies were strong in complementary areas—Nvidia in GPUs, Mellanox in networking—the deal touched directly on competition in China’s high-performance computing and data center markets.
In April 2020, SAMR approved the deal but attached strict conditions. Regulators worried that after the merger, Nvidia might bundle products or discriminate in supply, squeezing competitors and hurting customers. So they set rules: Nvidia and Mellanox had to supply products on fair, reasonable and non-discriminatory terms; allow customers to buy up to a year’s worth of stock at a time; no forced bundling of GPUs and networking equipment; and no treating some customers better than others. These conditions were to last six years, after which the company could apply to have them lifted.
The point of all this was simple: to prevent monopoly risks after the merger. Nvidia already dominated GPUs worldwide, and Mellanox was said to hold 80–85% of China’s high-performance networking gear market. Put together, the two would have the power to lock out rivals through bundling, cutting off supply, or technical barriers—unless regulators stepped in.
In short, China’s regulator has started looking into Nvidia based on several concerns:
Forced bundling and unfair terms: SAMR worries Nvidia may have tied its AI GPUs to Mellanox networking gear in China, basically telling customers they had to buy both or accept extra conditions. This limits choice and squeezes out competitors. When the Mellanox deal was approved, Nvidia promised not to do this and not to discriminate against customers who only bought one product.
Supply restrictions: Nvidia was supposed to keep supplying GPUs and Mellanox gear to China for at least six years on fair, reasonable, and non-discriminatory terms. But people familiar with the matter said that since 2022, Nvidia stopped selling its top AI chips (like A100 and H100) to China, after U.S. export controls kicked in. That left Chinese customers without access and raised accusations that Nvidia broke its supply promise.
Tech barriers and compatibility: Regulators also want to make sure Nvidia’s GPUs work with third-party networking equipment, and Mellanox gear works with non-Nvidia accelerators. If Nvidia blocked that—by making its chips only run smoothly with its own hardware—that would shut out rivals.
Open-source and data use: Mellanox had key software that was open source. Nvidia promised to keep it that way and also to protect sensitive information from competitors. If it stopped sharing the code or misused competitor data, that would also count as breaking its commitments and hurting fair competition.
The investigation is based on China’s Antimonopoly Law, specifically the rules about merger conditions and abuse of market dominance. A key reference is Article 58 of the 2022 revision. That article says: if a company breaks promises it made during a merger review, and its behavior ends up limiting competition, the regulator — SAMR — can fine the company up to 10% of its previous year’s sales. That fits Nvidia’s case: when its $6.9 billion takeover of Mellanox was cleared in 2020, it came with conditions. If SAMR now decides Nvidia didn’t live up to those commitments and actually harmed competition, it could face a massive penalty.
Beyond fines, the logic is straightforward: this is “after-the-fact” merger oversight. Back in 2020, SAMR approved the deal under Article 35, but with binding conditions. If Nvidia failed to follow them, SAMR has the power under Articles 54 and 55 to order corrections, revoke the approval, or issue fines.
After about nine months of preliminary work, SAMR announced today it has found enough evidence to believe Nvidia did violate the law and its commitments. So the case is moving into a deeper investigation stage, with tougher scrutiny and possible penalties or remedies ahead. The news rattled markets right away — Nvidia’s stock dropped more than 2% in premarket trading. The dip wasn’t huge, but it showed investors are getting nervous about the regulatory risk.
As of mid-September 2025, regulators haven’t set a clear timeline. Looking at past cases, big antitrust probes can take anywhere from several months to over a year. SAMR still needs to gather more evidence, talk with Nvidia, assess the impact of its conduct, and then decide whether to impose penalties or reach some kind of settlement. Given the complexity of this case — with international factors and legal conflicts involved — the process is likely to be cautious.
This investigation doesn’t just affect whether Nvidia can keep selling chips smoothly in China, it could also shape its future partnerships with Chinese companies. If regulators demand changes — such as scrapping exclusive deals, improving compatibility, or resuming supply to certain customers — Nvidia will face extra costs to comply.
A fine also seems almost inevitable — it’s just a question of size. The 2022 revision of China’s Antimonopoly Law raised the stakes: in particularly serious cases, fines can go beyond 10% of annual revenue, up to 2 to 5 times that. Based on Nvidia’s 2023 global revenue of about $27 billion, 10% would be $2.7 billion; at the maximum multiplier, the fine could in theory exceed $10 billion (around RMB 70 billion). That’s a staggering number.
This marks another setback for Nvidia in China, coming after the company was previously summoned by the Cyberspace Administration of China over alleged cybersecurity backdoor issues. Its prospects in the Chinese market appear increasingly bleak.
Wei Shaojun, Chairman of the Integrated Circuit Design Branch of the China Semiconductor Industry Association and a professor at Tsinghua University, recently spoke at the Asia Vision Forum hosted by Caixin Global in Singapore.
At the forum, he urged Asian countries to move away from relying on Nvidia GPUs for artificial intelligence development, in order to reduce dependence on Nvidia and avoid being constrained by U.S. technology. He argued that nations in the region should explore independent technological paths instead of blindly following the U.S.
“Asia has its own cultural traditions, while the GPU technology roadmap was shaped within the context of U.S. culture. The current practice of following the U.S. GPU roadmap needs urgent change. Today, all of our large AI models are tied to the GPU track, and this poses a fatal problem for Asia. We need new computing architectures to emerge in China or across the region.”——Wei Shaojun
Of course, the final outcome of the antitrust investigation may likely depend on how serious regulators judge Nvidia’s conduct to be, the specific circumstances, and—most importantly—the broader geopolitical climate. What’s striking is that the announcement came right as Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent were holding talks in Madrid.
Just over the weekend, Washington unexpectedly added 23 Chinese entities to the Entity List, breaking the trade truce that had held since the Geneva meetings. And yesterday, Beijing hit back—launching an anti-dumping probe into U.S.-origin analog chips and an anti-discrimination investigation into U.S.-origin integrated circuits. The U.S. may be trying to build bargaining chips for the talks, but Beijing’s message is clear: China can play that game too.
Since 2022, China’s antitrust enforcement has clearly tightened across sectors such as platform economy, pharmaceuticals, and manufacturing. But cases that directly target U.S. companies and carry an overt sense of “sanction” or “restriction” are relatively few. Except for Nvidia, the other two also stand out.
1. Broadcom–VMware. On November 21, 2023, SAMR approved Broadcom’s acquisition of VMware but imposed restrictive conditions. These require Broadcom to maintain interoperability of products in China, avoid bundling sales, and prevent discriminatory supply practices. In practice, this means Broadcom must operate its integration of VMware under tighter regulatory scrutiny, ensuring that customers in China’s cloud computing and data center ecosystems can continue to operate within a compliance “guardrail” and reducing the risk of exclusionary conduct.
2. Intel–Tower Semiconductor. In August 2023, Intel scrapped its planned acquisition of Israel’s Tower Semiconductor after waiting too long for Chinese antitrust clearance. While there was no formal penalty, the practical effect of the delayed review was to block the deal. For U.S. companies, such procedural holdups mean higher time costs and greater uncertainty for cross-border transactions, adding long-term risks to future mergers in sensitive industries.