Key Points

• Nvidia shares were under pressure after a regulator in China said it was investigating the chipmaker over possible violations of the country’s antimonopoly law.
• The State Administration for Market Regulation opened an investigation into the chipmaker in relation to its acquisition of Mellanox, the Chinese government said.
• The U.S. has blocked Nvidia and other key semiconductor companies from selling their most-advanced AI chips to China in an effort to limit the country from strengthening its military.

NVIDIA
Stocks were under pressure on Monday after a regulator in China said it was investigating the chipmaker for possible violations of the country’s antitrust law.

Shares ended the session down about 2.6%.

The State Administration for Market Regulation has opened an investigation into the chipmaker in connection with the Mellanox acquisition and some deals made during the acquisition, the Chinese government said on Monday. Nvidia acquired the Israeli technology company that creates networking solutions for data centers and servers in 2020.

“In recent days, due to Nvidia’s suspected violation of China’s anti-monopoly law and the State Administration for Market Regulation’s restrictive conditions surrounding Nvidia’s acquisition of Mellanox shares… “The State Administration for Market Regulation is opening an investigation into Nvidia in accordance with the law.” according to a statement translated by CNBC.

The news comes as competition heats up between the U.S. and China over chipmaking capabilities, with the Biden administration on Dec. 2 announcing a final slew of curbs targeting semiconductor toolmakers. The news could also be a response to mounting trade tensions as President-elect Donald Trump readies for office in January, promising to slap hefty tariffs on foreign goods.

The U.S. has amped up restrictions on chip sales to China in recent years, barring Nvidia and other key semiconductor manufacturers from selling their most-advanced artificial intelligence chips in an effort to limit China from strengthening its military. The company has worked to create new products to sell in China that abide by the U.S. regulations.

Shares of the AI chip darling have outperformed this year, rallying 180% as investors ramp up bets on the sector more than two years after the debut of ChatGPT. Shares have also helped push the market to new highs, along with the broader technology sector.

In a statement obtained by NBC News, Nvidia said it was “happy to answer any questions regulators have” about its business.

“Nvidia wins on merit, as reflected in our benchmark results and value to customers, and customers can choose the solution that is best for them,” the chipmaker said.

– CNBC’s Evelyn Cheng contributed reporting.