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by jan

China rules that Nvidia violated its antitrust laws [ft.com]:

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A Chinese regulator has found Nvidia violated the country’s antitrust law, in a preliminary finding against the world’s most valuable chipmaker.

Nvidia had failed to fully comply with provisions outlined when it acquired Mellanox Technologies, an Israeli-US supplier of networking products, China’s State Administration for Market Regulation (SAMR) said on Monday. Beijing conditionally approved the US chipmaker’s acquisition of Mellanox in 2020.

Monday’s statement came as US and Chinese officials prepared for more talks in Madrid over trade, with a tariff truce between the world’s two largest economies set to expire in November.

SAMR reached its conclusion weeks before Monday’s announcement, according to two people with knowledge of the matter, adding that the regulator had released the statement now to give China greater leverage in the trade talks.

The regulator started the anti-monopoly investigation in December, a week after the US unveiled tougher export controls on advanced high-bandwidth memory chips and chipmaking equipment to the country.

SAMR then spent months interviewing relevant parties and gathering legal opinions to build the case, the people said.

Nvidia bought Mellanox for $6.9 billion in 2020, and the acquisition helped the chipmaker to step up into the data center and high-performance computing market where it is now a dominant player.

The preliminary findings against the chipmaker could result in fines of between 1 percent and 10 percent of the company’s previous year’s sales. Regulators can also force the company to change business practices that are considered in violation of antitrust laws.

Over recent years, Nvidia has become a global market leader in artificial intelligence chips, with its graphics processing units becoming crucial in developing leading AI models.

That has also meant that Nvidia has increasingly been caught up in the trade tensions between Washington and Beijing.

Successive US administrations have imposed export controls that have forced Nvidia to sell watered-down versions of its must-have graphics processing units in China, giving rise to a large black market of smugglers who illegally bring its more advanced processors into the country.

The Trump administration this year also blocked sales of the H20 chip, which Nvidia designed for the Chinese market while adhering to export controls. Nvidia then cut a deal to allow sales to resume in exchange for giving the US government 15 percent of the revenues.

Despite this, Chinese regulators have been exerting pressure on the country’s tech companies, warning them not to buy Nvidia’s H20 chip, creating uncertainty over the US group’s business in the country.

Nvidia chief Jensen Huang, who has made frequent visits to China in a signal of his commitment to a crucial overseas market, has previously criticized the US curbs as a “failure” that has spurred Chinese rivals to accelerate development of their own products.

Nvidia did not immediately respond to a request for comment. SAMR did not immediately respond to a request for further comment.

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