China accuses Nvidia of anti-monopoly law violations, raising prospect of heavy fines — company could be fined 10% of revenue from China

China's market regulatory body accused Nvidia of violating anti-monopoly laws Monday after the conclusion of a preliminary investigation.

The specifics of the alleged breach remain murky, but the timing suggests it is indirectly related to the ongoing trade talks between the two countries in Spain. With much of those talks relating to China's access to high-end American processors for AI training and inference, Reuters reports, some believe China may be leveraging its legal system as a negotiating tool to encourage more favorable terms.

China launched the investigation into Nvidia's business practices related to Chinese anti-monopoly laws in December 2024, with authorities claiming it suspected Nvidia of violating the commitments it made when purchasing the Israeli chip designer Mellanox Technologies in 2020.

At the time it was seen as a retaliatory action aimed at the U.S. administration's restrictions on Chinese access to high-end GPUs for AI workloads. Since then the Trump administration and Chinese authorities have gone back and forth on whether Nvidia products could be sold to the country, and if so what types, and in what quantities.

The uncertainty has lead to the growth of smuggling and black-market operations, and China pushing for more domestic chip production and adoption among its high-tech firms. That included accusing Nvidia of adding tracking hardware to its graphics chips; a practice Nvidia has denied.

But now China claims it has fallen afoul of domestic law for which punitive fines can be quite extensive. In theory, it could levy fines of between 1% and 10% of its annual sales from the previous year.

It may not come to that, though, if it turns out this is just part of China's negotiating tactic with the U.S. during talks that are taking place in Madrid this week. Alongside a potential sale of social media company, TikTok, to an American firm, China's access to Nvidia's cutting-edge AI hardware is expected to be on the table.

This latest news follows the Chinese Minister of Commerce announcing over the weekend that it was initiating an an anti-dumping investigation into analog IC chips imported from America from companies like Texas Instruments and ON Semiconductor.

Vice president of the China Semiconductor Industry Association, has also called on China and other Asian countries to halt their use of Nvidia GPUs permanently, and instead to develop new application specific integrated circuits (ASIC) for the task. He claimed that such an over-reliance on America would pose a long-term risk to Chinese AI independence.

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