Nvidia Accused of Violating Chinese Antitrust Laws as Stock Falls 0.46%
Nvidia stock had a small hindrance Monday morning after allegations surfaced about antitrust violations.
Quick overview
- Nvidia is facing pressure from the Chinese government over alleged non-compliance with regulations related to its 2020 acquisition of Mellanox Technologies.
- The Chinese State Administration for Market Regulation has accused Nvidia of violating antitrust laws, which may be used as leverage in ongoing US-China trade negotiations.
- Despite a slight dip in stock value following the news, Nvidia's shares have since recovered, indicating investor confidence in the company's ability to navigate the situation.
- China remains a crucial market for Nvidia, making it unlikely that the company will lose access to this valuable customer.
AI tech company Nvidia (NVDA) is feeling the pressure from the Chinese government this week as they have been accused of not complying with the country’s regulations.
A preliminary hearing of the Chinese State Administration for Market Regulation found that Nvidia did not comply with the country’s regulations in 2020. At that time, Nvidia had purchased Mallanox Technologies, and China placed some provisions on the tech company.
A Harsh Move at a Key Moment
China has been leveling allegations of antitrust behavior at Nvidia for months, but it is significant that the government is now coming to the decision that Nvidia violated regulations. The United States government is in trade talks with China at the moment, and China may be using this finding as leverage in their negotiations. If they can prove that American companies are already violating Chinese law, they may have greater bargaining power.
Back in December, the Chinese government began investigating Nvidia’s business dealings in the country, specifically trying to find out if antitrust laws were broken. This occurred only days after the United States began restricting the sale of many high tech AI components to China. That list of restricted technology included Nvidia’s highest end AI components.
Nvidia’s Stock Value Slips but Not Far
Nvidia’s stock price dropped 0.48% on Monday as news broke that China had determined that the company violated regulations. However, the company’s stock has since recovered, climbing 0.6% in midday trading. NVDA stock has been high since the middle of last week after the company released its quarterly earnings.
Investors may have worried initially that China would block the sale of some of the company’s products, but China is simply too valuable of a customer for Nvidia to lose. The United States are China ware in negotiations right now about trade policies, and it is likely that they will come to a decision that allows the company with the highest market capitalization in the world to continue doing business with the most populated country.
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