This article first appeared on GuruFocus.
China just pulled Nvidia (NASDAQ:NVDA) deeper into the trade crossfire. Regulators in Beijing said the company’s 2020 Mellanox acquisition ran afoul of anti-monopoly rules, a move landing squarely as US and Chinese officials press through their second day of tariff talks in Madrid. Nvidia’s stock slipped about 2% in pre-market trading, with Texas Instruments also down by a similar margin, as US index futures gave back early gains. The watchdog hasn’t yet spelled out what penalties could follow, only that the investigation will continue.
The timing isn’t accidental. Beijing had originally cleared Nvidia’s $7 billion Mellanox deal four years ago, but only on the condition that Chinese firms wouldn’t be shut out. Since then, Washington has blocked shipments of Nvidia’s top-tier AI processors on national security grounds, forcing the company to redesign chips multiple times. Even after the Trump administration recently permitted Nvidia and AMD (NASDAQ:AMD) to sell some AI products back into China, local regulators have been urging agencies to avoid Nvidia’s H20 accelerator on security concerns. That whiplash leaves investors wondering if this case could become yet another bargaining chip in the broader trade fight.
And the backdrop is only getting more complicated. China has launched a fresh anti-dumping probe into US semiconductors, while Washington is weighing the future of TikTok in America. President Trump has said its survival may hinge on Beijing’s response, even as the two sides look toward a potential Trump-Xi meeting in South Korea this October. For Nvidia, already the center of gravity in global AI hardware, the uncertainty around remedies in Beijing could shape both its sales trajectory and the tenor of US-China negotiations in the months ahead.