Nvidia’s shares plummeted 2.6% after the Chinese government launched a probe into the US microchip company over suspected anti-monopoly law violations. The investigation appears to focus on Nvidia’s $6.9 billion acquisition of network and data transmission company Mellanox in 2019.
As a major player in artificial intelligence, Nvidia has seen its shares surge this year due to increasing demand for AI-related products and services. The Chinese government’s investigation may raise concerns about the future of Nvidia’s business operations in China.
The probe follows reports that the US Justice Department was investigating complaints from rivals alleging that Nvidia abused its market dominance in the chip sector. However, experts say the investigation is not primarily focused on Nvidia’s actions in China but rather serves as a signal to the incoming Trump administration.
“Nvidia will have to revise its strategy in China or come up with provisions for the uncertainty business with China will bring,” said international finance expert David Bieri. “I don’t think this is something that they can shake off.”
Nvidia’s market value recently surpassed $3.5 trillion, making it the world’s most valuable company. The company’s shares have surged due to its strong revenue and profit growth, driven by AI demand.
The investigation may impact Nvidia’s future prospects in China, where 16% of its revenue comes from. However, experts believe that Nvidia’s management strategy will help mitigate the risks associated with the probe.
Source: https://apnews.com/article/nvidia-china-antitrust-monopoly-investigation-chipmaker-bf2dfae0a2f6a83a64b46239f86a4173