The Chinese government has singled out the American AI chipmaker Nvidia as an example to signal its concerns over the tariff policies anticipated under a potential second Trump administration. This move comes amid the Biden administration’s announcement of expanded semiconductor export controls targeting China and the escalating implementation of high-tariff measures proposed for a Trump second term.
According to reports from The Wall Street Journal (WSJ) and other sources on Monday, China’s State Administration for Market Regulation is investigating Nvidia’s acquisition of the Israeli semiconductor company Mellanox, citing potential issues. Nvidia acquired Mellanox for 6.9 billion dollars in 2020. Mellanox specializes in data center and server network solutions.
China’s State Administration for Market Regulation (SAMR) approved Nvidia’s acquisition at the time on the condition that the company agreed to continue supplying graphics processing units (GPUs) and networking equipment to China without interruption. Nvidia also assured Chinese regulators that it would not discriminate against customers in China. Chinese authorities also required Nvidia to share information with competitors within ninety days of launching new products.
The SAMR has recently begun examining whether Nvidia violated antitrust conditions. The regulatory authority did not disclose which specific terms Nvidia allegedly breached or explain why it is raising the issue so long after the conditional approval was granted.
The prevailing analysis is the decision to revisit Nvidia’s acquisition from four years ago is less about alleged violations of acquisition conditions and more about sending a warning regarding the potential tariff policies of a second Trump administration. As the Trump administration’s plans to implement high tariffs on China become more evident, it is believed that Nvidia has been caught in the crossfire as a retaliatory measure.
After analyzing the situation, Angela Zhang, a professor at the University of Southern California, stated that China’s use of its regulatory authority over Nvidia demonstrated its capability to counteract the aggressive policies of a potential second Trump administration. She added that this move was also aimed at influencing U.S. policy decisions.
Zhang believes it is unlikely that China’s regulatory actions will escalate further. She explained that the Chinese government is aware that more aggressive steps could trigger a backlash in trade relations, leading her to note that regulatory measures against American companies will likely remain limited.
Ian Bremmer, President of the political risk consulting firm Eurasia Group, commented that the Chinese government’s actions could serve as a bargaining chip in negotiations with a potential second Trump administration. However, he added that this scenario seems unlikely at present.
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