- A Chinese regulator is investigating Nvidia for antitrust practices.
- The scrutiny follows US restrictions on exports of AI chips and semiconductor equipment to China.
- The Chinese investigation focuses on Nvidia’s 2020 acquisition of Israel’s Mellanox Technologies.
- With NVDA stock down 3%, further selling is expected to begin.
Nvidia (NVDA) has fallen more than 3% at the start of Monday after news emerged that the Chinese government has begun an antitrust investigation into the leading semiconductor company. NVDA shares have fallen to $138 as of this writing.
He Dow Jones Industrial Average (DJIA) fell 0.2% at the time of writing, not as bad as the 0.5% sell-off on the NASDAQ. The market appears to be somewhat cautious about the November Consumer Price Index (CPI) due out on Wednesday, and Wall Street appears to be cashing in on gains made following the election of President-elect Donald Trump a month ago.
Nvidia Stock News
China’s State Administration for Market Regulation agency has opened an investigation into the circumstances surrounding Nvidia’s acquisition of Israel’s Mellanox Technologies. At the time of the acquisition in 2020, China approved the deal with the requirement that Nvidia not discriminate against Chinese companies.
Now that the Biden administration has added a series of regulations against the sale of certain semiconductor components, chips, and equipment to build those chips, Nvidia could be violating some of those provisions.
The new decision comes after Beijing stopped the export of some minerals used in semiconductors to the US, including gallium, germanium and antimony, last week. In a parallel move, China has begun vetting end users in the US over graphite exports.
This move by China follows the recent US ban on high-capacity memory chips to China used in artificial intelligence (AI) workloads. Micron Technology (MU)US-based , a memory chip supplier, has also faced scrutiny over its business practices in China over the past year. Micron chips were banned for use in “critical infrastructure.”
“This is not just a regulatory problem; it is a calculated geopolitical maneuver,” Nigel Green, CEO of financial advisory firm deVere Group, said in a Bloomberg article. “China is sending a strong message that it will not hesitate to fight back, and Nvidia’s target is a harbinger of more aggressive measures to come.”
Nvidia stock chart
Nvidia stock has momentarily fallen below the 50-day Simple Moving Average (SMA), but that support could hold for the time being. A breakout there would likely send NVDA stock to the 100-day SMA near $127, which is a considerable drop. However, Nvidia already momentarily fell below the 50-day SMA on November 27.
The $115 and $105 levels have also offered general support over the last six months, and the 200-day SMA is just below the $115 level. It is interesting to note that many traders have noted that Nvidia has not benefited as much as other Magnificent 7 stocks following Trump’s victory in the November 5 presidential election. NVDA stock had extended to $149 over a two-week period in November before the sell-off.
Continued tit-for-tat politics between the incoming Trump administration and China will likely put more pressure on Nvidia, as much of the regulatory duel involves AI technology. Nvidia currently occupies more than 70% of the AI chip market.
NVDA Stock Daily Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
