Beijing's Tougher Approach Nvidia Becomes a Pawn in the "Chip War" Between China and the USA

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Nvidia is increasingly caught in the gears of the U.S.-China "chip war." After Beijing had long called on Washington to relent and hesitated with serious retaliatory measures against U.S. companies, China is now signaling a tougher approach.

The Chinese government has launched an investigation against Nvidia for alleged violations of the country's anti-monopoly laws. The measure, announced in mid-September 2025 during a new round of crisis talks between both sides in Madrid, is seen by most analysts in China as a shift toward a policy of genuine retaliatory actions.

U.S. President Donald Trump threatened China with massive tariffs six months ago but later reduced them to 30 percent. Trump also wants to force China to agree to the sale of the TikTok platform in the U.S. to businesspeople acceptable to him.

Back to the Past

On September 15, the "State Administration of Market Regulation" (SAMR) in Beijing reopened a file that many observers had considered long archived. Five years ago, SAMR had approved Nvidia's acquisition of the Israeli company Mellanox Technologies, but with the condition that Nvidia would continue offering its high-performance GPUs on the Chinese market.

SAMR has now announced that Nvidia may have violated this condition and thereby effectively breached China's anti-monopoly laws. China's top market regulatory authority stated that a formal investigation into the case has begun. Mellanox produces equipment for high-speed networks, which are used, among other things, in data centers. The Chinese government and state media are making efforts to portray the newly announced investigation as "routine" and a "consequence of the country's laws."

The acquisition of Mellanox had already taken place in 2019. In the meantime, Nvidia had been prevented by the U.S. government from delivering several of its most powerful AI chips to China. Now, SAMR is accusing Nvidia of exactly that. The company has "repeatedly halted the delivery of several GPU accelerators to the Chinese market, citing the increasing export controls of the U.S. government, thereby violating the legitimate rights of Chinese companies," according to the statement released by SAMR.

The Patience Runs Out

Observers, however, believe that this is not really about Mellanox and market distortions, but rather about the concrete threat of retaliatory measures in the "chip war" that the U.S. has been waging against China for several years. The consensus among most analysts in China is that the country has abandoned hope for an agreement with the Trump administration and is now, for the first time, truly preparing 'revenge' against chip boycotts and restrictions on the sale of lithography equipment. Washington has been taking such measures against the People’s Republic for several years and has gradually tightened them further.

Washington recently backed down in the tariff dispute after Beijing threatened to restrict the export of rare earths, whose global supply chains are largely controlled by China. However, Beijing had so far refrained from direct retaliatory measures against high-tech companies in the U.S.—comparable to the U.S. attacks on the Chinese high-tech corporation Huawei.

Is Nvidia Being Treated Like Huawei? Not Yet

Even now, Nvidia is being threatened with costly consequences, but not yet with a ban on its business in the People’s Republic. This is partly because Nvidia's GPUs are also urgently needed in China, as the utilization of data centers continues to increase due to the AI boom.

"This should not be understood as a sign that China is trying to kick Nvidia out of the country," the news agency Reuters quoted Zhengyuan Bo, an analyst at the research firm Plenum. It is another warning shot directed at the USA, but the sharpest one yet, informed observers in the Chinese capital say.

An agreement between both sides remains a possibility, but should China eventually accuse Nvidia of violating anti-monopoly laws, this could mean the US company faces difficulties selling its network solutions to Chinese customers with data centers. This business is worth several billion US dollars. (sb)

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