Chinese regulators said on Monday (September 15) that a preliminary investigation found US chipmaking giant Nvidia to have violated the country’s anti-monopoly laws.Officials said that further investigation will be carried out, while Nvidia said it had complied with all laws and would cooperate with authorities.The probe comes as Nvidia has become a key player in the United States-China race for global dominance in artificial intelligence (AI) technology and research. Just months ago, the US government blocked certain chips or semiconductor exports from Nvidia to China, resulting in criticism from China. Many Chinese AI developers also relied on the company’s chips for a long period.What may be behind the changed attitudes in China towards Nvidia?China’s allegations against NvidiaThe Chinese statement said the investigation centred on Nvidia’s purchase of an Israeli-American network and data transmission company, named Mellanox Technologies.According to the Associated Press, Chinese regulators said last year that they were investigating the company for “suspected violations stemming from the $6.9 billion acquisition of Mellanox in 2019.”Explained | India gets its first indigenous microprocessor: What are semiconductor chips and why are they significant?Chinese state media agency Xinhua said its markets regulator had approved the acquisition after an antitrust review. “The deal was subject to multiple restrictive conditions due to concerns that the merger could exclude or restrict competition in global and Chinese markets for GPU accelerators, dedicated network interconnect equipment, and high-speed Ethernet adapters,” it said.Story continues below this adGPUs, or Graphics Processing Units, are capable of advanced computing and calculations, compared to standard Central Processing Units (CPUs). They have been central to the growth and development of AI models that need to train on vast amounts of data.While Nvidia dominates the GPU market, it previously said the acquisition of Mellanox will “unite two of the world’s leading companies in high performance computing (HPC).” It added that they together had customers in every major cloud service provider and computer maker.Why Nvidia mattersChina’s scrutiny of Nvidia is not being seen as an isolated case, but the latest in a series of actions amid its AI race with the US.Nvidia centrality comes from the fact that it is today among the most valued companies on the US stock market. It has grown rapidly in recent years, from a valuation of $1 trillion in 2023 to becoming the first company to hit $4 trillion in market value earlier this year. The demand for GPUs, driven by the rise of AI, has aided its rise.Story continues below this adExplained | ‘The world’s most valuable chipmaker’: How Nvidia saw a 250% surge in revenues amid AI stock rallyHowever, despite its success, CEO Jensen Huang has criticised the US government for restricting the sales of its high-powered processing chips in China. Towards the end of the Joe Biden administration (2021-25), as AI companies were taking off globally, export controls were introduced against certain countries to maintain American strategic advantage.As a workaround, Nvidia developed much lower quality chips, called the H20, for selling to China. They were reportedly key to the creation of the Chinese AI model DeepSeek released earlier this year, which caught many in the US by surprise. Until then, it was believed that China was hobbled by tech restrictions and lagging behind the US.Under President Donald Trump, H20 sales were halted in April this year. Huang then argued that it would cede ground to Chinese tech companies to develop their own variants. It also hurt Nvidia’s sizable business in the country. According to its latest annual report, the country generated $17 billion in revenue for Nvidia in the fiscal year ending January 26, or 13% of its total sales.In what was an unusual move, it was announced in July that H20 sales would resume, contingent on Nvidia giving the US government 15% of the revenue it earned from their sales.China’s indigenisation pushStory continues below this adFor its part, Beijing has criticised the US for “abusing export controls to suppress and contain China”. Even as Huang has visited China in recent months with assurances of sales, they have increasingly raised questions of trust when it comes to Nvidia.In July, China’s cyberspace regulator summoned Nvidia for talks regarding “security risks linked to vulnerabilities and potential backdoors in its H20 AI chips sold in China,” according to the Chinese Communist Party’s mouthpiece, Global Times.The Financial Times reported in August that Chinese officials were also “insulted” by the comments of US Commerce Secretary Howard Lutnick. He had said in July, “We don’t sell them (China) our best stuff, not our second-best stuff, not even our third-best,” in reference to the H20 chips. He added, “You want to sell the Chinese enough that their developers get addicted to the American technology stack, that’s the thinking.”Scrutiny is also being extended to other American tech companies. On September 13, China’s Ministry of Commerce said it was carrying out an anti-dumping investigation into certain chips imported from the US, including companies like Texas Instruments.Story continues below this adAnother GT article quoted a Chinese telecom industry expert as saying, “Following the US ban on H20 chip exports in April, Chinese companies have ramped up efforts to strengthen self-reliance in semiconductor supply, with many firms accelerating their shift to domestic suppliers such as Cambricon and Huawei… Chinese tech companies are gradually adapting to this shift, particularly in the field of AI computing power.”