AXIOS: Nvidia becoming pawn in U.S.-China tensions
https://www.axios.com/2024/12/09/nvidia-ai-china-trumpNvidia, the key backbone in global AI infrastructure and 2024's most important stock, has a new distinction: giant corporate ping pong ball caught up in U.S.-China tensions.
Why it matters: Geopolitical forces bearing down on the U.S. tech giant could have far-reaching ripple effects for investors and tech ecosystems.
Driving the news: Chinese regulators are scrutinizing the company over whether it's abused a dominant market position, according to multiple reports.
Specifically, Beijing's antimonopoly officials said Monday that they're peering into issues connected to terms in the approval of Nvidia's 2020 acquisition of Mellanox Technologies.
The deal was blessed under certain conditions, which the State Administration for Market Regulation now suspects have been violated.
A probe that finds Nvidia guilty could result in fines in China of up to 10% of its prior year revenue, WSJ notes.
Zoom out: The company has already been facing U.S. pressure to tweak its China sales strategy to comply with growing export restrictions on advanced tech.
Nvidia in a statement to Axios Monday said it's "happy to answer any questions regulators may have about our business."
And when asked last month about its strategy under a new Trump administration, its CEO Jensen Huang told investors that respecting U.S. regulation was the company's "highest mandate."
The impact: Nvidia shares fell 2.6% Monday, pulling the S&P 500 down with it.
Flashback: We've seen this movie before.
Chinese tech giant Huawei was the big ping pong ball being volleyed during Trump's first administration.
Though the concerns were different then (the U.S. saw Huawei as a security risk), they arose from similar fears: the risks from a single company's dominance.
The bottom line: They also reflect the ongoing mutual suspicions between the world's two largest economies.
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