Nvidia China Probe Deepens Bilateral Uncertainty

The State Administration for Market Regulation (SAMR) in China has initiated an investigation into Nvidia, a major U.S. chip maker, for allegedly violating China’s Anti-Trust and Anti-Monopoly Law. The notice regarding this investigation was posted on SAMR’s official WeChat channel on December 9.

China represents a significant portion of Nvidia’s revenue, accounting for approximately 12% of its global earnings. In its most recent quarterly report, Nvidia’s revenue from China reached $13.5 billion, making it one of the company’s largest markets outside the U.S. The investigation has already impacted Nvidia’s stock, which dropped by as much as 4% on the news.

This probe comes amid rising U.S.-China tensions, with China being a key target of the Biden administration’s Chips Act, which restricts the export of high-end semiconductor technologies and devices to China. Furthermore, with Donald Trump’s incoming second term, there are concerns that this investigation could deepen the already intense rivalry between the two global powers, especially as Trump has threatened to impose higher tariffs on Chinese goods starting on his first day in office.

Additionally, while China’s regulatory scrutiny of Nvidia creates uncertainty, WuXi Apptec and WuXi Biologics, two major Chinese biotech service providers, have seen their stock prices rise by over 12% on the Hong Kong Stock Exchange. This surge comes in response to recent developments surrounding the Biosecure Act, which, though not included in the 2024 U.S. Defense Bill, has had a positive effect on Chinese biotech services companies.