China Says Nvidia Broke Monopoly Laws. What It Means for the Chip Maker.

China’s market regulator said on Monday that a preliminary investigation had determined Nvidia violated antimonopoly rules. (Marlena Sloss/Bloomberg)

China’s market regulator said a preliminary investigation found U.S. chip maker Nvidia had violated antimonopoly laws.

Nvidia shares rose 0.2% after falling earlier in Monday’s session. The S&P 500 was 0.4% higher.

China’s State Administration for Market Regulation said an initial inquiry found Nvidia had violated Beijing’s antimonopoly laws, according to a statement translated by Barron’s using online tools. The regulator plans to conduct a further investigation.

A spokesperson for Nvidia told Barron’s: “We comply with the law in all respects. We will continue to cooperate with all relevant government agencies as they evaluate the impact of export controls on competition in the commercial markets.”

The inquiry is a blow for Nvidia because it looks very unlikely that China would allow the chip maker to sell new hardware in the country while saying it had breached antimonopoly laws.

Nvidia has asked some partners to stop work related to production of its H20 processor for the Chinese market after China’s government told domestic companies not to buy the hardware, The Wall Street Journal has reported, citing people familiar with the matter.

In the past four quarters, Nvidia’s China revenue reached $13.5 billion, accounting for 12% of the company’s global total, down from 21% a year earlier. Nvidia is currently forecasting no Chinese revenue for its current quarter, which implies a loss of between $2 billion and $5 billion in potential sales, according to the company’s executives.

Despite Beijing’s apparent opposition, Nvidia CEO Jensen Huang has said there is a “real possibility” the company might be able to sell its more advanced Blackwell chips in China in future.

Beijing announced the inquiry as officials from both the U.S. and China gather in Madrid for another round of trade talks. Nvidia investors will have to hope there’s a significant breakthrough when it comes to AI chips.

Write to George Glover at george.glover@dowjones.com and Adam Clark at adam.clark@barrons.com