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Investing.com -- China’s market regulator said Monday it will extend its antitrust probe into U.S. chipmaker Nvidia (NASDAQ:NVDA) after finding preliminary evidence the company breached the country’s competition law.
The investigation focuses on Nvidia’s 2020 purchase of Israeli chip designer Mellanox Technologies, which Beijing approved under certain conditions. Officials claim the California-based firm failed to meet those requirements.
Nvidia shares slid more than 2% in premarket trading on Monday following the news, but have since recovered, last down 0.5%.
The move comes as U.S. and Chinese negotiators meet in Madrid to address trade frictions.
The first round of talks was held on Sunday, spearheaded by U.S. Trade Representative Jamieson Greer and Treasury envoy Bessent with Chinese Vice Premier He Lifeng and senior negotiator Li Chenggang.
The negotiations lasted about six hours at Spain’s foreign ministry and are set to continue today.
It is the fourth such meeting in as many months, following earlier sessions in European capitals aimed at easing tensions over tariffs and access to critical materials.
In July, both sides agreed in Stockholm to extend for 90 days a truce that had reduced steep retaliatory duties and reopened the flow of rare-earth supplies from China to the U.S.
President Donald Trump has authorized the continuation of existing tariffs on Chinese imports, which currently average 55%, through November 10.
The extension keeps pressure on trade even as discussions continue over issues ranging from TikTok’s future in the U.S. to Beijing’s oil purchases from Russia.
Last month, Nvidia asked several suppliers to halt work on its H20 chips designed for the Chinese market, according to a report by The Information.
The move came following Beijing’s directive to domestic firms to stop buying the processors over security concerns, the report said.
Nvidia has reportedly asked suppliers Amkor Technology in Arizona, which handles advanced packaging, and Samsung Electronics, which provides memory for the H20, to cease production.
The AI chipmaker also asked Foxconn, also known as Hon Hai, to suspend related work, a separate report by Reuters said.
Commenting on the news, Mizuho TMT Sector Specialist Jordan Klein said it is not great on the surface given that upside to NVIDIA consensus revenue and EPS is driven partially by China sales and demand. However, he still sees the news as noise.
"To me it is total noise and pure posturing by China govt to gain leverage over US in current trade negotiations," Klein commented. He sees NVIDIA stock as one of the best risk/reward longs over the next year. "At mid 20s P/E on NVDA for FY27 for probably 50% EPS growth, the risk reward looks very compelling sub $180. Super compelling to me below $170," he added.