China Launches Multi-Pronged Counteroffensive Against US Chip Restrictions
China has launched an unprecedented three-pronged regulatory counteroffensive against US semiconductor firms, marking a significant escalation in the ongoing chip trade war. The coordinated response includes antidumping investigations on US analog chips, anti-discrimination probes into US semiconductor policies, and antitrust violations findings against Nvidia.
The Chinese government initiated two major trade investigations on September 13, targeting US analog chip imports and broader discriminatory measures in the semiconductor sector. Two days later, China's market regulator determined that Nvidia violated antitrust laws related to a 2020 acquisition approval, triggering further investigations into the AI chip giant.
The regulatory blitz follows the US Commerce Department's September 12 decision to add 32 entities to its export control blacklist, including 23 Chinese companies with semiconductor operations. The timing also coincides with upcoming US-China trade talks in Spain, potentially serving as negotiating leverage.
The moves sent immediate shockwaves through global chip markets, with Nvidia shares falling as much as 1.5% at opening and several major US semiconductor companies posting declines, while Chinese analog chip makers surged.
Nvidia Faces Antitrust Scrutiny Over 2020 Merger Conditions
China's State Administration for Market Regulation announced September 15 that Nvidia violated antitrust laws and conditions set during its 2020 acquisition of Israeli networking company Mellanox Technologies. The regulator will conduct further investigations into the violations.
The probe stems from Nvidia's $6.9 billion acquisition of Mellanox in 2019, which required Chinese regulatory approval due to the companies' dominant market positions. At the time of the merger, Nvidia held 90-95% of the global GPU accelerator market and 95-100% of China's market, while Mellanox controlled 55-60% of the global specialized network interconnect equipment market and 80-85% in China.
Chinese regulators approved the deal in April 2020 with seven restrictive conditions, including requirements that Nvidia supply GPU accelerators to the Chinese market under "fair, reasonable and non-discriminatory principles" and prohibitions against bundling products or discriminating against customers purchasing components separately.
The violation appears linked to Nvidia's restricted chip sales to China. The company currently offers the H20 chip to Chinese customers, a performance-limited version with roughly one-sixth the computing power and one-fifth the bandwidth of its H200 model. Chinese authorities previously questioned Nvidia in July about potential security vulnerabilities in the H20 chip.
US Analog Chip Makers Targeted in Antidumping Probe
China's Ministry of Commerce launched an antidumping investigation into US analog semiconductors, targeting products from Texas Instruments, Analog Devices, Broadcom, and ON Semiconductor. The probe covers commodity interface chips and gate driver chips manufactured using 40-nanometer or larger processes.
According to the complaint filed by Jiangsu Province Semiconductor Industry Association, US companies increased exports of the targeted products to China by 37% while cutting prices by 52%, causing "substantial damage" to domestic Chinese manufacturers. The association reported that Chinese analog chip makers have operated at losses since 2023 due to suppressed pricing from US imports.
The investigation period covers January 1 to December 31, 2024, with industry damage assessment extending back to January 2022. If dumping is confirmed, China typically imposes anti-dumping tariffs on the products involved.
The four US companies generate combined revenues exceeding $10 billion annually in China, creating significant pressure points for potential US government response. Chinese analog chip manufacturers saw immediate stock gains, with several companies including Maxscend Microelectronics and Novosense Microelectronics hitting daily trading limits.
Anti-Discrimination Investigation Targets Broader US Policies
Simultaneously with the analog chip probe, China's commerce ministry launched an anti-discrimination investigation into US semiconductor export restrictions and manufacturing equipment controls. The investigation addresses what Chinese officials characterize as discriminatory trade practices spanning both high-end chip export limitations and low-end chip dumping.
If the anti-discrimination probe concludes that US policies constitute unfair trade practices, China could impose additional tariffs or import restrictions on American semiconductor products. Such measures would represent a significant escalation beyond industry-specific investigations.
The coordinated regulatory response demonstrates China's shift from largely passive acceptance of US chip restrictions to active retaliation using its own trade enforcement mechanisms. However, the ultimate resolution of these investigations may depend on the outcome of upcoming bilateral trade negotiations, reflecting the interconnected nature of trade disputes and diplomatic engagement in US-China relations.