China's market regulator reportedly said that a preliminary investigation found that Nvidia has violated the country's antitrust law.

According to a report by Reuters on Monday, China's State Administration for Market Regulation (SAMR) announced that a preliminary investigation had concluded that the giant chipmaker had violated Chinese antitrust law, specifically in relation to its 2020 acquisition of Israeli chipmaker Mellanox Technologies.

The regulator did not specify how Nvidia had violated the country's laws.

Last December, SAMR launched an investigation into Nvidia for suspected violations of the country's antitrust law, a move that many perceived as a reaction to Washington's restrictions on the Chinese chip industry.

Under Chinese antitrust law, companies can face fines ranging from 1 per cent to 10 per cent of their annual turnover.

According to its latest annual report, Nvidia earned $17 billion in China in the last fiscal year, which ended on 26 January, accounting for 13 per cent of its total revenue, as reported by Reuters.

On Monday, SAMR added that it would be continuing its investigation.

Following the announcement, Nvidia's shares fell by around 2 per cent in pre-market trading.

The news comes amid broader trade negotiations between the US and China in Madrid, where semiconductors were discussed at length, particularly AI chips such as those produced by Nvidia.

China has also called in national tech giants such as Tencent and ByteDance to discuss their use of Nvidia's H20 chip, raising concerns about data security, Reuters reported.

In June, Nvidia and AI search company Perplexity announced a collaboration with more than a dozen European and Middle Eastern organisations to develop sovereign large language models tailored to local languages and cultures.

The chip giant is working with model builders including Barcelona Supercomputing Center, Bielik.AI, H Company, LightOn, and the Technology Innovation Institute, among others, to optimise their AI models using NVIDIA Nemotron techniques.

The partnership aims to reduce operational costs whilst improving accuracy for enterprise AI applications.

"Europe's diversity is its superpower — an engine of creativity and innovation," said Jensen Huang, founder and chief executive officer of NVIDIA.

"Together with Europe's model builders and cloud providers, we're building an AI ecosystem where intelligence is developed and served locally to provide a foundation for Europe to thrive in the age of AI — transforming every industry across the region."

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