China has accused Nvidia of violating its competition laws, raising the stakes in Beijing's tussle with the US for technological supremacy.
The State Administration for Market Regulation (SAMR), China's competition watchdog, on Monday said the US tech giant's takeover of Israeli-American company Mellanox had flouted antitrust laws.
China originally approved Nvidia's $7bn (£5.1bn) takeover five years ago but it reopened an investigation in December 2024 amid ongoing trade tensions between Washington and Beijing.
The launch of the investigation was seen at the time as a salvo in the tense tit-for-tat of controls and crackdowns on the US-China trade in chips and other AI-related tech. Much of this has caught Nvidia in the crossfire.
The investigation effectively gave China the option of taking aim at America's largest company Nvidia when it chose to, handing it greater ammunition in the trade battle.
The surprise decision to censure Nvidia on Monday is widely seen as China exerting greater leverage over America as trade talks continue between Scott Bessent, the US treasury secretary, and He Lifeng, the Chinese vice premier, in Madrid.
It originally approved the deal in 2020 on the condition that Nvidia keep supplying Mellanox products to China under "fair, reasonable and non-discriminatory principles".
Both the US and China are trying to prevent the other side from gaining a cutting-edge advantage in the future-shaping technologies and to seize the upper hand for themselves.
The two sides last met in July when they agreed not to ratchet up tariffs on each other for another 90 days. They have until Nov 10 to secure a wider trade ceasefire.
Expectations are growing that Donald Trump, the US president, and Xi Jinping, the Chinese president, might meet face-to-face in October on the sidelines of an Asia-Pacific Economic Cooperation summit in South Korea.
But negotiators are working to a more specific and urgent deadline of this Wednesday, when Mr Trump's ban on Chinese-owned social media platform TikTok is due to come into effect.
The two sides' wider fight over technology gained fresh momentum over the weekend as both sides tried to gain an edge in this week's talks.
On Friday, the US added another 23 Chinese businesses to the American commerce department's restricted trade list, including two companies accused of buying American chip-making equipment for Chinese giant SMIC.
A day later, Beijing launched an anti-discrimination investigation into US trade policy on chips and a separate inquiry into alleged dumping of American analogue chips into the Chinese market.