China Says Nvidia Broke Rules In $7 Billion Mellanox Deal

China has decided Nvidia (NVDA) broke antitrust rules tied to its $7 billion purchase of Mellanox Technologies back in 2020, putting fresh strain on U.S.China relations just as trade talks are heating up.

The country's market regulator said a preliminary review found Nvidia failed to live up to certain conditions agreed to when China cleared the deal. Officials didn't spell out what exactly was violated, but the ruling highlights how closely Beijing is watching U.S. tech firms. Nvidia stock slipped about 2% in premarket trading on the news.

Nvidia bought Mellanox, an Israeli company that makes networking gear for data centers and servers, to strengthen its AI and cloud ambitions. Chinese regulators reopened their look at the deal late last year, signaling ongoing concerns about how much control Nvidia wields in the market.

The move lands at a delicate time, raising questions about whether this is strictly about competitionor another shot in the broader U.S.China tech fight.