Nvidia slides after China says it’s probing the AI chip business for violating anti-monopoly laws

Shares of Nvidia slid early Monday after China said it is investigating the high-flying U.S. microchip business over suspected violations of Chinese anti-monopoly laws.

In a brief press release with few details, Chinese regulators appear to be focusing on Nvidia’s $6.9 billion purchase of network and data transmission business Mellanox in 2019.

Nvidia shares dipped 2.5% in morning buying and selling Monday, falling below $140 each.

Considered a bellwether for artificial intelligence demand, Nvidia has led the AI sector to become one of the ownership trade’s biggest companies, as tech giants spend heavily on the business’s chips and data centers needed to train and operate their AI systems.

Nvidia’s shares have nearly tripled this year with the California business turnover and profits soaring on AI demand. According to data firm FactSet, about 16% of Nvidia’s turnover comes from China, second only to its U.S.-generated turnover.

In its most recent profits release, Nvidia posted turnover of $35.08 billion, up 94% from $18.12 billion a year ago. Nvidia earned $19.31 billion in the quarter, more than double the $9.24 billion it posted in last year’s third quarter. The profits release did not shatter out turnover from China.

The business’s trade worth rocketed to $3.5 trillion recently, passing Microsoft and briefly overtaking Apple as the globe’s most valuable business.

Nvidia’s creation of graphics processor chips, or GPUs, in 1999 helped spark the growth of the PC gaming trade and redefined computer graphics.

Last month, the Santa Clara, California-based tech giant replaced Intel on the Dow Jones Industrial Average, ending the pioneering semiconductor business’s 25-year run on the index.

Unlike Intel, Nvidia designs but doesn’t manufacture its own chips, relying heavily on Taiwan Semiconductor Manufacturing Co., an Intel rival.

China’s antitrust investigation follows a update this summer by technology information site The Information that the U.S. fairness Department was investigating complaints from rivals that Nvidia was abusing its trade dominance in the chip sector.

The allegations reported include Nvidia threatening to punish those who buy products from both itself and its competitors at the same period.