China Poised to Investigate More U.S. Tech Deals After Nvidia Probe
The Takeaway
•China is moving slowly on Synopsys-Ansys antitrust review
•It is reopening Nvidia-Mellanox review in response to U.S. export restrictions
•Numerous other deals could be subject to Chinese review
As the U.S. restricts China’s access to American technology, Beijing is striking back—with antitrust reviews of both ongoing and long-completed acquisitions.
The Chinese antitrust regulator’s decision a week ago to investigate Nvidia for alleged violations of antitrust rules in relation to its 2020 purchase of Mellanox Technologies is likely to be the first of a series of such reviews by the Chinese government, according to three people familiar with Chinese regulators’ thinking.
The Nvidia-Mellanox investigation was triggered by the U.S. Commerce Department’s decision to tighten restrictions on the export of American chipmaking technology to China, two of the people said. China’s State Council, the equivalent of a cabinet, and its Ministry of Foreign Affairs signed off on using antitrust inquiries as a way of striking back against Washington’s increasing curbs on Beijing’s technological rise, one of the people said.
Already, the State Administration for Market Regulation, which oversees anti-monopoly regulation and other issues, is dragging out the review of chip design software maker Synopsys’ $35 billion planned acquisition of Pennsylvania engineering software developer Ansys. SAMR is also reexamining two past mergers that involve Coherent, formerly known as II-VI, a manufacturer of transceivers that enable fast data flow in chips and artificial intelligence devices, two of the people said.
Whether more investigations are officially announced depends on how tensions evolve with the incoming Trump administration, the person added. President-elect Trump has threatened to impose huge tariffs against China when he takes office.
China’s State Council, SAMR, and the Ministry of Foreign Affairs did not reply to requests for comment. Coherent didn’t immediately comment.
Synopsys said in a statement: “The regulatory approval process is proceeding as expected in relevant jurisdictions, including China.”
Since the second half of 2019, China has conditionally approved eight mergers where American tech companies were the acquirers (and often also the ones acquired), involving a total deal value of more than $150 billion. The biggest was Broadcom’s $86 billion stock-and-cash takeover of VMware in 2023.
Two other deals came from II-VI, a Pennsylvania based maker of advanced engineering materials used in defense, aerospace, and other industries: It acquired optical communications maker Finisar for $2.9 billion in 2019 and purchased Coherent, which sells laser-based tech, for $7.1 billion in 2022. II-VI renamed itself Coherent after the latter deal. Both acquisitions received conditional approval in China, which was the last market to greenlight the transactions. Lately, however, SAMR has been reviewing both deals for potential breaches of the approval conditions, the two people said.
These deals combine two U.S. companies. But regulators in other countries including China have antitrust oversight if the companies have significant businesses in their territories, because the mergers could potentially have an anticompetitive impact on their local markets.
Under China’s anti-monopoly law, SAMR has the power to reopen any past cases with conditional approvals on the grounds that they may have breached those conditions. If found in breach, companies could be fined up to 10% of their annual global revenue or be forced to unwind the merger in China.
“This highlights how China’s regulatory power can extend beyond its borders,” said Angela Zhang, a professor of law at the University of Southern California and an expert on China antitrust issues. “Ultimately, China is using its market access as a tool to exert influence over these transactions.”
Nvidia Probe
Nvidia bought Mellanox, an Israeli company that developed computer networking technology, for $7.1 billion in April 2020. China was the final country to approve the deal.
Mellanox’s InfiniBand technology is used in Nvidia’s Hopper and Blackwell series to allow faster data transfer and quick communication among thousands of chips. It has become one of the ways Nvidia has maintained its lead in the AI chip sector.
SAMR’s approval came with various conditions, including a requirement that Nvidia not bundle any Mellanox equipment with the sale of Nvidia GPUs in China, not discriminate against Chinese customers, and ensure that both companies’ products remain interoperable with those of others. Those conditions are effective for six years.
Since 2022, Chinese companies have complained to SAMR that Nvidia has discriminated against them, in particular relating to access of H20 chips, the only graphics processing units for AI training that Nvidia is allowed to sell to China under U.S. export controls, according to one of the people familiar with Chinese regulators’ thinking.
Chinese regulators also considered as discriminatory the fact that U.S. regulations have prohibited Nvidia from selling its most advanced GPUs to China, the person added. In February, Nvidia disclosed in a U.S. securities filing that “regulators in China have inquired about sales and efforts to supply the China market and our fulfillment of the commitments we entered at the close of our Mellanox acquisition.”
But SAMR didn’t announce the probe until Dec. 9, one week after the Commerce Department released annual updates to its export control regulations, because it wanted to appraise the impact of the latest U.S. rules before taking action, the person added.
As part of the investigation, the antitrust regulator can visit Nvidia’s offices in China, interview its employees, suppliers, and customers, and review and make copies of Nvidia’s books and other internal documents, according to China’s anti-monopoly law.
In a statement, Nvidia said: “We work hard to provide the best products we can in every region and honor our commitments everywhere we do business. We are happy to answer any questions regulators may have about our business.” The company declined to comment on the alleged discrimination against Chinese customers or whether Chinese regulators had inspected its offices.
Dragged-Out Approval
The Commerce Department’s latest export restrictions also prompted Beijing to use the Synopsys-Ansys deal as another card to play.
Sunnyvale, Calif.–based Synopsys is a global leader in developing electronic design automation software that is essential for designing integrated circuits, without which both designers and manufacturers would struggle to create and understand complex chip architectures. Often referred to as the backbone of chip design, EDA software has also been subject to rounds of U.S. export restrictions against China since 2022.
Ansys, meanwhile, makes software used to simulate the physical aspects, like mechanical, electrical and heating, in the design of semiconductors, automobiles, and airplanes.
In May, Synopsys flagged in a securities filing that SAMR had asked it to submit the deal for approval, even though the transaction was below the review threshold set out in China’s anti-monopoly law. In addition to the specific thresholds, the regulator also has the discretion to review any mergers it deems as potentially anticompetitive.
On Dec. 6, Synopsys submitted an application to SAMR. On Dec. 9, the same day the agency announced its Nvidia probe, SAMR told Synopsys it would hold off reviewing the case on the grounds that the application materials were insufficient, according to two people familiar with the regulator’s thinking.
According to Chinese regulation, the agency must make an initial decision on whether to approve or further examine the transaction within 30 days of accepting the application, and it can pause the clock anytime pending more materials. If the agency proceeds with an in-depth review, it could take up to another 90 days with an extension of up to 60 days to reach a final decision.
The back and forth in Synopsys’ application indicates that China could drag out the review process of the $35 billion deal involving two American software makers, just as it delayed Broadcom’s takeover of WMware and Nvidia’s purchase of Mellanox. In both cases, the companies had to extend deal completion timelines while they waited for China’s approval, which was the last to arrive of all the necessary regulatory sign-offs.
Synopsys said it remains confident in a positive resolution of the ongoing regulatory review processes and expects the transaction to close in the first half of 2025.