China has launched an investigation into Nvidia over alleged violations of the country’s anti-monopoly laws, marking a significant escalation in the ongoing technology trade war between Beijing and Washington.

The State Administration for Market Regulation (SAMR) announced the probe on Monday, according to a Reuters news report. The probe would also examine Nvidia's compliance with commitments made during its 2020 acquisition of Israeli chip designer Mellanox Technologies. 

The regulator's conditional approval of the $6.9 billion deal required Nvidia to abide by specific terms, including ensuring fair access to GPU accelerators and Mellanox networking equipment in China.

The announcement did not specify how Nvidia might have breached Chinese laws, but analysts view the move as a retaliatory response to the United States’ latest export restrictions on Chinese semiconductor firms. These measures, introduced last week, target 140 companies and impose stricter limits on selling advanced U.S. chip technology to China.

The Nvidia probe comes days after Washington imposed its third major semiconductor export restriction in as many years, citing national security concerns. In response, Beijing tightened export controls on critical minerals like gallium, germanium, and antimony—key materials for chip manufacturing.

Nvidia, a global leader in artificial intelligence (AI) and gaming chips, has been significantly affected by these restrictions. Following U.S. sanctions in 2022, the company developed modified versions of its A100 and H100 AI chips for the Chinese market. However, even these versions were restricted under tighter US controls announced in October 2023.

Nvidia’s reliance on the Chinese market has diminished in recent years. China accounted for 17% of Nvidia's revenue in the fiscal year ending January 2024, down from 26% two years earlier. Despite this, the company remains a dominant player in China's AI chip market, holding over 90% market share before the restrictions took effect.

The SAMR probe will scrutinize Nvidia’s adherence to conditions tied to its Mellanox acquisition, including prohibitions against forced product bundling and discriminatory practices. Nvidia was required to allow Chinese customers to purchase up to one year’s inventory of its GPU accelerators and Mellanox networking products under “fair, reasonable, and non-discriminatory” terms.