Nvidia's stock dropped by around 2% after China's State Administration for Market Regulation announced an investigation into potential violations of the country's antimonopoly law.
The probe is focused on Nvidia's acquisition of Mellanox and involves suspected breaches of legal provisions.
This development comes at a time of increasing competition between the U.S. and China in the semiconductor industry.
The Biden administration recently imposed additional restrictions on chip sales to China in order to prevent the transfer of advanced AI technology that could enhance the country's military capabilities.
Nvidia has not yet provided a comment on the investigation.