China finds Nvidia broke antitrust law and extends probe. Shares are dropping.

Nvidia shares were under pressure ahead of Monday’s stock market open after China’s top regulatory authority said the U.S. chipmaker has violated the country’s antitrust rules.

The State Administration for Market Regulation announced that following a preliminary investigation, Nvidia was found to be in breach of those rules, with relation to its acquisition of Mellanox Technology Co., Ltd. with Restrictive Conditions.

“The State Administration for Market Regulation decided to conduct further investigation in accordance with the law,” the SAMR said in a brief statement

Shares of Nvidia were down more than 2% in premarket trade.

The world’s biggest company by market cap, Nvidia shares have gained 32% this year.

China’s anti-monopoly body said last December that it was opening an antitrust investigation into Nvidia, making reference to the chipmaker’s acquisition of Israeli networking technology group Mellanox. Nvidia announced the $6.9 billion deal in 2019, but it didn’t close until April 2020, after approval from authorities in China and elsewhere.

Bloomberg reported that Nvidia has indicated pressure by China regulators to keep supplying chips to local companies, in exchange for approving that deal. Nvidia announced this summer that the U.S. would allow the company to sell its H20 AI chips made specifically for China to comply with export controls to that nation after a U.S. ban in the spring.

Chinese officials have discouraged businesses from using its chips, amid claims they are a security risk, according to reports. While its latest results were deemed by some analysts to be lackluster, others have said investors are putting too much focus on its China business.

The report comes amid trade talks between Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer with China’s China’s Vice Premier He Lifeng and top trade negotiator Li Chenggang in Madrid. Bessent said Monday that a deal to keep ByteDance’s TikTok running in the U.S. is getting close, though that could hinge on China trade concession demands.