Nvidia Stocks were under pressure on Monday after a regulator in China said it was investigating the chipmaker for possible violations of the country’s antimonopoly law.

Shares fell more than 2%.

The state market regulator has opened an investigation against the chipmaker in connection with the takeover of Mellanox and some agreements made as part of the takeover, the Chinese government said on Monday. Nvidia acquired the Israeli technology company in 2020, which develops networking solutions for data centers and servers.

“Due to Nvidia’s alleged violation of China’s anti-monopoly law and the state market regulator’s restrictive conditions related to Nvidia’s acquisition of Mellanox shares… in recent days, the state market regulator is launching an investigation against Nvidia in accordance with the law,” according to one Statement translated by CNBC.

The news comes as competition between the US and China for chip manufacturing capacity heats up after the Biden administration announced a final set of restrictions on semiconductor tool makers on December 2. The news could also be a response to rising trade tensions as President-elect Donald Trump prepares to take office in January promising to impose steep tariffs on foreign goods.

The U.S. has tightened restrictions on chip sales to China in recent years, blocking Nvidia and other major semiconductor makers from selling their most advanced artificial intelligence chips to prevent China from bolstering its military. The company has been working to develop new products for sale in China that comply with U.S. regulations.

Shares of the AI ​​chip darling have outperformed this year, rising nearly 188% as investors increased their bets on the sector more than two years after ChatGPT’s debut. Stocks have also helped push the market to new highs, as has the broader technology sector.

Nvidia did not immediately respond to CNBC’s request for comment.

—CNBC’s Evelyn Cheng contributed reporting.