Nvidia Shares Fall On Report China-Focused AI Chip Hit With Launch Delays 

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by Tyler Durden
Friday, Nov 24, 2023 - 12:35 PM

Nvidia's shares slumped in premarket trading in New York after a Reuters report revealed that the company had paused launching a new artificial intelligence chip designed to comply with US export rules until the first quarter of 2024. 

Two sources familiar with the situation said Nvidia's H20 chip, the most powerful of three China-focused chips that comply with the latest US export restrictions, has had its launch delayed "due to issues server manufacturers were having in integrating the chip." 

The goal of the H20 is to help Nvidia preserve market share after the Biden administration banned its more advanced A800 and H800 AI chips for export to China. Sources said the launch date of Nov. 16 is now expected sometime between February and March. 

Nvidia has two other chips, L20 and L2, that comply with Washington's export rules and will soon be launched. Sources said those two chips are not experiencing any launch delays. The goal of the three chips is to preserve market share in the world's second-largest economy. 

Reuters noted export restrictions by Washington have "created an opportunity for rivals such as Huawei to win orders that may have otherwise gone to Nvidia, whose graphics processing units (GPUs) dominate the AI market." 

Reuters reported last month, citing sources, that Huawei is already winning orders as the US export curbs forced Chinese internet giant Baidu to place a "sizeable order" for Huawei AI chips. 

Shares of Nvidia are down nearly 2% in premarket trading in New York. 

The delays, plus US export restrictions, suggest Nvidia's efforts to preserve market share in China will be challenging.