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Nvidia delays launch of new China-focused AI chip -sources

The logo of NVIDIA as seen at its corporate headquarters in Santa Clara, California, in May of 2022. Courtesy NVIDIA/Handout via REUTERS
The logo of NVIDIA as seen at its corporate headquarters in Santa Clara, California, in May of 2022. Courtesy NVIDIA/Handout via REUTERS

According to two people familiar with the situation, Nvidia (NVDA.O.) has informed clients in China that it will delay the debut of a new artificial intelligence chip it created to comply with U.S. export laws until the first quarter of next year.

According to the sources, the chip that was delayed is the H20, the most powerful of the three China-focused processors Nvidia has created to meet recent U.S. export limitations. This might make it more difficult for Nvidia to maintain its market dominance in China compared to local competitors such as Huawei (HWT.UL).

This month, the chip industry publication SemiAnalysis revealed that the California-based artificial intelligence chip company anticipated introducing the new devices as early as November 16.

According to the sources, the introduction of H20 has reportedly been postponed until the first quarter of the following year. One of the individuals stated that they were informed that the launch may occur in February or March.

Both of the sources asked not to be identified because the material was considered to be secret. Nvidia does not wish to remark on the matter.

According to the sources, they were told that the release of the H20 was going to be delayed because server makers were experiencing difficulties integrating the chip.

In addition to the H20, Nvidia has been designing two additional chips to meet new export regulations in the United States. These chips are designated as the L20 and the L2. According to the sources, there would be no delays in the launch of the L20, and it would occur on the initially planned day. They could not communicate with one another about the current state of the L2.

After being prevented from exporting goods like its powerful A800 and H800 AI processors due to Washington’s stricter export laws, Nvidia is placing its hopes on the chips to help it maintain its market leadership in China.

In November 2022, approximately one month after the United States initially prohibited selling sophisticated microchips and equipment to China, the A800 and H800 were presented as other options for Chinese clients.

According to SemiAnalysis’ examination of the chips’ specs, the H20, L20, and L2 all have the majority of Nvidia’s newest capabilities for artificial intelligence work; however, their computational power metrics have been reduced to comply with new laws in the United States.

The export restrictions imposed by the United States have opened the door for competitors like Huawei to secure contracts that would have otherwise been awarded to Nvidia, the market leader in graphics processing units (GPUs), which dominate the market for artificial intelligence.

According to a story from Reuters published earlier this month, citing sources, the Chinese internet giant Baidu (9888. H.K.) reportedly made a substantial order for Huawei A.I. processors this year. One insider claims that Baidu had already taken these steps before announcing the restrictions in the U.S. because it was ready for the possibility that it would no longer be able to purchase Nvidia.

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