Nvidia slides on report of delays in launch of new AI chips for China market

Nvidia slides on report of delays in launch of new AI chips for China market

Nvidia  (NVDA) – Get Free Report shares moved lower in early Friday trading following reports that the chipmaker is set to delay the launch of new AI-focused semiconductors designed to comply with U.S. sanctions on tech exports to China.

Reuters reported Friday that Nvidia has told customers it is delaying the launch of the H20 chip, one of three chips its developing in the wake of enhanced restrictions on China exports put in place by the Biden administration last month, until early next year.

Reuters said the L20 PCIe chip should remain on schedule while the status of the L2 PCIe chip remains unknown. 

The new restrictions, which expand upon new export rules put in place last year, are designed to limit China’s access to “advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to (Chinese) military applications,” Raimondo said.

Related: Nvidia lower as restricted AI China sales cloud blowout Q3 earnings

The rules also address a loophole in the previous restrictions, which allowed Nvidia to sell its A800 and H800 semiconductors, by focusing on overall performance as opposed to the computing power of individual chips.

Last week, Nvidia said China sales would likely slow “significantly” over the current quarter as a result of the new rules, a view that clouded the group’s better-than-expected third quarter earnings.

“We had seen historically over the last several quarters that China and some of the other impacted destinations to be about 20% to 25% of our data center revenue,” Kress told investors on a conference call late Tuesday. “We are expecting in our guidance for that to decrease substantially as we move into Q4. The export controls will have a negative effect on our China business, and we do not have good visibility into the magnitude of that impact even over the long term.”

Nvidia shares were marked 2.1% lower in pre-market trading to indicate an opening bell price of $477.00 each.

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