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Nvidia Delays Launch of AI Chip for China amid Export Compliance Challenges, NVDA Stock 1% Down

Summary:
Nvidia is also working on two other chips, the L20 and L2, for the Chinese market. According to the Reuters report, one of the chips, L20, is not facing delays and is expected to launch according to the original schedule. Nvidia Corp (NASDAQ: NVDA), the California-based AI chip giant, has notified its Chinese customers of a delay in the launch of its new artificial intelligence chip, H20, designed to comply with the latest United States export regulations, Reuters reported Friday, citing two sources familiar with the matter. The country’s tightened export rules have already restricted Nvidia from shipping some of its advanced products to China, including the A800 and H800 AI chips. In response, the company introduced alternatives in the form of the A800 and H800 in November 2022,

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Nvidia is also working on two other chips, the L20 and L2, for the Chinese market. According to the Reuters report, one of the chips, L20, is not facing delays and is expected to launch according to the original schedule.

Nvidia Corp (NASDAQ: NVDA), the California-based AI chip giant, has notified its Chinese customers of a delay in the launch of its new artificial intelligence chip, H20, designed to comply with the latest United States export regulations, Reuters reported Friday, citing two sources familiar with the matter.

The country’s tightened export rules have already restricted Nvidia from shipping some of its advanced products to China, including the A800 and H800 AI chips. In response, the company introduced alternatives in the form of the A800 and H800 in November 2022, specifically tailored for Chinese customers.

Now, the tech giant is developing three additional chips, including the H20, touted as the most powerful among the three chips and designed explicitly for the Chinese market in compliance with the new US export rules.

Delay in Launch

According to Reuters, the company has delayed the release of the product to its Chinese customers. The chip was initially expected to debut as early as November 16. However, the launch has been rescheduled to the first quarter of the following year, with a potential time frame in February or March. The delay could complicate the company’s efforts to maintain market share in the region, where it faces stiff competition from local players such as Huawei.

People familiar with the matter have cited delays caused by issues that server manufacturers are facing while integrating the semiconductor into their products.

Nvidia is also working on two other chips, the L20 and L2, for the Chinese market. According to the Reuters report, one of the chips, L20, is not facing delays and is expected to launch according to the original schedule. However, details about the status of the L2 remain undisclosed.

All this news doesn’t seem to be very inspiring for investors which results in a stock price fall. NVDA stock os 1.16% down, trading at $481.49.

Graphcore Exits the Chinese Market

While Nvidia is adapting its AI chips to comply with the new US export rules for the Chinese market, its UK-based competitor, Graphcore, has strategically decided to exit the Chinese market. The company is withdrawing from the Chinese market and laying off a significant portion of its workforce.

A spokesperson for Graphcore confirmed the decision, attributing it directly to recent US export controls that impose restrictions on the sale of technology to China.

In an emailed statement, the spokesperson expressed regret over the necessity of scaling back business operations in China but did not disclose the exact number of employees affected by the decision.

“Elsewhere, the need for AI compute continues to increase, and Graphcore is working with customers around the world to meet their demand for a powerful, cost-effective alternative to GPUs,” the Graphcore spokesperson said, referring to the powerful graphics chips that Nvidia and others make.

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