Nvidia Shares Drop Following Announcement of Delay in Release of New AI Chip for China

Key takeaways

  • Nvidia shares slipped after news that the chipmaker delayed the launch of a new AI semiconductor designed to comply with new U.S. export rules.
  • The H20 was the most powerful of three new chips designed for use in China.
  • A Reuters report says the H20 won't be released until the first quarter of next year.

Shares of Nvidia (NVDA) crashed following a report that the semiconductor maker was delaying the launch of a new device. a new artificial intelligence (AI) chip for China that would comply with the latest US export restrictions.

Reuters said the H20 chip was the most powerful of the three semiconductors the company was poised to produce after President Biden signed an executive order in August limiting investments in China for “sensitive technologies critical to national security in three sectors: semiconductors and microelectronics, quantum information”. technologies and artificial intelligence.

It was thought that Nvidia chips could be launched this this month. However, people familiar with the matter have indicated that the H20 chip will now launch in the first quarter of 2024 due to problems server makers are having integrating the chip.

The sources told Reuters that one of the other chips, L20, did not face delays and would be available as planned. It is not clear what the status of the third chip, named L2, is.

Nvidia shares climbed soared, hitting an all-time high on Monday thanks to booming demand for its AI semiconductors. However, shares fell when the company explained after releasing its quarterly earnings report that China's export rules would negatively impact current quarter results.

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Source: investopedia.com

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