Nvidia’s (NVDA) stock is down 2% on media reports that the company plans to delay the rollout of a new artificial intelligence (A.I.) microchip for China that will comply with U.S. export controls.
Multiple news organizations are reporting that Nvidia has told Chinese customers that it is delaying the launch of a less powerful A.I. chip that is designed to comply with U.S. export restrictions until the first quarter of 2024.
The new chip for the Chinese market, called the H20, is being delayed due to issues server manufacturers are having integrating the semiconductor into their products.
This October, the U.S. government tightened its export restrictions on the sale of A.I. chips to China.
The new rules prevent Nvidia’s powerful A800 and H800 microchips from being sold to China over fears that the government could use them to advance the country’s military capabilities.
However, Nvidia is developing several new microchips that are less powerful and can be sold to organizations and governments in China.
In addition to the H20, Nvidia is planning to launch two other export-compliant microchips called the L20 and L2.
China is a key market for Nvidia, which derives 25% of its revenue from the nation of 1.4 billion people. The delay to the H20 chip is viewed as a setback for the company.
Earlier this week, Nvidia reported blockbuster quarterly results that showed its revenue tripled from a year earlier due to strong demand for its A.I. microchips.
Still, Nvidia warned that its results for the current quarter are likely to be lower because of the restrictions placed on its sales to China.
NVDA stock has gained 240% this year and currently trades at $487.16 U.S. per share.