NVIDIA Corporation (NASDAQ: NVDA) shares jumped over 6% on Monday as the US chipmaker revealed plans to start mass production of an artificial intelligence (AI) chip tailored for China in Q2 2024.
In a move to comply with U.S. export rules, chip giant NVIDIA Corporation (NVDA) is set to kick off mass production of its highly anticipated artificial intelligence (AI) chip, the H20, in the second quarter of 2024.
The H20 chip was initially set for a November launch. However, the plan was delayed, with sources attributing the delay to challenges faced by server manufacturers in integrating the chip.
Insiders reveal that the initial production volume will be limited, with Nvidia prioritizing major customers’ orders.
Several media sources reported earlier that Chinese companies are hesitant to purchase the scaled-down H20 chip, opting to test domestic alternatives due to concerns that the U.S. might further tighten restrictions. In a notable shift away from Nvidia, search engine leader Baidu ordered AI chips from Huawei Technologies last year, as reported by Reuters.
NVIDIA Corporation (NASDAQ: NVDA) developed three China-focused chips to comply with the restrictions announced in October, and among them, the H20 chip stands out as the most powerful.
Apart from the H20, Nvidia has plans for two other chips, the L20 and L2, to comply with the new regulations. However, sales for these chips have not been officially announced.
Nvidia is counting on these chips to safeguard its market share in the country following tighter U.S. export restrictions that prohibited the shipment of products, including its advanced A800 and H800 AI chips.
The A800 and H800 were presented as substitutes for Chinese customers in November 2022, about a month after the U.S. first restricted exports of advanced microchips and equipment to China.
According to SemiAnalysis’ analysis of the chips’ specifications, the H20, L20, and L2 incorporate Nvidia’s latest AI features, but their computing power has been reduced to comply with the new rules.
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