Nvidia shares fell on Friday with the company reportedly delaying a new artificial intelligence chip for China that has been designed to comply with U.S. export restrictions.
Nvidia shares were down around 2.4% in pre-market trade, on what will be a shortened trading day in the U.S.
It comes after Reuters, citing two sources familiar with the matter, reported that Nvidia told Chinese customers that it is delaying the launch of an AI chip that is designed to comply with U.S. export rules until the first quarter of next year.
The new chip, called the H20, was being delayed due to issues server manufacturers were having integrating the semiconductor into their products, Reuters reported.
Nvidia was not immediately available for comment when contacted by CNBC.
In October, the U.S. government further tightened export curbs on AI chips to China. Those rules restricted export of Nvidia’s A800 and H800 chips. These semiconductors were also specifically designed for China.
As well as the H20, Nvidia is also gearing up to launch two other export-compliant chips called the L20 and L2, Reuters reported.
The delay to the H20 could be a setback for Nvidia which makes around a fifth of its revenue from China and is facing competition from local players such as Huawei.
Even as Nvidia reported this week that it tripled its revenue in the September quarter, the company warned sales in regions affected by export restrictions will “decline significantly” in the current quarter.