Nvidia (NVDA. O) has begun accepting pre-orders for a new China-specific artificial intelligence (AI) chip, named the H20, according to sources familiar with the matter. The H20 is one of three graphics cards that Nvidia has developed for the Chinese market following the expanded bans on high-end chip exports from the United States. The goal of these bans is to impede China's AI and military computer development. Although the H20 chip is less powerful than Nvidia's flagship H100 AI chip and the previously banned H800 card, it appears to have lower performance than Huawei's Ascend 910B chip in certain key areas. Distributors have priced the H20 on par with Huawei's chip, and some are advertising the H20 at around 110, 000 yuan ($15, 320), while Huawei's chip is being sold for about 120, 000 yuan. The distributors are also offering servers pre-configured with eight H20 chips at a price of 1. 4 million yuan. Deliveries of the H20 are expected to begin in small batches in the first quarter of 2024, with larger quantities available in the second quarter.

Before the U. S. restrictions, Nvidia held over 90% of the AI chip market in China but is now facing increasing competition from domestic rivals, particularly Huawei. Despite its lower performance, the H20 remains competitive with the Ascend 910B in applications that require multiple chips to function as a system. Nvidia plans to commence mass production of the H20 in the second quarter of this year, with two other China-specific chips, the L20 and the L2, also in the works. CEO Jensen Huang recently visited Nvidia's offices in China, indicating the company's focus on the Chinese market. In related news, semiconductor stocks declined following Advanced Micro Devices' disappointing revenue forecast for the current quarter, which added to concerns over sluggish demand for non-AI chips.