Nvidia is planning to launch its new slower artificial intelligence (AI) chip for China in the second quarter of this year, sources say, but recent reports suggest the US chipmaker may be in for a disappointment. Nvidia’s H20 chip is the most powerful of three chips it created for China so as to meet export restrictions announced by Washington in October. But top Chinese cloud firms have told Nvidia they do not want its slower artificial intelligence chips, according to a report by the Wall Street Journal. China’s Tencent and Alibaba told Nvidia that they will purchase only a few AI chips from the US chipmaker, the WSJ said, adding that the two firms said they would prefer using homegrown chips from companies such as Huawei. The H20 was originally scheduled for launch last November but that plan was delayed, with sources saying the delay was due to issues server manufacturers were having in integrating the chip. One of the people familiar with the matter said the company’s initial production volume will be limited, with Nvidia set to primarily fulfill orders for major customers. Both people declined to be identified as the information was confidential. Nvidia declined to comment. Reuters previously reported that Chinese companies are reluctant to buy the downgraded H20 and are testing domestic alternatives amid fear the US could again tighten restrictions. Alibaba and Tencent plan to place much smaller orders for Nvidia’s slower AI chips as compared to those for faster ones — like the A800 and H800, the WSJ reported. Exports of both chips were banned under expanded US export controls last year. The A800 and H800 themselves were introduced as alternatives for Chinese customers in November 2022 about a month after the US first restricted exports of advanced microchips and equipment to China. The two Chinese tech giants have told Nvidia that they will be switching to domestic firms for some advanced chip orders, WSJ reported. They also plan to use more chips that they can “develop in-house”, the report added.

Full report : Nvidia to launch all new China-focused AI chip in Q2 2024 but the Chinese dont like it.