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Nvidia has begun sampling two new AI chips for China market, says CEO

FILE PHOTO: NVIDIA HGX AI Supercomputer on display during the annual Foxconn Tech Day in Taipei

By Stephen Nellis and Yelin Mo

SAN FRANCISCO/BEIJING (Reuters) - Nvidia is currently offering customers samples of its two new artificial intelligence chips aimed at the China market, its CEO Jensen Huang said, in a bid to defend its market dominance in the country now threatened by U.S. export curbs.

"We're sampling it with customers now. Both of them comply with the regulation without a license. We're looking forward to customer feedback on it,” Huang told Reuters on Wednesday in an interview after releasing Nvidia's quarterly results.

"We're expecting that we're... going to go compete for business, and hopefully we can serve the market successfully."

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Huang did not mention the names of the chips or the customers and Nvidia did not immediately respond to a request for clarification.

The chip industry newsletter, SemiAnalysis, reported in November that Nvidia was preparing to release three chips - H20, L20 and L2 - for the China market. The chips include most of Nvidia's newest features for AI work, but have had some of their computing power cut back to comply with new U.S. rules, according to the newsletter's analysis of the chips' specifications.

Reuters reported earlier this month that Nvidia has started taking pre-orders for the H20 chip, the most powerful of the three chips aimed at the Chinese market, and its distributors were pricing it on par with a rival product from Huawei.

The H20 was originally expected to be released in November but has been delayed due to issues server manufacturers were having in integrating the chip, Reuters reported late last year.

Nvidia's business in China took a hit after Washington expanded export control measures in October that included more restrictions on shipments of advanced Nvidia chips to China.

"This last quarter, our business significantly declined as we...stopped shipping in the marketplace (for China)," Huang said during the earnings call.

For the fiscal fourth quarter which ended on Jan. 28, Nvidia recorded sales of $1.9 billion in the China market, which includes Hong Kong, according to Reuters calculations based on the company's results.

That amounted to about 9% of total sales, down from 22% in the previous quarter when it reported $4 billion in sales in the region.

"We expect this quarter to be about the same. But after that, hopefully, we can go compete for our business and do our best, and we'll see how it turns out," Huang said on the earnings call.

(Reporting by Stephen Nellis, Yelin Mo and Brenda Goh; Editing by Miyoung Kim and Muralikumar Anantharaman)