Two sources told Reuters that was the message the U.S. chipmaker delivered to customers in the country.

The semiconductor, known as the H20, is designed to comply with U.S. export rules, and is the most powerful of three chips Nvidia has developed specifically for China.

The firm was expected to launch its new products as early as this month, but sources say that's now pushed back to the first quarter of next year.

They were told the H20 was delayed due to issues server manufacturers were having in integrating it.

Nvidia plans two other chips to comply with new U.S. export rules - the L20 and L2.

The sources said the L20 faced no delays, but were unable to share information on the L2.

Now the delays mean Nvidia could struggle to preserve market share against local rivals like Huawei.

The U.S. firm has bet on the chips to keep its market share in China.

Nvidia was banned from shipping products including advanced AI chips by Washington's strict export rules.

Those curbs give rivals like Huawei a chance to win orders that might otherwise have gone to Nvidia.

Earlier this month, Reuters reported Chinese internet giant Baidu placed a big order for Huawei AI chips this year.