Nvidia Corp.'s upcoming artificial intelligence chips are now facing production delays due to a design flaw, according to a report.

Nvidia's "Blackwell" B200 AI chips will now take at least three more months to produce after a design flaw was discovered "unusually late in the production process. No other information about the design flaw was revealed. The delay was first reported by The Information, citing two unnamed sources, including a Microsoft employee. 

Nvidia is now reportedly working through another set of test runs with chip producer Taiwan Semiconductor Manufacturing Company. 

The production delays mean big shipments of the B200 AI chips are not expected until the first quarter of 2025. The delay would significantly affect Nvidia's customers, including Meta Platforms Inc., Google LLC, and Microsoft Corp---all of which ordered "tens of billions of dollars" worth of the chips, according to the report.

Nvidia's B200 chips are the follow-up to the popular H100 chips used to power swaths of the artificial intelligence cloud landscape as well as language models like OpenAI's GPT-3 to medical systems like DeepMind's AlphaFold. The H100 chips also made Nvidia one of the most valuable companies in the world. 

The delay comes after Nvidia CEO Jensen Huang said in May that its latest Blackwell series of AI chips was set to ship in the second quarter of 2024. 

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Nvidia's Shares Tumbled Due to the Delays

Following the report of production delay, Nvidia's shares tumbled more than 10% in early trading. However, the stock rebounded as concerns about the costs of the delay eased up. 

Stacey Rasgon, an analyst with Bernstein who follows Nvidia, later said that there is no cause for concern despite the delay, adding that Amazon's and Microsoft's expansion of AI data centers would likely increase the demand for Nvidia chips.

"Nvidia's competitive window is so large right now that we don't think a three-month delay will cause significant share shifts," Rasgon said, as quoted by The New York Times. 

Nvidia currently dominates between 70% and 95% of the market share of artificial intelligence chips. 

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