NVIDIA has encountered a significant development setback with its forthcoming “Blackwell” B200 AI chip. According to The Information, a critical design flaw discovered late in the production process has necessitated a delay of at least three months in the chip’s manufacturing timeline. This information was shared with key customers, including Microsoft and at least one other major cloud service provider.

The Blackwell chip is highly anticipated as the successor to NVIDIA’s immensely successful H100 chip, which has been instrumental in the company’s rapid ascent to a dominant position in the AI hardware market. The delay in Blackwell’s production is likely to have repercussions across the tech industry, as companies like Microsoft, Google, and Meta have collectively placed substantial orders for the chip.

NVIDIA has confirmed that it is working diligently with Taiwan Semiconductor Manufacturing Company (TSMC) to address the design issue and expects to ramp up production in the second half of the year. Large-scale shipments of the Blackwell chip are now projected for the first quarter of the following year.

This unforeseen challenge arrives as competition in the AI chip market intensifies. Several tech firms, including AMD, are investing heavily in their own AI chip development, aiming to erode NVIDIA’s market leadership. The Blackwell delay could potentially provide a window of opportunity for these rivals to gain traction.