NVIDIA Corp ( NVDA ) shares are trading lower Monday. Reports from the weekend indicated that China’s Huawei Technologies has developed an AI chip to directly challenge Nvidia ( NVDA ).

What To Know: Huawei has developed a new AI processor called Ascend 910D that it hopes will be a replacement for some higher-end chips made by Nvidia ( NVDA ), the Wall Street Journal reported on Sunday.

People familiar with the matter said Huawei already approached some Chinese technology companies with intentions of testing the technical practicability of the new chip.

Development of the chip is still in the early stages, but the company could reportedly receive its first sample batches by late May. This latest version of the company’s Ascend AI processor is expected to be more powerful than Nvidia's ( NVDA ) H100.

The news comes after Nvidia ( NVDA ) said in a regulatory filing earlier this month that the U.S. government informed the company that it will need a license to export certain chips to China, focused on the company’s H20 chips.

A license will also be required for any other circuits achieving the H20’s memory bandwidth, interconnect bandwidth, or a combination thereof, Nvidia ( NVDA ) said in the filing.

Check This Out: Chamath Palihapitiya Says Nvidia Is Huawei’s ‘New Target’ — A ‘National Champion’ That Crushed Tech Giants With A ‘Low-End Disruptor’ Strategy

As a result of the restrictions, Nvidia ( NVDA ) said it expects its first-quarter financial results to include up to $5.5 billion of charges associated with H20 products held in inventory. Nvidia’s fiscal first quarter ended on Sunday and the company is due to report financial results for the period next month.

Analysts currently expect the chipmaker to report earnings of 88 cents per share and revenue of $43.09 billion, according to estimates from Benzinga Pro.

Huawei’s new chip is the latest version of its Ascend processor, with previous versions being called 910B and 910C. The report indicates that the Chinese chipmaker is expected to ship more than 800,000 Ascend 910B and 910C chips to customers this year. Some buyers are also reportedly in talks to increase orders following the chip restrictions from the Trump administration.

NVDA Price Action: Nvidia ( NVDA ) shares were down 0.96% at $109.94 at the time of publication Monday, according to Benzinga Pro.

Read Next:

If You Invested $10K In Nvidia Stock 10 Years Ago, How Much Would You Have Now?