Nvidia (NVDA) shares closed slightly lower on Friday following a Reuters report that the chipmaker has to delay the launch of its AI-focused chip for China, one that was specifically designed to comply with US restrictions on certain chips being exported to the country. Constellation Research Founder and Principal Analyst R "Ray" Wang explains that "it's not easy to get a chip out there. It's not easy to get a chip certified." Wang tells Yahoo Finance Live that though this delay could leave an opening for Huawei, given how long it takes to develop a chip, it's going to be just as hard for other rivals to get into the market.

Elaborating on Huawei's opportunity, Wang says right now, it doesn't have the chips to compete with Nvidia. "You're taking a Rolls-Royce to solve an AI problem, maybe they'll just use a few more Huawei chips, which would be the equivalent of getting a Ford or GM chip out there," Wang says adding that "you don't always have to use the high-end chips to get to the answer and you might have some workarounds along the way."

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Video Transcript

RACHELLE AKUFFO: Well, taking a look at NVIDIA shares, they took a dip after reportedly delaying their new AI chip for China, despite being designed to comply with US export restrictions. Sources told Reuters that the delay was due to issues that server manufacturers were having in integrating the chip. For more on what this means for NVIDIA stock, we turn to Constellation Research founder and principal analyst Ray Wang.

Ray, always good to see you. So give us your take on this situation, because we knew some companies were going to try and find a workaround for the chip restrictions put on by the Biden administration. What does this mean for NVIDIA?

RAY WANG: Yeah, I think it's important to realize it's not easy to get a chip out there. It's not easy to get a chip certified. And so what NVIDIA is trying to do with the H20 chip to get out into China, it's going to take time, and it's not going to be just them. It's going to be everyone else. But it leaves an opening for Huawei to jump into that market, and that's what investors are reacting to.

But I think the flip side of this is that it's not easy getting a GPU or chip out the door. So all those people who think that NVIDIA is going to have competition right out the back, whether it's coming from AMD, whether it's coming from Microsoft in the future, or Google's TPUs or anybody else, it's not that easy to get a chip out the door. So if it takes NVIDIA a little hiccup to get this out the door, it's going to be just as hard for someone to come into the market.

AKIKO FUJITA: NVIDIA, Ray, certainly one of those names that is more exposed to the Chinese market. About a fifth of their revenue comes from there. In this particular case, though, you mentioned Huawei. Do they have the tech to match what NVIDIA would have offered here? I mean, these are chips that the company was building specifically for the Chinese market for the work around, the export controls.

RAY WANG: I could tell you're definitely right. It's not easy to do that. Does Huawei have the chips? The short answer is no at this moment, but keep in mind, like, you're taking a Rolls Royce to solve an AI problem. Maybe they'll just use a few more Huawei chips, which will be the equivalent getting a Ford or GM chip out there.

And I think that's the important thing is, like, you don't always have to use the high end chips to get to the answer, and you might have some workarounds along the way. And I think that's what China's going to be doing, especially with the export ban and the trade wars that are continuing.