What happened

Shares of Nvidia (NVDA 3.46%) bounced Tuesday morning, jumping as much as 4.1%. As of 10:34 a.m. ET, the stock was still up 1.5%.

The catalyst that sent the semiconductor specialist higher was news that the company had created an alternative chip to comply with the U.S. export ban to China.

So what

Nvidia has developed a new high-end processor for customers in China, following a U.S. government export ban announced back in August. The newly designed graphics processing unit (GPU), dubbed the A800, has been modified to meet to new restrictions, while still providing users with ample processing power. 

An Nvidia spokesperson said in a statement, "The Nvidia A800 GPU, which went into production in Q3, is another alternative product to the Nvidia A100 GPU for customers in China. The A800 meets the U.S. government's clear test for reduced export control and cannot be programmed to exceed it." 

The modified processor appears to have many of the same capabilities as the A100, though the transfer rate has been reduced from 600 gigabytes per second to 400 gigabytes per second, a clear performance reduction. This is also below the threshold for exports, which restricted the sale of chips with rates of 600 gigabytes or higher.

The redesigned processor made its appearance on a distributor website in China and is listed among the components of two of the country's foremost server manufacturers.

Now what

In a regulatory filing in late August, Nvidia said the U.S. government had announced new licensing restrictions for its most advanced processors, forbidding exports to Russia and China, though the company confirmed at the time that it "does not sell products to customers in Russia." 

The restrictions applied only to Nvidia's most advanced processor, a workhorse designed for servers and data centers used for artificial intelligence and supercomputing.

Nvidia initially reduced its guidance for the current quarter, saying the company could lose as much as $400 million in potential sales as the result of the new requirements. It isn't known how this new processor will impact its results. This latest development shows why Nvidia is the undisputed industry leader and remains a buy.