Nvidia Tightens H200 AI Chip Sales to China

Nvidia has reportedly begun requiring Chinese customers to pay the full amount upfront for its H200 artificial intelligence chips, reflecting heightened uncertainty around regulatory approvals in both China and the United States. 

According to Reuters, the U.S. chipmaker has implemented unusually strict terms that leave no room for refunds, order cancellations, or configuration changes once a purchase is placed, even though Beijing has not yet formally approved shipments of the advanced processors (Reuters). This marks a significant shift from Nvidia’s earlier policies, which sometimes allowed partial deposits rather than full advance payment. While some buyers may still be permitted to use commercial insurance or asset collateral instead of cash, these exceptions are limited and tightly controlled.

The stricter payment requirements appear to be Nvidia’s way of hedging against political and regulatory risks tied to selling advanced AI hardware into China. Sources told Reuters that Beijing has asked some Chinese technology companies to temporarily pause their H200 orders while regulators determine how many domestically produced chips must be purchased alongside each imported H200 unit (Reuters). Chinese authorities are reportedly still deciding on the conditions under which these chips can be sold, including which customers are eligible. Bloomberg has reported that China plans to approve some H200 imports as early as this quarter, but only for select commercial uses, while barring the military, sensitive government agencies, critical infrastructure, and state-owned enterprises due to national security concerns (TechCrunch).

Despite these hurdles, demand for Nvidia’s H200 chips in China remains exceptionally strong. Chinese technology companies have reportedly placed orders for more than 2 million H200 GPUs for delivery in 2026, far exceeding Nvidia’s current inventory of roughly 700,000 units (Reuters). Each chip is priced at around $27,000, underscoring both the scale of the financial commitment required from buyers and the importance of the hardware to China’s AI ambitions. Nvidia CEO Jensen Huang recently said that demand for the H200 is “quite high” and confirmed that the company has “fired up” its supply chain to ramp up production in response (Reuters).

The strong appetite for Nvidia’s chips highlights a persistent performance gap between U.S. and Chinese AI hardware. While domestic chipmakers such as Huawei have developed processors like the Ascend 910C, Reuters notes that these alternatives still lag behind Nvidia’s H200 when it comes to large-scale training of advanced AI models. This gap has made Nvidia’s chips particularly valuable to Chinese firms working on cutting-edge AI systems, even as regulators push for greater use of domestically produced components. One source told Reuters that Beijing is considering requiring Chinese buyers to purchase a certain number of local chips alongside each H200 order, a policy that could further complicate procurement.

Nvidia’s cautious approach is also shaped by past experience with U.S. export controls. The company previously suffered a major financial setback when U.S. authorities required it to obtain a license to export its H20 chips to China, forcing Nvidia to write down $5.5 billion worth of inventory (TechCrunch; Yahoo Finance). By demanding full upfront payment for the H200, Nvidia reduces its exposure if shipments are delayed or blocked by regulators, effectively shifting more of the risk onto customers.

Ultimately, Nvidia is attempting to strike a delicate balance between meeting surging demand for its AI chips and navigating a complex geopolitical landscape. While Chinese regulators appear poised to allow limited H200 imports, ongoing uncertainty around approvals, domestic chip requirements, and security restrictions has pushed Nvidia to adopt some of its toughest sales terms to date. The situation underscores how deeply global politics are now intertwined with the future of AI hardware supply chains.

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Works Cited

Reuters. “Exclusive: Nvidia Requires Full Upfront Payment for H200 Chips in China, Sources Say.” Reuters, 8 Jan. 2026, www.reuters.com/world/china/nvidia-requires-full-upfront-payment-h200-chips-china-sources-say-2026-01-08/.

TechCrunch. “Nvidia’s Reportedly Asking Chinese Customers to Pay Upfront for Its H200 AI Chips.” TechCrunch, 8 Jan. 2026, www.techcrunch.com/2026/01/08/nvidias-reportedly-asking-chinese-customers-to-pay-upfront-its-for-h200-ai-chips/.

Yahoo Finance. “Nvidia’s Reportedly Asking Chinese Customers to Pay Upfront for Its H200 AI Chips.” Yahoo Finance, 8 Jan. 2026, www.finance.yahoo.com/news/nvidia-reportedly-asking-chinese-customers-172931115.html.

CNBC. “Nvidia to Mass Produce AI Supercomputers in Texas.” CNBC, 14 Apr. 2025, https://www.cnbc.com/2025/04/14/nvidia-to-mass-produce-ai-supercomputers-in-texas.html.

NVIDIA. “H200 Data Center GPU.” NVIDIA, https://www.nvidia.com/en-us/data-center/h200/.

Mantel, Mark. “Huawei Competes Against Nvidia with Many Chips.” heise Online, 22 Apr. 2025, https://www.heise.de/en/news/Huawei-competes-against-Nvidia-with-many-chips-10358052.html.