Nvidia (NVDA) Stock: Requires Chinese Customers to Pay in Full Upfront for H200 AI Chips

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TLDR

  • Nvidia now asks Chinese customers to pay the entire amount in advance for H200 AI chip orders, and cancellations or refunds are not permitted.
  • Chinese companies have ordered more than 2 million H200 chips, each priced at $27,000, which is more than Nvidia’s current inventory of 700,000 chips.
  • Beijing has requested tech firms to halt new H200 orders while regulators figure out how many domestic chips must be bought along with each H200.
  • The strict payment terms transfer the financial risk to buyers as the timeline for China’s approval remains unclear.
  • Nvidia took a $5.5 – billion inventory write – down last year after sudden export bans, which led the company to protect itself with stricter terms.

Nvidia has altered its way of selling AI chips to Chinese customers. The company now requires full upfront payment for its H200 chips before orders can be placed.

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The new terms remove the flexibility for buyers. Once an order is submitted, customers can’t cancel, ask for refunds, or change configurations. In some cases, buyers can use commercial insurance or pledged assets as collateral instead of cash.

This stricter approach represents a change from Nvidia’s previous policy. Historically, the company required advance payments from Chinese clients but often accepted partial deposits rather than full payment.

Regulatory Uncertainty Drives Policy Change

Beijing has not clearly approved the shipment of H200 chips to China yet. This uncertainty has compelled the company to tighten its sales terms.

Chinese authorities recently asked local tech companies to temporarily stop new H200 orders. Regulators are still determining how many domestically produced chips companies must purchase for each H200 order.

The Biden administration previously banned the export of advanced AI chips to China. President Donald Trump reversed that policy last month, allowing H200 sales with a 25% fee paid to the U.S. government.

China has since banned the shipment of the H20 chip. The H20 was the most powerful product Nvidia could previously sell in China.

Despite regulatory obstacles, the demand for the H200 remains strong. Chinese technology companies have placed orders for more than 2 million H200 chips. Each chip costs around $27,000.

Nvidia’s current inventory of H200 chips is 700,000, which is far less than the order volume from Chinese buyers.

Strong Performance Fuels Demand

The H200 offers approximately six times the performance of the now – blocked H20 chip. Nvidia had designed the H20 specifically for the Chinese market.

Chinese chipmakers like Huawei have developed AI processors such as the Ascend 910C. However, their performance still lags behind Nvidia’s H200 for large – scale training of advanced AI models.

Nvidia CEO Jensen Huang said that customer demand for H200 chips remains “quite high.” The company has enhanced its supply chain to increase production.

Huang indicated that he didn’t expect China’s government to make a formal approval declaration. He suggested that if purchase orders are successful, it means customers are able to place them.

Chinese internet giants including ByteDance consider the H200 a major upgrade. The chip is currently Nvidia’s second – most powerful offering.

Nvidia plans to fulfill initial orders from its existing stock. The first batch of H200 chips is expected to arrive before the Lunar New Year holiday in mid – February.

The company has approached [missing entity] about increasing H200 production. Additional manufacturing is expected to start in the second quarter of 2026.

The payment structure shifts the financial risk from Nvidia to its customers. Buyers must commit capital without knowing for sure whether Beijing will approve chip imports.

Nvidia has a reason to be cautious about sales in China. Last year, the company wrote down $5.5 billion in inventory after the Trump administration suddenly banned it from selling the H20 chip to China.

According to Bloomberg, China plans to approve some H200 imports as early as this quarter. Chinese officials are preparing to allow purchases for select commercial uses while excluding the military, sensitive government agencies, critical infrastructure, and state – owned enterprises.