Key Points
- Nvidia is requiring Chinese customers to pay 100% upfront for its H200 AI chips.
- The new policy also includes a strict “no refunds, no cancellations” rule.
- This is a hedge against the uncertainty of whether Beijing will approve the shipments.
- Chinese companies have reportedly ordered more than 2 million H200 chips, far exceeding Nvidia’s current inventory.
Nvidia is playing it safe with its latest AI chip sales to China. The U.S. chip giant is now requiring Chinese customers to pay the full price upfront for its powerful H200 chips. According to sources, the company has also implemented a strict “no refunds, no cancellations” policy, a clear sign that it’s hedging against the ongoing uncertainty about whether Beijing will approve the shipments.
This is a change from Nvidia’s usual practice. In the past, Chinese clients were sometimes allowed to pay a deposit instead of the full amount. But for the H200, the company is being extra cautious.
The strict payment terms effectively shift the financial risk from Nvidia to its customers. Chinese tech giants like ByteDance will now have to commit significant sums without a guarantee they will ever receive the chips.
The demand for these chips is massive. Chinese companies have reportedly placed orders for more than 2 million H200 chips, each costing approximately $27,000. That’s far more than Nvidia’s current inventory of 700,000.
The whole situation is a delicate balancing act. The Trump administration recently reversed a Biden-era ban, allowing Nvidia to sell these chips to China, provided it pays a 25% fee to the U.S. government.
However, Beijing has not yet given its official approval. In fact, the Chinese government recently asked some companies to temporarily pause orders as it decides how many domestic chips they will be required to purchase alongside Nvidia chips.
Nvidia has been burned before. Last year, the company had to write down $5.5 billion in inventory after the U.S. government abruptly banned the sale of a different chip to China. By demanding full payment upfront this time, Nvidia is ensuring it doesn’t end up with a warehouse full of expensive, unsellable chips if the political winds shift again.
