Exclusive: Nvidia requires full upfront payment for H200 chips in China, sources say (Reuters)

Nvidia is requiring full upfront, non-refundable payment from Chinese customers for its H200 AI chips. Chinese regulators have temporarily asked some firms to pause H200 orders while deciding how many domestic chips must be purchased alongside each Nvidia chip. Chinese demand exceeds supply (orders >2M units vs. \\\~700k available), despite domestic alternatives like Huawei’s Ascend which lag behind the H200 in performance. The policy shifts financial and regulatory risk from Nvidia to Chinese buyers, reflecting Nvidia’s caution after prior losses from sudden export bans. Nvidia is ramping production but capacity expansion is constrained by generational chip transitions and competition for foundry capacity. Nvidia’s payment terms effectively offload geopolitical and regulatory risk onto Chinese customers, protecting cash flow and avoiding inventory write downs. Beijing’s actions toward H200 imports signals a deliberate attempt to subsidize and force adoption of local products while still selectively accessing top tier Nvidia technology. Allowing H200s for commercial use while excluding military, SOEs, and critical infrastructure reflects a is Beijing’s way of balancing AI competitiveness with national security. Strong dependency on Nvidia persists despite heavy investment in domestic chips, Chinese tech giants’ willingness to prepay underscores continued reliance on Nvidia for cutting edge AI training. Rapid reversals in U.S. export controls and Chinese countermeasures suggest that capital discipline and flexible supply allocation are now core competitive advantages for Nvidia. Full prepayment, high unit prices, and excess demand indicate Nvidia retains exceptional pricing power, even in politically constrained markets which is something few hardware firms can sustain. Nvidia is monetizing Chinese demand while insulating itself from policy whiplash, and China is using regulatory approval to extract industrial policy concessions leaving buyers to absorb the uncertainty in exchange for access to best in class AI compute. https://www.reuters.com/world/china/nvidia-requires-full-upfront-payment-h200-chips-china-sources-say-2026-01-08/