Nvidia has started requiring Chinese customers pay the full price for its high-end H200 AI chips at the time of order. This is a change from the earlier practice where buyers could make a smaller deposit first to procure the chip.

Reuters reported that Nvidia decided to hedge against the ongoing uncertainty over China’s approval, where the Xi Jinping administration told firms to halt the orders of the H200 chips.

Nvidia has imposed strict terms requiring full payments for the H200 AI chip orders with no option to cancel. The stringent measure would also not allow refunds and changes in configurations after order placement.

A source familiar with the matter said that Nvidia might help clients only in special circumstances. However, it comes only if they provide commercial insurance or lend an asset as collateral as an alternative to full cash payment. Deposits for the H200 AI chips will no longer be available for Chinese buyers due to the tussle between China and the US.

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Nvidia and China: The Ongoing Battle To Procure H200 AI Chips

Chinese tech firms had already placed 2 million orders for Nvidia’s H200 AI chips. This exceeded their inventory of 700,000, and the company ramped up production to meet the demand. Each of the chips was priced at $27,000. Bloomberg reported that China could approve H200 AI chips as soon as this quarter. They reported that China will approve the sales for commercial use only.

The Xi Jinping administration’s halting of the Nvidia H200 AI chips comes at a time when its homegrown brand, Huawei, built the Ascend 910C processors. However, Huawei’s chip lags behind Nvidia and fails to meet the large-scale training of advanced AI models. Therefore, the H200 AI chips will always be in demand, as no competitor comes close to their performance.