NVIDIA Reportedly Wants China To Pay 100% Upfront For Millions Of H200 AI Chips

After coming to a revised royalty rate agreement with the U.S. government, NVIDIA has orders from China for more than 2 million H200 AI chips at around $27,000 each, but will only ship the orders if they are paid in full upfront, Reuters reports. Citing two people who have purportedly been briefed on the matter, the outlet says NVIDIA's requirement is the result of the Chinese government having yet to fully approve the chip orders.

According to the report, NVIDIA also required prepayments from Chinese customers in the past, but had previously been willing to accept deposits instead of the full amount upfront. However, that's evidently not the case this time because of ambiguity in regards to China's regulatory approval of buying Hopper-based AI chips from NVIDIA.

This is the latest twist in the ongoing saga between NVIDIA and governments from both sides. Under the Biden administration, a ban was put in place on AI chip exports to China over national security concerns. The Trump administration initially upheld the ban, but then agreed to partially lift restrictions in exchange for a 15% royalty from both AMD and NVIDIA.

Later on, the agreement with NVIDIA was revised to a 25% cut of AI chip shipment revenue, with the U.S. government giving the company the greenlight to ship H200 AI chips based on the company's last-generation Hopper architecture. NVIDIA CEO Jensen Huang praised the agreement as a "thoughtful balance" after having previously criticized the ban.

"Export restrictions spurred China’s innovation. The U.S. has based its policy on the assumption that China cannot make AI chips. Assumption was always questionable. Now it’s clearly wrong," Huang told CNBC before the revised agreement was finalized.

Huang also warned that China was mere "nanoseconds behind America in AI" and that it was vital for America to win developers worldwide.

It's moot with the new deal in place, which allows NVIDIA to ship its Hopper silicon to China, but not its newer and more performant Blackwell-based parts. This may have irked the Chinese government, however, as it has yet to open the floodgates for NVIDIA's last-gen parts. According to Reuters, Beijing is in the process of deciding how may domestic chips Chinese customers must pay with each H200 order placed.