Chip Photo: VCG

Nvidia's reported requirement for full upfront payment from Chinese customers seeking its H200 chips is a departure from market norms, reflecting the company's high-handed approach to address concerns over policy uncertainty related to US export control rules, a Chinese expert said on Sunday, noting that such an approach of imposing harsh, unequal terms onto its customers is not conducive to its goal of achieving chip sales in China. The company needs to maintain respect for its Chinese customers, the expert said.

These policy uncertainties and the extra financial burden created by Nvidia's abnormal request will likely diminish the market appeal of the H200, currently one of the most powerful artificial intelligence chips on the market and is reportedly awaiting approval from the US government for sales in the Chinese market, the expert said.

Nvidia is requiring full upfront payment from Chinese customers seeking its H200 AI chips, hedging it against ongoing uncertainty over the chip's shipments, Reuters reported on January 8, citing sources.

According to Reuters, the US chipmaker has imposed unusually stringent terms requiring full payment for orders with no options to cancel, ask for refunds or change configurations after placement.

The development came after Nvidia CEO Jensen Huang said recently that the company has "fired up" production of H200 AI data center chips in the expectation it will soon be able to resume sales in China after striking a deal with the White House, the Financial Times (FT) reported.

Liu Dingding, a veteran industry analyst, told the Global Times on Sunday that Nvidia's reported requirement for its Chinese clients is a breakaway from traditional business practice, and a typical case of shifting all the risks onto its clients.

"Although this approach is very rare, it clearly reveals Nvidia's domineering nature and its unreasonable practices. Chinese buyers have supported Nvidia for years, and now they are forced to bear all the risks when the industry enters a period of volatile risks," Liu said.

Such an approach of imposing harsh, unequal terms onto its customers is not conducive to its goal of achieving chip sales in China, Liu said, noting that peers should collectively address risks, rather than clients being forced to bear all the burden.

The reported move by the US chip giant has been closely watched by US tech investors. In an article published on industry portal investinglive, it is commented that the move is a "balancing act" and that "Nvidia's steep financial terms could very well accelerate" a transition by Chinese clients to seek domestic alternatives.

Industry portal TechStock2, in a Saturday article, called the latest development a "China payment snag" for Nvidia stocks, noting that "the stricter payment rule pushes the risk of abrupt policy shifts onto buyers, forcing them to pay upfront before chip clearance is confirmed. This can drag down orders at the edges, even if final demand remains intact."

Despite H200's potential clearance for entry into the Chinese market, the Chinese industry has kept a cool head in the face of the situation.

While China's semiconductor industry welcomes China-US positive exchanges in technological innovation and industrial development in line with both sides' regulations, it must remain highly vigilant regarding the US' erratic stance on exports of high-end chips, Wei Shaojun, a deputy head of the China Semiconductor Industry Association (CSIA) told the Global Times in an exclusive interview last week.

Wei pointed out that the US' erratic stance - alternately easing restrictions and applying pressure on high-end chips - makes it difficult for others to discern its true strategic intentions: Is the recent so-called "relaxation" a genuine signal to promote positive interaction, or is it a new tactic aimed at disrupting Chinese industry's development pace and lulling it into complacency?

"China's semiconductor industry must remain highly vigilant toward this, resolutely refuse to be deceived by superficial appearances, and, even more importantly, must not waver in its confidence and determination to persist on the path of indigenous development in advanced process technologies and other key areas," Wei said.

In December, US President Donald Trump announced that he would allow Nvidia to ship these advanced H200 chips to China in exchange for a 25 percent government cut from sales, but the deal with the White House has not been finalized, according to the FT report.

At a regular press conference on December 9, when asked whether China will allow H200 chips to be purchased after the US administration's decision to allow the sale of Nvidia H200 chips to China, Chinese Foreign Ministry spokesperson Guo Jiakun said that "we have noticed the reports. China always advocates that China and the US achieve mutual benefit through cooperation."