Chinese state media slams Nvidia’s ‘prepayment’ demand as “harsh and unequal”

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[Financial News] A Chinese state-run media outlet has condemned Nvidia Corporation’s demand for upfront payment on its artificial intelligence (AI) chips as “harsh and unequal.” The outlet predicted that, because of Nvidia Corporation’s sales practices, Chinese companies may turn to other suppliers for semiconductors.
Global Times, the English-language edition of the Communist Party-affiliated Global Times, criticized the sales method for the NVIDIA H200 GPU, an AI accelerator produced by Nvidia Corporation, in a report on the 11th. Citing reports by Western media, including British outlets, on January 8 about the prepayment requirement for the NVIDIA H200 GPU, Global Times stressed that Nvidia Corporation’s “abnormal request will undermine the popularity of the NVIDIA H200 GPU in the market.” It also argued that this was “a coercive approach aimed at addressing concerns over policy uncertainty surrounding U.S. export controls.”
Earlier, Western media outlets reported on the 8th, citing anonymous sources, that Nvidia Corporation had demanded full prepayment from Chinese customers for purchases of the NVIDIA H200 GPU. In addition to prepayment, Nvidia Corporation is said to have imposed conditions prohibiting order cancellations, refunds, or specification changes after orders are placed. While Nvidia Corporation has previously required prepayments from Chinese customers, it had allowed a structure in which a deposit was paid first and the remaining balance was settled later, rather than insisting on full payment upfront.
Liu Dingding, introduced by Global Times as an advanced technology analyst, wrote in the January 11 article that this “clearly reveals Nvidia Corporation’s arbitrary tendencies and unreasonable practices,” adding that “Chinese buyers who have supported Nvidia Corporation for years are now being forced to shoulder all the risks.” Liu Dingding argued that “such harsh and unequal sales conditions will not help Nvidia Corporation achieve its goal of increasing semiconductor sales in the Chinese market.” He went on to stress that “industry peers should share risks collectively, and it is wrong to shift the entire burden onto customers.”
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The administration of U.S. President Joe Biden moved in 2022 to block Nvidia Corporation and other American companies from exporting high-performance AI chips to China. In response, Nvidia Corporation developed and exported a lower-spec, China-specific product, the NVIDIA H20 chip. Later, U.S. President Donald Trump decided, starting in April of last year, to impose restrictions even on exports of these China-tailored chips.
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Having effectively lost access to the vast Chinese market due to government regulations, Nvidia Corporation has engaged in sustained lobbying of the Trump administration in an effort to export high-end products subject to export controls, such as the NVIDIA H200 GPU, to China. Launched in 2023, the NVIDIA H200 GPU is currently a second-tier product among Nvidia Corporation’s AI accelerators. Its performance is lower than that of Nvidia Corporation’s latest products based on the NVIDIA Blackwell architecture, but it is reported to deliver roughly twice the inference performance and more than six times the AI training performance of the NVIDIA H20 chip.
In line with efforts to improve relations with China, Donald Trump allowed exports of the NVIDIA H20 chip starting in July of last year. However, in August, the following month, China moved to completely ban its major domestic technology companies from purchasing Nvidia Corporation’s chips, citing the need to reduce dependence on U.S. semiconductors and to safeguard national security.
Last month, under a trade war truce with China, Donald Trump gave the green light for Nvidia Corporation to export the NVIDIA H200 GPU to China. As of last month, Chinese companies were reported to have already placed orders with Nvidia Corporation for more than 2 million units of the NVIDIA H200 GPU, each priced at about 27,000 dollars (approximately 39.5 million won). The Chinese government is reportedly considering partially approving imports of the NVIDIA H200 GPU as early as the first quarter.
In their January 8 reports, foreign media analyzed Nvidia Corporation’s demand for full prepayment as an attempt to shift revenue-related risks onto its Chinese customers, given that it is still unclear whether the Chinese government will approve imports of the NVIDIA H200 GPU.
Global Times also cited a post on a U.S. investment portal claiming that Nvidia Corporation’s decision “will further accelerate a ‘shift’ by Chinese clients toward seeking domestic alternatives.” It went on to relay an analysis by investment media outlet TechStockTwo, which predicted that “tightened payment terms could lead to a decline in order volumes.” Wei Xiaojun, vice chairman of the China Semiconductor Industry Association (CSIA), argued that “because of the United States’ capricious stance—easing restrictions on high-performance chips and then tightening them again—it is difficult for other countries to discern Washington’s true strategic intentions,” adding that “China’s semiconductor industry must not let down its guard.”
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pjw@fnnews.com Jong-won Park Reporter