• China asks tech firms to pause orders for Nvidia's H200 AI chips amid regulatory debates.
• Nvidia mandates full upfront payments for H200 chips, reflecting market uncertainty.
• Chinese orders for H200 chips exceed available stock, raising supply concerns.
• The U.S. government has eased restrictions on H200 chip sales to China, pending export licenses.
• Experts urge vigilance in China's approach to foreign technology amidst ongoing trade tensions.

This week, Beijing directed some domestic tech firms to halt their orders for Nvidia's H200 artificial intelligence chips while regulators assess terms for these imports. This action follows increased demand from firms across China for the H200, coinciding with heightened tensions between the U.S. and China regarding technology exports. The Chinese government aims to prevent a rush on U.S. chip stockpiling until a clear policy is established, indicating a cautious approach to maintaining semiconductor self-sufficiency, according to Reuters and Channel News Asia.

In connection to this, Nvidia is enforcing strict payment terms for the H200 chips, requiring full upfront payment from Chinese customers, thereby minimizing the company's risk amid the uncertain regulatory landscape. These terms prevent any cancellations or modifications after the order is confirmed. Nvidia's CEO Jensen Huang confirmed that demand for the H200 in China is "quite high," but the company's shift to enforce these stringent conditions reflects significant apprehension regarding China’s potential approvals of chip imports, as reported by Reuters and Channel News Asia.

Approximately 2 million H200 chips have been ordered by Chinese technology firms, which reflects a staggering $54 billion in committed capital at $27,000 per chip, dwarfing Nvidia’s current inventory of 700,000 units. This overwhelming demand underscores the significant technological gap between Nvidia's offers and the capabilities of domestic alternatives like Huawei's chips, emphasized by the analysts quoted in multiple sources including India Times and South China Morning Post.

While the Biden administration last month eased restrictions on Nvidia’s ability to sell H200 chips to China, allowing sales under a revenue-sharing framework, experts like Wei Shaojun of the China Semiconductor Industry Association caution that Chinese firms should exercise prudence when ordering these chips. The attention on domestic production and reduced reliance on foreign technology continues to be a focal point in China’s strategic plan for its semiconductors, as indicated in reports by India Times and South China Morning Post.