China halts production of Nvidia H200 Chips: Here’s why

As soon as Nvidia ramps up production to meet the ‘high demand’ for H200 chips in China, its capital, Beijing, has made a new announcement, asking Chinese companies to temporarily halt orders for Nvidia AI chips while regulators work to get further approvals.

As reported by Reuters, Nvidia is requiring full upfront payment from Chinese customers seeking its H200 artificial intelligence chips, hedging it against ongoing uncertainty over Beijing's approval of the shipments.

The U.S. chipmaker has imposed unusually stringent terms requiring full payment for orders with no options to cancel, ask for refunds, or change configurations after placement.

Nvidia H200 AI chip manufacturing ‘pause’ was first reported by The Information on Wednesday, January 7, 2026.

In special circumstances, clients may provide commercial insurance or asset collateral as an alternative to cash payment.

Nvidia's standard terms for Chinese clients have previously included advance payment requirements, but they were sometimes allowed to place a deposit rather than make a full payment upfront.

While for the H200, the company has been particularly strict in enforcing conditions given the lack of clarity on whether Chinese regulators would greenlight the shipments.

Chinese technology companies have placed orders for more than 2 million H200 chips that are priced at around $27,000 each, exceeding Nvidia's inventory of 700,000 of the chips, reports Reuters.

China plans to approve some H200 imports as soon as this quarter, Bloomberg reported on Thursday.

Beijing in recent days asked some Chinese tech companies to temporarily pause their H200 chip orders as regulators are still deciding how many domestically produced chips each customer will need to buy alongside each H200 order.

Nvidia CEO Jensen Huang said on Tuesday, January 7, 2026, that customer demand for H200 chips was "quite high" and that the company has "fired up our supply chain" to ramp up production.

Huang said he did not expect China's government to make a formal declaration on approval, but "if the purchase orders come, it's because they're able to place purchase orders."

A new balanced strategic approach

According to tech experts, strict policy payment requirements underscore the delicate balancing act Nvidia faces as it attempts to capitalize on surging Chinese demand while navigating regulatory uncertainty in both countries.

The Biden administration had banned advanced AI chip exports to China, but President Donald Trump reversed that policy last month, allowing H200 sales with a 25% fee to be paid to the U.S. government.

Nvidia has suffered in the past, as it wrote down $5.5 billion in inventory after the Trump administration abruptly banned it from selling the H20 chip to China, previously the most powerful product it was able to offer last year.

Sources consider this plan a condition of anonymity because the information is not public, as the stepped-up policy enforcement has not been reported previously, and both Nvidia and China’s industry ministry had yet to respond to the current scenario.