$7bn plan reveals how Chinese firms navigate US restrictions

ByteDance’s strategies to access AI chips have taken a new turn, as TikTok – the social platform’s parent company – reportedly planning to spend $7 billion to secure Nvidia chips through facilities outside China in 2025, according to The Information.

The move represents one of the latest attempts by Chinese technology companies to maintain access to cutting-edge AI hardware despite US export restrictions. The Information reports ByteDance co-founder Zhang Yiming has been in discussions with data centre operators across Southeast Asia about acquiring access to Nvidia’s upcoming Blackwell chips when they become available in 2025.

The development follows a pattern of Chinese tech firms finding alternative routes to advanced semiconductor technology. In June 2024, we learned ByteDance had circumvented restrictions by renting Nvidia’s high-performance chips from Oracle for AI computing operations, highlighting companies’ ability to navigate around trade limitations.

The scale of ByteDance’s planned investment – $7 billion for overseas chip access – would position the company as one of Nvidia’s most prominent global customers. Sources familiar with the company’s broader infrastructure plans indicated the possibility of even more substantial investments. ByteDance reportedly informed some data centre suppliers about potential expenditures exceeding $20 billion in 2025 for AI chips access, data centres, and related infrastructure, including undersea cables.

The semiconductor access strategy comes amid intensifying US efforts to restrict advanced chip availability to Chinese entities. Current US sanctions prevent Chinese companies from legally purchasing advanced semiconductor technology from countries it has political influence over.

The Biden administration has already implemented export bans on Nvidia and AMD’s latest GPUs to several Middle Eastern countries, following concerns that the UAE could potentially serve as a “transhipment point” for restricted technology.

ByteDance AI chip access strategy questions export control effectiveness

ByteDance’s expansion of its data centre footprint serves dual purposes: meeting growing computational demands and addressing government concerns about data sovereignty. The company’s strategic approach to securing chip access through overseas facilities demonstrates the intricate balance Chinese tech companies must maintain between technological advancement and regulatory compliance.

The situation highlights broader implications for the global semiconductor industry and international trade relations. While renting advanced GPUs in the US doesn’t violate current sanction laws, the evolving regulatory landscape could prompt further adjustments to how companies access essential AI computing resources.

As Chinese technology companies continue developing sophisticated AI applications, their ability to access advanced semiconductors remains crucial for maintaining competitiveness . ByteDance’s substantial investment plans reflect the importance of these resources and the lengths companies will go to ensure continued access to cutting-edge technology.

The ongoing situation raises important questions about international technology supply chains. As companies find creative ways to access necessary resources, policymakers face the challenge of balancing what they cite as national security concerns with the realities of global markets.

(Photo by iStock)

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