ByteDance Navigates US AI Chip Restrictions Through Overseas Partnerships
In a strategic move to bypass stringent US export controls, TikTok-parent ByteDance is reportedly constructing a vast network of high-end Nvidia AI chips, leveraging partnerships with cloud computing firms and data centres located outside China. This development comes amid ongoing tensions between the US and China over technology access, with the US having banned the sale of Nvidia's most advanced AI chips to Chinese entities to prevent their use in military or surveillance applications.
How ByteDance is Accessing Nvidia's Top-Tier Chips
According to a report by The Wall Street Journal, ByteDance is collaborating with a little-known Southeast Asian company called Aolani Cloud to deploy approximately 500 Blackwell computing systems in Malaysia. These systems, which represent Nvidia's top-tier AI processors, are expected to comprise around 36,000 B200 chips, with the total hardware investment potentially exceeding $2.5 billion. The chips are being assembled into servers by Aivres, a company from which Aolani is purchasing them, and the computing power will then be leased to ByteDance for AI research and development, as well as to support the growing global demand for ByteDance's AI products.
Legal Grey Area and Compliance Measures
Under this arrangement, ByteDance does not own the chips directly; instead, Aolani, based outside China and operating in Malaysia, holds ownership. This setup appears to operate in a legal grey area, as it does not directly violate existing US restrictions, which allow clouds to be built and operated outside controlled countries like China. An Nvidia spokesman confirmed that the company's compliance team clears all cloud partners before selling chips to them, and Aolani has stated it works with a US law firm to ensure adherence to all applicable export control regulations. Additionally, ByteDance is reportedly in talks to use AI servers with over 7,000 B200 chips at a data centre in Indonesia, further expanding its access.
Broader Trend of Chinese Companies Renting AI Chips
This is not an isolated case; Chinese companies have increasingly sought intermediaries to rent computing power from Nvidia chips in regions like Malaysia, Indonesia, Singapore, South Korea, Australia, and parts of Europe. ByteDance, recognized as one of the fastest-growing AI companies, operates five of the world's 50 most popular AI consumer apps by monthly active users, according to a January ranking by venture capital firm Andreessen Horowitz. Its AI portfolio includes tools such as Dola (a chatbot), Dreamina (a video creation tool), Gauth (a homework assistant), and the recent standout product Seedance, an AI video generation model that transforms written prompts into realistic short film scenes.
Implications and Future Outlook
The ability of ByteDance to secure advanced AI chips through such partnerships highlights the challenges in enforcing export controls and the innovative strategies employed by tech firms to maintain competitiveness. As AI development accelerates globally, this trend may prompt further regulatory scrutiny and adjustments in international trade policies.
