These investments, which have fueled ByteDance’s artificial intelligence growth, are now facing potential regulatory challenges as the US government tightens restrictions on China’s access to high-performance Nvidia chips.

Several buyout firms have unknowingly backed data centres used by ByteDance, some of which may have provided a legal workaround for acquiring high-end Nvidia chips. Under US restrictions imposed in 2023, Chinese firms are banned from purchasing these chips directly. However, they have continued to access them by leasing space in foreign data centres, particularly in Malaysia.

Starting in May, new US rules will prevent Chinese companies from accessing Nvidia’s top-tier chips, even indirectly. These regulations, introduced at the end of the Biden administration, target AI model training that could be transferred back to China.

ByteDance has already allocated $12bn for AI infrastructure investments in 2025, with $6.8bn earmarked for expansion outside China. The company is a key tenant at several Malaysian data centres, including those operated by Blackstone’s AirTrunk, Bain Capital’s WinTrix, Warburg Pincus-backed Princeton Digital Group (PDG), and General Atlantic’s Actis.

Private equity firms argue that they only provide the physical infrastructure, not the servers or chips used inside. Bain Capital, for example, emphasized that its portfolio companies comply with all legal and regulatory requirements. Blackstone and General Atlantic declined to comment.

Despite regulatory uncertainty, demand for global data centres remains strong. Analysts suggest that even if US restrictions reduce ByteDance’s reliance on these facilities, other tenants could fill the gap, ensuring continued profitability for private equity investors.

Source: Financial Times

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