$7B NVIDIA chip purchase: How ByteDance is circumventing US restrictions
What's the story
China's ByteDance, the parent company of TikTok, is reportedly planning to buy NVIDIA chips worth $7 billion in 2025. This could make ByteDance one of the top global owners of these advanced chips, as reported by The Information. The plan comes despite US restrictions to prevent Chinese firms from acquiring such American AI chips.
Trade barriers
US restrictions on AI chip exports
In 2022, the US imposed export restrictions on certain types of AI chips to select countries, including China where ByteDance is based. These restrictions have been tightened several times since their initial implementation. The move is part of broader US efforts to regulate the global technology trade and maintain its technological edge.
Loophole exploitation
ByteDance's strategy to navigate US restrictions
Reportedly, ByteDance is getting around these restrictions by exploiting a loophole. Rather than directly importing the chips into China, the company plans to store them in data centers located in other regions like Southeast Asia. This way, it doesn't technically violate US restrictions, enabling ByteDance to continue with its ambitious chip acquisition plan.
AI expansion
ByteDance's AI chatbot and future plans
ByteDance runs Doubao, an AI chatbot that has become immensely popular in China with more than 51 million active users. The company's plan to buy a huge number of NVIDIA chips could further drive growth and development in its AI efforts. However, the details of how these chips will be used remain unknown.