bytedance bypasses us export restrictions to secure nvidia chips
Beijing, Tuesday, 31 December 2024.
ByteDance, the parent company of TikTok, is navigating around U.S. export restrictions by purchasing Nvidia AI chips and storing them outside of China. This strategy allows ByteDance to acquire advanced technology despite regulatory barriers. The company plans to spend $7 billion on these chips in 2025, which could significantly impact Nvidia’s stock performance. By using overseas data centers, ByteDance avoids directly violating U.S. regulations. This move highlights the company’s commitment to expanding its AI capabilities, particularly for its popular Doubao chatbot. The acquisition also underscores the ongoing demand for high-performance AI hardware, even amid tightening international trade restrictions. This development has sparked interest among investors, as it illustrates how companies might adapt to geopolitical challenges while pursuing technological advancements.
Market response and stock performance
Nvidia’s stock showed positive movement in response to ByteDance’s plans, rising nearly 2% in afternoon trading [3]. The news helped alleviate recent investor concerns about potential sales impacts [2]. The chipmaker maintains a strong market position, with Wall Street assigning a Strong Buy consensus rating based on 37 Buys and three Holds [2]. Despite trading in a narrow range over the past month, Nvidia’s shares have surged 189 % year-to-date [3].
Strategic chip acquisition plans
ByteDance’s $7 billion investment will include a mix of Nvidia’s premium offerings, including H100, Blackwell, and H20 chips [3]. The company plans to deploy these chips in data centers across Southeast Asia, with new facilities in Malaysia [3]. This forms part of a larger $20 billion allocation for AI-related hardware, including data centers and undersea cables [2]. ByteDance’s founder, Zhang Yiming, has personally engaged in negotiations with suppliers and data center operators in Southeast Asia and Europe [2].
AI development and market implications
The chip acquisition supports ByteDance’s expanding AI initiatives, particularly its Doubao chatbot, which has attracted 51 million active users [1]. The company’s ability to secure Nvidia chips, despite U.S. restrictions [1], demonstrates the persistent demand for advanced AI hardware. This arrangement could set a precedent for how companies navigate export controls while maintaining access to crucial technology [2].