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ByteDance accessed Nvidia B200 AI chips via Norway data center, exploiting US export control loopholes

A subsidiary of the TikTok parent used a UK-based neocloud firm's contract to gain access to 2,304 advanced GPUs, raising regulatory concerns as Nscale prepares for a US IPO.

By LineZotpaper
Published
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UK-based neocloud provider Nscale has revealed that a subsidiary of ByteDance, the Chinese parent company of TikTok, accessed over 2,000 Nvidia B200 AI accelerators through its data center in Glomfjord, Norway, according to documents filed for Nscale's initial public offering. The deal, which was reportedly legal and exploited gaps in US export controls, exposes Nscale to regulatory and reputational risk as Washington continues to tighten restrictions on Chinese access to advanced chips.

The arrangement came to light after Nscale filed its S-1 documents for a US IPO. While the filing itself did not name ByteDance or its subsidiaries, a supporting loan agreement with Macquarie revealed that Spring (SG) Pte Ltd, a Singapore-based ByteDance subsidiary, was a significant customer. The contract allowed Spring to access 2,304 Nvidia B200 chips at Nscale's facility in Norway, with the deal accounting for $24 million of Nscale's $33 million annual revenue in 2025, according to the Financial Times.

The loan agreement, worth $105 million from Macquarie alongside $35 million in equity, helped fund the purchase of advanced Nvidia AI GPUs. Notably, a month after drawing the first tranche of that loan, Nscale closed a deal with both Microsoft and Nvidia. Nvidia CEO Jensen Huang committed to invest more than $660 million in the company as part of a broader agreement under which Nvidia promised to buy large volumes of AI chips in the future. Nvidia has since increased its commitments to over $2 billion, with an additional $860 million guarantee on Nscale's lease at a Texas facility.

The ByteDance subsidiary's access to the chips was structured in a way that appears to comply with current US export control laws, but critics argue it undermines the intent of those restrictions. Nscale has since secured larger Western clients, including a $44 billion deal with Microsoft and a $45 billion contract with Anthropic. The company expects its Spring contract to fall below 20% of overall revenue and shrink further as it wins more business from non-Chinese customers.

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Analysis

Why This Matters

  • The deal highlights a persistent gap between US export control policy and the ability of Chinese firms to obtain advanced AI hardware through third countries and subsidiaries.
  • Nscale's reliance on a ByteDance contract until recently raises questions about the effectiveness of due diligence by Western investors, including Nvidia and Microsoft, which backed the company.
  • As Nscale pursues a US IPO, regulatory scrutiny over its past dealings with a Chinese subsidiary will likely intensify, potentially impacting its valuation.

Background

The US has progressively restricted exports of advanced AI chips to China since October 2022, citing national security concerns about the development of AI capabilities that could aid military applications. Nvidia's B200 is among the most powerful GPUs on the market, designed for training large language models and other AI workloads. Export controls typically target direct sales to China but have had to adapt to transshipment and subsidiary arrangements. The loophole exploited here—using a Singapore-based subsidiary to access GPUs in Europe—illustrates the challenge of enforcement.

Key Perspectives

ByteDance/Spring: The arrangement, while legal, gives the company access to advanced AI hardware despite US restrictions. ByteDance likely benefits from the loophole without directly violating any laws. Nscale: The neocloud provider argues its contract with Spring was compliant and that it has since diversified its client base to Western hyperscalers, reducing reliance on the ByteDance deal. It faces reputational risk but continues to expand. US regulators and critics: The deal exposes a significant enforcement gap. Even if technically legal, it undermines the policy intent and may prompt the US to tighten rules on subsidiaries and third-country data centers. Nscale's partners—Nvidia and Microsoft—could face pressure to explain their oversight.

What to Watch

  • Whether the SEC or other US agencies scrutinize Nscale's IPO filing over the ByteDance contract.
  • Potential updates to US export control rules that explicitly forbid arrangements like the Spring-Nscale deal.
  • The timeline for Nscale's Spring contract to fall below 20% of revenue and whether ByteDance finds alternative access routes.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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