Latest Update: Tencent Secures Advanced Nvidia AI Chips Via Japanese Alliance
A recent report reveals a clever strategy employed by Chinese technology giant, Tencent, to gain access to Nvidia's most powerful AI semiconductors. Despite stringent export limitations imposed by the United States, Tencent is reportedly leveraging a partnership with a Japanese firm, Datasection, to acquire crucial computing power. This development highlights a significant loophole in current US trade policies, sparking fresh debate about their effectiveness in the global tech race.
Datasection's Pivotal Role in AI Computing
Datasection, a Japanese company that has recently shifted its core business from marketing services to establishing advanced AI data centers, is at the heart of this workaround. The company has rapidly emerged as a leading "neocloud" provider, specializing in renting out GPU capacity to major technology firms worldwide. Its facilities, particularly a data center located near Osaka, are equipped with approximately 15,000 of Nvidia's cutting-edge Blackwell B200 processors. A substantial portion of the computational power from these advanced chips is now being contracted to Tencent through a third-party arrangement.
This multi-billion dollar agreement, valued at around $12 billion, allows Tencent to legally utilize the high-performance computing capabilities that are otherwise restricted from direct export to China by US regulations. Datasection is also expanding its footprint with a new AI data center in Sydney, Australia, which will house Nvidia's even more advanced B300 chips. These B300 processors are known to outperform any hardware currently permitted for sale in China. The initial phase for 10,000 B300s alone cost an estimated $521 million, and this Australian facility is also expected to largely serve Tencent, creating what Datasection's CEO, Norihiko Ishihara, calls "the world’s first hyperscale AI cluster using B300 chips."
Exploiting Policy Gaps: The US Export Control Conundrum
The strategy adopted by Datasection and Tencent effectively capitalizes on existing legal gaps within US export controls. While the Biden administration had previously sought to tighten these loopholes, these specific rules were reportedly reversed by President Donald Trump in May, enabling companies like Datasection to proceed swiftly with their deals, such as the Osaka agreement. Although the US recently approved the sale of lower-performance chips to China, major Chinese tech players including Tencent, Alibaba, and ByteDance are opting for overseas computing solutions rather than acquiring downgraded hardware.
Industry analysts suggest that renting GPU capacity abroad is proving to be a more appealing option for Chinese tech groups compared to purchasing less powerful, domestically approved chips. This trend underscores the growing demand for top-tier AI computing power that cannot be met by restricted domestic supplies.
Datasection's Growth and Global Ambitions
The US export policy on advanced chips has inadvertently created significant growth opportunities for Datasection. The company's stock has seen an impressive 18% surge this year, despite experiencing a halving from its peak of ¥4,000 due to concerns over potential over-investment and a short-seller attack. To fuel its expansion, Datasection has also successfully raised ¥50 billion through equity warrants from Singapore-based First Plus Financial Holdings, which is owned by a Chinese national.
Despite increased scrutiny, Datasection is forging ahead with ambitious plans to expand into the European market. The company has strategically appointed high-profile individuals to its board, including Spanish politician Pablo Casado Blanco and John Ellis Bush Jr., a scion of the influential US Bush political family. CEO Ishihara remains confident in the robust demand for GPU capacity, believing that even if US export regulations change again, new customers would be readily available.
Implications for Washington's Export Controls
For Tencent and other leading Chinese tech companies, the Japanese deal highlights a key method they are using to navigate international trade restrictions: outsourcing intensive AI training to overseas data centers. This development raises serious questions about the overall effectiveness of Washington's export control measures and emphasizes the increasingly vital role of "neocloud" providers in the fierce global competition for AI dominance.
The ongoing saga of Nvidia AI chip access and the innovative methods employed by global tech players like Tencent and Datasection will undoubtedly remain a focal point in the ever-evolving landscape of international technology and trade policy.
