Data centers backed by the private capital of the United States

The US private capital groups have invested billions of dollars in data centers that serve the owners of Tiktok Bytedance, in a frenzy of agreements now threatened by a repression of the United States against the access of companies Chinese to the best chips.

Blackstone, Bain Capital, Warburg Pincus and General Atlantic have backed companies that direct Malaysian data centers that have Bytedance based on Beijing as a tenant, according to four people with knowledge of the arrangements.

Some have done so without knowing if the Bytedance has been using or planning to use, the sites to exploit a legal escape to access high -end NVIDIA chips as it develops its artificial intelligence potential.

Chinese companies have been forbidden to buy the highest NVIDIA performance outside the US. They contain chips owned by third -party companies. .

The lagoon is ready to close in May by rules that prohibit Chinese groups not only to have such an advanced American technology, but also to access it to help build AI language models that are transferred to China.

The rules were issued by the administration of Joe Biden just before he left office.

“If you want to build a Data Center in Malaysia with Nvidia (Chips). . . You will have to meet this type of security requirements that include (China) to train large language models in those data sets, ”said Alan Estévez, then the Undersecretary of Commerce of the United States industry and security, to The Financial Times. Just before leaving the paper last month.

The type of chips used in data centers is not clear, and private capital groups do not always know, partly because data centers do not have chips or rent them to customers.

However, several people with knowledge of the matter have told the FT that the Bytedance plans to use data centers in Malaysia to access high -end NVIDIA chips.

The purchase groups tend to consider that “it is providing a building with electricity and a cooling system; the server and what is on the server is not their business,” said a private capital executive.

In recent years, the Bytedance has made a growing use of data centers outside China, particularly in Malaysia, since it becomes a key player in the China’s career. He is planning great orders to develop his ability to abroad this year, even through these rental agreements, the FT reported last month. Separately, General Atlantic has invested in the bytete himself.

“There has been this cat and mouse game where the Trade Department (USA) amended the parameters to capture the chips,” said Matt Rabinowitz, a partner of the law firm Pillsbury.

According to the new rules, the identity of the owners and operators of the chips used in the data centers will have to go through a review process to guarantee compliance.

It is not clear if the president of the United States, Donald Trump, who intensified measures against China in his first mandate, will further alter the regulations that govern chips exports and their use.

The rules that will enter into force in May could reach the value of the investments of the purchase groups by reducing the demand of the data centers if the Bytedance and other Chinese groups cannot use them to ensure access to the best Nvidia chips, An advisor who works in the industry said.

However, the high demand for data centers worldwide could fill the void, they added.

World private capital groups have run to invest in data centers in recent years, even when another agreements activity has slowed down, attracted by the possibility of exposure to the growing use of the Internet and the AI ​​boom.

They have tried to distance themselves from the complex and politically tense businesses of chip supply by supporting companies that manage physical buildings of the data centers, but they are not owned by the chips inside.

“We have no visibility or influence on the servers and equipment that our customers install in the data centers,” said Princeton Digital Group, an operator of the data center backed by Warburg Pincus.

Bain said that their portfolio companies did not have access to the servers within the data centers they execute and added that “they comply with the relevant laws and regulations in all the jurisdictions we operate.” Blackstone and General Atlantic declined to comment.

Bytedance is the anchor tenant in a data center in Johor, a state in the south of Malaysia, which is owned by a unit of the Bain Capital portfolio company. It is also a tenant in several other facilities in Johor, including those administered by Airtrunk, PDG and Epoch Digital, owned by Airtrunk, PDG and Epoch, led by the general property infrastructure manager of Atlantic Actis.

The Bytedance plans to spend more than $ 12 billion in AI infrastructure this year, with $ 6.8 billion of that allocated to investment outside of China. But the rules of the United States could complicate that investment.

“Bytedonce complies with all applicable laws and regulations,” the company told FT.

Warburg Pincus agreed to invest up to $ 300 million in PDG in 2017 and since then has injected more funds. Blackstone completed its Airtrunk acquisition, based in Sydney of $ 24 billion ($ 15 billion), which has sites in Malaysia, Singapore, Hong Kong, Australia and Japan, in December.

Bain bought Chindata from China in 2019, merged it with Bridge data centers and listed the company combined in Nasdaq in 2020. It took the combined company, now known as Wintrix, private with an assessment of $ 3 billion in 2023.

General Atlantic completed his purchase from Actis last year.