CNBC: ByteDance building AI chip capacity outside China using Nvidia Blackwell

“Chinese company ByteDance is reportedly working on building up its computing power outside of China, using top of the line Nvidia AI chips,” CNBC reported this week. That single sentence carries enormous weight for investors in semiconductors, AI infrastructure, and anyone watching the chess match between Washington and Beijing over advanced technology.

Here’s what’s actually happening: ByteDance, the parent company of TikTok, is working with a Southeast Asian company on plans to use Nvidia’s Blackwell chips in Malaysia for AI research and development. The partner is a Tier 1 Nvidia cloud partner, meaning it gets priority access to Nvidia’s latest chips directly from Nvidia. ByteDance plugs in through that relationship to access hardware it cannot legally obtain at home.

Nvidia’s Blackwell chips are prohibited from being sold directly in China, which is precisely why this arrangement exists. The U.S. built a wall. ByteDance found a door in Malaysia.

Why This Matters for Nvidia

Nvidia (NASDAQ:NVDA | NVDA Price Prediction) already stripped any China data center compute revenue from its forward guidance. The stock sits at $183.14, down about 1.8% year to date, even as the underlying business posted $215.9 billion in trailing revenue with 55.6% profit margins. Any Blackwell spending ByteDance routes through a Southeast Asian Tier 1 partner would represent revenue beyond what Nvidia included in its Q1 FY2027 outlook.

Jensen Huang put the demand picture plainly on the last earnings call: “Enterprise adoption of agents is skyrocketing. Our customers are racing to invest in AI compute.” ByteDance routing around export controls to get Blackwell chips is exactly that dynamic playing out in real time.

The Broadcom Angle

Broadcom (NASDAQ:AVGO) is also relevant here. ByteDance is a known Broadcom custom chip customer, and Broadcom’s AI revenue hit $8.4 billion last quarter, up 106% year over year. CEO Hock Tan is targeting over $100 billion in AI sales by 2027. ByteDance building capacity offshore only deepens that relationship.

The Policy Problem

A CNBC commentator captured the frustration directly: “I don’t know what we’re going to do about that. I mean, this is the problem… if you were going to hold up the TikTok deal and all the things, and then this is the outcome, this is a pretty bad outcome.”

U.S. export controls were designed to slow China’s AI development. But when the world’s most compute-hungry Chinese company can route chip purchases through Malaysia via a Tier 1 Nvidia partner, the policy leaks. Prediction markets currently put the odds of a U.S. government stake in ByteDance at roughly 45%, with that probability trending down over the past week. The Malaysia arrangement may be exactly why.

The pattern illustrates how essential Nvidia’s Blackwell chips have become to frontier AI development – demand strong enough that companies legally blocked from direct purchases are engineering workarounds across international borders.