US PE Giants Face Scrutiny Over ByteDance Data Centers, FT Reports
- Editor
- Feb 12
- 2 min read
What's happening: The Financial Times reports that major US private equity firms have invested billions in Malaysian data centers serving ByteDance, potentially enabling the TikTok owner to access restricted Nvidia chips through a legal loophole that's about to close.
Why it matters:
Regulatory shift: New US rules taking effect in May will ban Chinese companies from accessing high-end chips through overseas data centers
Investment risk: PE firms' data center investments could lose value if Chinese tech companies can't use them for AI development
Strategic impact: This could affect ByteDance's planned $12bn AI infrastructure investment, with $6.8bn earmarked for outside China
The key moves:
Infrastructure: PE firms including Blackstone, Bain Capital, and Warburg Pincus have backed Malaysian data centers with ByteDance as a tenant
Distancing: Data center operators maintain they have "no visibility" into servers and equipment customers install
Expansion: ByteDance has increasingly used overseas data centers, particularly in Malaysia, to build AI capacity
By the numbers:
Investment scale: Warburg Pincus invested up to $300mn in PDG since 2017
Major deal: Blackstone acquired AirTrunk for A$24bn ($15bn)
Valuation: Bain took WinTrix private at $3bn in 2023
Key players:
ByteDance: TikTok owner and anchor tenant at multiple Malaysian facilities
US PE firms: Blackstone, Bain Capital, Warburg Pincus, General Atlantic backing data center operators
Data center operators: WinTrix, AirTrunk, PDG, Princeton Digital Group running the facilities
Key quotes:
Industry view: "You're providing a building with electricity and a cooling system; the server and what's in the server is not your business" - Private equity executive
Regulatory perspective: "There has been this game of cat and mouse where the [US] commerce department has amended the parameters to capture the chips" - Matt Rabinowitz, Pillsbury law firm partner
The wrap: The situation highlights growing tensions between US investors capitalizing on the AI boom and Washington's efforts to restrict China's access to advanced technology. The upcoming regulatory changes could reshape the global data center industry and impact billions in private equity investments.
Comments