How Tencent Bypasses US Export Restrictions to Access Nvidia’s Latest GPUs via Datasection’s Data Centers in Osaka and Sydney

• Why is Tencent Turning to Offshore GPU Access?
• What’s Driving the Surge in GPU Demand?
• How Did US Policy Changes Influence This Deal?
• What Are the Financial and Geopolitical Stakes?
• What Challenges Does Datasection Face?
• The Bottom Line
• FAQs

In a strategic MOVE to circumvent US export restrictions, Tencent has secured access to Nvidia’s cutting-edge GPUs through Datasection’s data centers in Osaka and Sydney. The deal, valued at over $1.2 billion, highlights the growing demand for AI infrastructure and the lengths Chinese tech giants will go to maintain their competitive edge. This article delves into the details of the agreement, the geopolitical backdrop, and the implications for the global tech landscape.

Why is Tencent Turning to Offshore GPU Access?

Tencent, China’s tech behemoth, has found a workaround to US export bans by leasing Nvidia’s latest GPUs from Datasection, a Japanese firm that pivoted from marketing solutions to AI infrastructure last year. The deal includes a significant portion of Datasection’s first batch of 15,000 Blackwell processors, all located in Japan—a critical advantage given China’s inability to import these chips directly. According to industry insiders, this arrangement underscores the escalating demand for high-performance computing power in AI development.

What’s Driving the Surge in GPU Demand?

Norihiko Ishihara, CEO of Datasection, noted a dramatic shift in demand: “Six months ago, 5,000 B200 chips sufficed for AI models. Now, 10,000 is the bare minimum.” This explosive growth reflects the breakneck pace of AI innovation and the urgency for companies like Tencent to secure offshore GPU capacity. With US restrictions blocking China’s access to Nvidia’s most powerful chips, Chinese firms are increasingly relying on third-party providers like Datasection, CoreWeave (US), and Nebius (Europe) to meet their computational needs.

How Did US Policy Changes Influence This Deal?

The Biden administration’s failed attempt to close a regulatory loophole in May 2024 allowed Datasection to expedite its Osaka project. Although the White House later approved a less advanced Nvidia chip for China, analysts like Lin Qingyuan of Bernstein Research argue that offshore leasing will remain a “viable option” for Chinese tech giants. Tencent, Alibaba, and ByteDance are already training AI models overseas and licensing the results back to China, according to sources familiar with the matter.

What Are the Financial and Geopolitical Stakes?

Datasection’s stock has soared nearly 185% this year, despite recent volatility due to short-seller attacks and concerns over overinvestment. The company’s $800 million Sydney project, featuring Nvidia’s B300 chips, is set to become the world’s first hyperscale AI cluster of its kind. Tencent, the presumed primary user, maintains that its cloud computing practices are “transparent and legal.” Meanwhile, Datasection has secured approvals from the US Commerce Department and Nvidia, mitigating risks from potential policy shifts.

What Challenges Does Datasection Face?

Critics have questioned Datasection’s ties to Tencent and First Plus Financial Holdings, a Singapore-based investor with Chinese ties. The company insists its operations comply with all regulations, and CEO Ishihara emphasizes that GPU purchases—its largest expense—are amortized over five years to balance cash flow. In a worst-case scenario, he admits operations might pause for “about a week” if US-China tensions escalate.

The Bottom Line

As AI demand outpaces supply, offshore GPU leasing has become a lifeline for Chinese tech firms. Datasection’s ambitious expansion—including a push into Europe with high-profile hires like Spanish politician Pablo Casado Blanco—signals its ambition to dominate the niche. For Tencent, the gamble on offshore capacity is a calculated risk to stay ahead in the AI arms race.

FAQs

How is Tencent accessing Nvidia GPUs despite US restrictions?

Tencent is leasing GPUs from Datasection’s data centers in Osaka and Sydney, bypassing direct US export controls.

What is the value of the Tencent-Datasection deal?

The agreement is worth over $1.2 billion, covering 15,000 Blackwell processors initially.

Why is offshore GPU leasing popular among Chinese firms?

US export bans prevent direct imports of advanced chips, making third-party leasing the only viable option.

How has Datasection’s stock performed this year?

Shares ROSE 185%, though they’ve retreated from a summer peak amid short-seller pressure.

What safeguards are in place if US-China policies change?

Datasection can terminate contracts if regulations tighten, though Ishihara calls this unlikely.