The backlash against US capital flowing into an AI ecosystem linked to Chinese firms can be swift. — Bloomberg
SOME bankers in Asia are starting to worry about financing deals that would grant Chinese end-users remote access to advanced US chips amid the escalating battle between the world’s two superpowers for artificial intelligence (AI) dominance.
At least nine bankers at global lenders that have financed or been pitched such deals have expressed concerns in private that their firms could be caught in the crossfire and face more US scrutiny, according to people familiar with the matter.
Some transactions and pitches have sparked internal debate on whether the risk-reward is worth it anymore, the people said, asking not be identified discussing private matters.
Such concerns have been a factor in one deal that hasn’t materially advanced despite months of work by JPMorgan Chase & Co bankers, some of those involved said.
The misgivings were also at play when a Western bank declined to finance a Malaysia-based data centre operator late last year due to a China link, other people said.
The impact sheds light on how cautious lenders are getting, despite strong demand from tech firms for financing as they try to navigate Washington’s restrictions on Nvidia Corp’s high-end AI chips being sold to Chinese firms based in the nation’s mainland.
While these companies cannot directly buy the hardware, they can legally access it through data centres in other countries outside China.
The United States Treasury didn’t immediately respond to a request for comment.
There have been other cases where lenders were pitched deals that would grant Chinese end-users access to advanced Nvidia chips outside the nation since US controls took effect, according to bankers and private credit financiers.
It’s unclear whether any of those deals ultimately received financing.
For US banks, financing AI chips or data centres that ultimately benefit a Chinese platform is no longer a neutral commercial decision – instead, it’s one that falls between the intersection of US investment, export controls and national security, said Olaf Groth, practice professor for futures, strategy and policy at UC Berkeley Haas (School of Business).
The deal that hasn’t moved forward yet is a potential loan involving Silicon Valley-based PaleBlueDot AI, which has been seeking to borrow about US$300mil to help fund the purchase of advanced Nvidia chips for use in Japan.
The technology would be used in a Tokyo-based data centre, and the end-user client would be Xiaohongshu, China’s popular lifestyle social media platform, also known as Red Note, Bloomberg News reported in December.
The deal had been under discussion for at least four months, though it remains unclear if it will move forward.
JPMorgan was involved in preparing marketing materials for potential lenders though it’s possible the bank would ultimately refrain from taking a role, people familiar with the matter said.
For the Western bank that passed on the data centre deal, the risk of potential US pushback was too high to merit involvement, according to people involved with the discussions.
Another example came earlier in 2025.
JPMorgan and Citigroup Inc joined a banking group that provided a US$2.8bil loan to Bridge Data Centres for a facility in Malaysia, committing US$120.28mil each, people familiar with the matter said in September.
One of the clients for the data centre has been Chinese tech firm ByteDance Ltd, according to a press release from Malaysia Investment Development Authority.
The data centre also had service contracts with Singapore-based AI firm Megaspeed International Pte, according to documents seen by Bloomberg News.
The United States government is investigating Megaspeed’s ownership structure and whether it’s smuggled Nvidia chips to China, people familiar with the effort said in December. It’s not known when the investigation began.
“Megaspeed is a Singapore-based company, operating fully in compliance with all applicable laws, including US export control regulations,” the firm previously said in an emailed statement.
An Nvidia spokesperson has said its inquiry into Megaspeed found no evidence of diversion and showed that the company is fully owned and operated outside of China, with no China shareholders.
Representatives for Citigroup and JPMorgan declined to comment. Bridge Data Centres said it is “not in a position to divulge customer information.”
The United States government has in recent years increased scrutiny of money flowing into the sector.
The Biden administration in 2024 finalised restrictions on investments by US individuals and companies into advanced technology in China, including semiconductors, quantum computing and AI.
Still, it’s unclear how the legal ramifications might change after US President Donald Trump’s decision in December to grant Nvidia permission to ship its H200 AI chips to China.
The hardware would enter China for a 25% surcharge, with only “approved customers” able to secure a shipment, Trump said.
For bankers in Asia, any deals that can get done are in high demand after loan volumes in the region excluding Japan in dollars, euros and yen fell to the lowest in five years in 2025.
But the backlash against US capital flowing into an AI ecosystem linked to Chinese firms can be swift.
Benchmark, a Silicon Valley venture capital firm, experienced that earlier in 2025 after backing a Chinese startup behind Manus AI.
Within weeks of the investment becoming public, Republican senators accused Benchmark of aiding Beijing and called for congressional action.
The US Treasury even sent the firm a letter inquiring about the deal. — Bloomberg
Kari Lindberg writes for Bloomberg. The views expressed here are the writer’s own.
