Nscale Buried ByteDance Deal Accounting for 73% of Revenue Ahead of $35 Billion IPO

Nscale Buried ByteDance Relationship in IPO Documents

UK-based AI cloud provider Nscale concealed a critical business relationship with ByteDance in its pitch to investors, despite the Chinese tech giant accounting for nearly three-quarters of its sales last year1

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. The London-based neocloud company filed for a US initial public offering last week, seeking a valuation of up to $35 billion, but nowhere in its 192-page S-1 filing did it mention ByteDance by name2

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The relationship only came to light through a supporting document—a $105 million loan agreement with Macquarie—that named Spring (SG) Pte Ltd, a Singaporean ByteDance subsidiary, as a significant customer1

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. People familiar with the matter confirmed to the Financial Times that Spring was indeed a ByteDance subsidiary and that the TikTok parent was Nscale's largest revenue source in 20252

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ByteDance Access to Nvidia AI Chips Through Norway Data Center

The SEC filing reveals that Nscale signed a contract with Spring in May 2025, granting the ByteDance subsidiary access to 2,304 Nvidia B200 chips at the company's Norway data center in Glomfjord1

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. This arrangement allowed ByteDance to access advanced Nvidia AI chips that it would otherwise have been unable to purchase in China due to US export controls2

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Spring contributed $24 million of Nscale's $33 million annual revenue in 2025, representing 73% of total sales1

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. Spring is listed on Apple and Google's app stores as the developer of Trae and Dola, two of ByteDance's AI apps, and regulatory filings in Singapore link Spring to ByteDance staff and other international affiliates2

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Legal but Risky Arrangement Exploited US Trade Restrictions

While the arrangement is entirely legal, it exploited a loophole in US trade restrictions that allowed Chinese tech companies to rent AI chips abroad even though they couldn't import them directly into China1

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. The setup exposes Nscale to regulatory and reputational risks at a time when the US and China are engaged in a high-stakes race to dominate AI technology2

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Macquarie imposed strict monitoring requirements on the deal, compelling Nscale to assess ByteDance's use of the chips and report any "compute anomalies or suspicious configurations" that might violate US export controls1

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. Nscale also conducted third-party due diligence on both ByteDance and Spring to ensure compliance with applicable laws1

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ByteDance Deal Jump-Started Path to Nvidia Backing

The ByteDance contract proved pivotal for Nscale's rapid growth trajectory. ByteDance's commitment underpinned the $105 million loan from Macquarie, which, along with $35 million in equity, funded the purchase of the Nvidia B200 chips2

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. The first tranche of the loan was drawn in August 20252

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Just one month later, Nscale closed a major deal with Microsoft and Nvidia, with Jensen Huang committing to invest more than $660 million into the company1

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. Nvidia's chief executive lauded Nscale as a "national champion" for the UK2

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. Nvidia has since increased its commitments to over $2 billion, plus an additional $860 million guarantee on Nscale's lease at a Texas facility1

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Nscale Secured Massive Contracts with Microsoft and Anthropic

Nscale has since landed significantly larger contracts with Western AI hyperscalers. The company secured a $44 billion deal with Anthropic and a $43.8 billion contract with Microsoft running through December 20331

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. The prospectus lists $103.4 billion of active and contracted total contract value as of August 313

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Nscale reported revenue of $33 million for 2025 and $140.6 million for the first half of 2026, though it also posted a net loss of $1.02 billion for those six months3

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. The company stated that these new contracts would reduce Spring's contribution to below 20% of overall revenue, with expectations for further decline as it adds more Western clients1

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. However, one reading of the prospectus found that the largest customer still provided 52% of revenue in the first half of 20263

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Geopolitical Risks Shadow Neocloud Business Model

The disclosure raises broader questions about the neocloud business model and its vulnerability to geopolitical risks. For AI cloud providers hunting for anchor tenants to underwrite expensive AI infrastructure build-outs, Chinese tech groups have proved lucrative customers2

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. However, this strategy remains fraught with regulatory uncertainty.

The US has recently moved to close loopholes that allowed Chinese companies to access advanced chips through foreign subsidiaries or by renting compute capacity abroad1

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. The Trump administration is working to further tighten these restrictions1

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. It remains unclear whether these moves will affect the Spring-Nscale deal or similar arrangements at other cloud facility providers.

Nscale's board includes high-profile members such as former UK deputy prime minister Nick Clegg, former Meta executive Sheryl Sandberg, and Berkshire Hathaway director Susan Decker2

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. The company declined to comment on the ByteDance relationship2

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. Watch how regulators respond to this disclosure and whether it impacts investor appetite for the Nscale IPO as the company navigates increasingly complex trade restrictions between the US and China.