Nscale, an AI cloud provider backed by Nvidia, did not prominently feature Chinese tech giant ByteDance as its largest customer in its main investor pitch for its planned U.S. initial public offering. While the relationship was detailed in a separate document, the primary IPO filing did not highlight that ByteDance represented nearly three-quarters of Nscale's sales last year. This significant customer concentration, with ByteDance's subsidiary Spring (SG) Pte Ltd identified as the customer responsible for 73% of Nscale's $33 million revenue in 2025, was not directly named in the main filing, obscuring the identity of its most critical client.
The arrangement involved ByteDance using Nscale's cloud computing facility in Norway to access advanced Nvidia AI chips. This provided a legal workaround for U.S. trade restrictions that prevent direct sales of such high-performance chips to companies in China. Although legal, this practice exposes Nscale to considerable regulatory and reputational risks, especially given the intense technological competition between the U.S. and China. The heavy reliance on a single customer, particularly one like ByteDance which is central to geopolitical tensions, is a material risk for potential investors, and the lack of prominent disclosure raises concerns about transparency.
Despite the initial heavy reliance on ByteDance, Nscale has since expanded its customer base. It has signed significant multiyear computing agreements, including deals worth up to $44 billion with Microsoft and $45 billion with Anthropic. These new contracts are expected to reduce ByteDance's share of Nscale's revenue to below 20% this year. Nscale's IPO filing aims for a $35 billion valuation, with revenue reaching $140.6 million in the first half of the year, although it also reported a net loss of approximately $1 billion during the same period. The company has over $2 billion in Nvidia commitments and an $860 million lease guarantee.
