Singapore’s skyline underscores Asia’s role in US-China AI and chip financing tensions

（Singapore,
08.01.2026）Banks
across Asia are becoming increasingly cautious about financing technology deals
that could expose them to heightened scrutiny from the United States,
particularly those involving advanced artificial intelligence chips and Chinese
end-users. As Washington and Beijing continue to compete for leadership in
artificial intelligence, lenders find themselves navigating an increasingly
complex regulatory and political landscape.

According to people familiar with the matter cited by
Bloomberg, concerns have been raised by at least nine bankers at major global
financial institutions. These bankers have either financed or reviewed
proposals that would allow Chinese companies to remotely access advanced
US-made artificial intelligence chips through data centres located outside
mainland China. While such arrangements remain legal, they are attracting
increased scrutiny from US authorities, prompting internal debates within banks
over whether the potential returns continue to justify the growing regulatory
and geopolitical risks.

In several cases, these concerns have already influenced
lending decisions. One proposed transaction involving a major US bank has
stalled after months of preparatory work, while another Western lender opted to
walk away from a Malaysia-based data center financing late last year due to
links with Chinese clients. People involved in those discussions said the
possibility of US regulatory backlash played a key role in the decisions.

The growing caution highlights how sensitive the issue has
become, even as demand for financing from technology firms remains strong.
Companies continue to seek funding to build or expand data centers abroad as a
way to work around US restrictions that limit the direct sale of high-end AI
chips to Chinese firms operating within China. Under current rules, Chinese
companies are prohibited from purchasing certain advanced chips outright, but
they can still legally access computing power through overseas facilities.

Despite this workaround, banks are increasingly aware that
financing such structures may invite unwanted attention. Industry observers
note that US banks, in particular, are no longer treating these deals as
ordinary commercial transactions. Instead, they sit at the intersection of
investment rules, export controls, and national security considerations, making
them far more sensitive than traditional infrastructure or technology loans.

One high-profile example involves a proposed loan of about
US$300 million to a Silicon Valley-based artificial intelligence firm seeking
to purchase advanced chips for use in a Tokyo data center. The end-user of the
computing power would be a popular Chinese lifestyle and social media platform.
While the deal has been under discussion for several months, it has yet to make
meaningful progress. People familiar with the situation said that although a
major US bank helped prepare materials to market the loan, it remains uncertain
whether the bank will ultimately participate.

In another case, a Western bank declined to finance a data
center project after assessing the risks linked to potential US objections.
According to those involved, the possibility of future regulatory action or
reputational damage outweighed the expected financial returns.

Earlier in 2025, however, some deals did proceed. A banking
group that included major US lenders provided a multi-billion-dollar loan to
support the construction of a data center facility in Malaysia. The project had
ties to a large Chinese technology company, disclosed publicly through official
investment announcements. At the same time, the data center maintained service
agreements with a Singapore-based AI firm that has since come under
investigation by US authorities over questions related to chip sourcing and
ownership structure.

The AI firm has stated that it operates fully in compliance
with all applicable laws, including US export control regulations. Separately,
the chip manufacturer involved said its own review found no evidence of
improper diversion and confirmed that the company is owned and operated outside
China.

Neither the banks involved nor the data center operator have
commented publicly on customer relationships or regulatory concerns.

In recent years, Washington has tightened oversight of
capital flows into advanced technology sectors connected to China. In 2024, the
US government finalized restrictions limiting investments by US individuals and
companies into certain high-tech fields in China, including semiconductors,
artificial intelligence, and quantum computing. While these rules do not
automatically prohibit overseas data center financing, they have added to
uncertainty over how future enforcement might evolve.

That uncertainty deepened further in late 2025 after US
President Donald Trump announced a policy shift allowing shipments of certain
advanced AI chips to China under strict conditions. The chips would be subject
to a significant surcharge and limited to approved buyers. Market participants
are still assessing how this decision might affect existing regulations and
future enforcement.

For Asian bankers, the timing is particularly challenging.
Loan volumes across the region, excluding Japan, fell to their lowest level in
five years in 2025. As a result, any viable lending opportunities are highly
sought after. Yet the risk of political or regulatory backlash is forcing banks
to weigh caution against the pressure to deploy capital.

Recent history offers a cautionary tale. Earlier in 2025, a
US venture capital firm faced swift political backlash after investing in a
Chinese AI startup. Within weeks, lawmakers accused the firm of supporting
Beijing’s technological ambitions, prompting calls for congressional scrutiny.
The US Treasury later contacted the firm to seek further information about the
investment.

For banks operating in Asia, the message is clear. While the
demand for AI-related financing remains strong, deals that intersect with
Chinese technology firms and advanced US chips are no longer straightforward.
As geopolitical tensions intensify, lenders are finding that even legally
structured transactions can carry significant strategic and reputational
risks—ones that many are now far less willing to take.