Banks chase risky chip loans in Asia’s US$8.2 trillion AI buildout
With lenders a bigger funding source, firms must do more to prove projects will generate enough revenue
The AI industry is witnessing a surge in debt financing across Asia as firms build data centers and acquire advanced computer chips, according to a report by PricewaterhouseCoopers. While borrowing for GPU acquisition has grown rapidly in the US, Asian lenders have generally been more cautious, relying on private credit funds willing to accept higher risks.
Now, banks are becoming more comfortable with GPU financing, significantly expanding the capital available for AI projects. In recent months, banks played key roles in $3.8 billion of GPU loans to GMI Cloud and other AI infrastructure providers, such as Zankore and PaleBlueDot AI. Citigroup and JPMorgan Chase were involved in these transactions, highlighting the growing importance of traditional lenders in the AI financing landscape.
However, banks face challenges in valuing chips and assessing risks associated with rapidly changing technology and geopolitical tensions. Despite these concerns, traditional lenders, particularly global investment banks, are leading the way in Asian GPU financing due to their expertise in complex structures. For companies seeking chip financing, demonstrating sufficient revenue potential will be crucial in securing loans.
Traditional lenders may also impose stricter underwriting standards and higher debt service reserve requirements.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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