TikTok owner ByteDance is considering expanding a data center project in northeastern Brazil, a move that would strengthen its standing as Latin America’s leading builder of computing facilities.

The Beijing-based company is seeking a developer to oversee the second phase of a project at an industrial port in the state of Ceara, where it benefits from tax breaks for data exports, according to people familiar with the process who asked not to be named discussing private information.

At stake is Brazil’s push to remain a competitive data center builder at a time when countries, including Chile and Argentina, are offering incentives and creating infrastructure to capture the same types of investments.

The expansion would be even larger than the $10 billion, 300-megawatt project currently under construction also in Ceara, the people said. ByteDance is also in early talks with developers for a similar-sized data center outside of the Pecem port, some of of the people added. The project would serve clients in Brazil, while the data centers at Pecem are required to export the data to qualify for tax exemptions. ByteDance didn’t respond to an email seeking comments.

To support its bet on AI becoming its next growth engine, ByteDance is focused on ramping up hardware spending to better equip its facilities. However, voter backlash against data centers in the US midterm elections threatens to slow the ongoing build out and drive developers to consider other locations such as Brazil.

Brazil’s data center capacity has more than doubled since 2022 to surpass one gigawatt, according to industry group Brasscom. It expects installed capacity to grow by about 20% a year through 2031, nearly tripling from 2025 levels. Pecem is located in one of Brazil’s most attractive regions for wind and solar generation, which makes data centers less reliant on transmission lines than other projects in southern Brazil.

Last year, ByteDance announced that it would invest 200 billion reais ($36 billion) for a data center complex at Pecem that would be built in phases. Construction for the first phase began in early 2026.

“The region around Fortaleza, and the Northeast in general, stand out because Brazil’s submarine cables arrive right there,” Brasscom President Affonso Nina said. “That’s a prime location.”Brazilian data center construction is set to accelerate after President Luiz Inacio Lula da Silva signed tax breaks for equipment imports in September. The measures cut the tax burden on imported servers, processors and networking equipment by about a third, helping make Latin America’s largest economy a more competitive location for data centers.

The industry is still waiting for the government to publish regulations detailing which products will qualify for the tax breaks.

Data centers enjoy bi-partisan support in Brazil and, unlike the US, local opposition has been limited. Lula pledged to bring more data centers to Brazil in his victory speech after winning reelection in October.

While the industry has been celebrating the approval of Redata, obstacles remain to reach the country’s potential, such as expanding electricity transmission lines to bring more renewable energy to population centers in southern Brazil.

“We still have other challenges,” said Bruna de Barros Correia, an energy partner at Brazilian law firm BMA Advogados. “We have a transmission grid that can’t accommodate all the power plants seeking to connect to the system.”