TikTok owner ByteDance plans to spend $12 billion on AI chips by 2025.
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TikTok owner ByteDance plans to spend more than $12 billion on artificial intelligence infrastructure this year, playing big tech for new growth amid Washington’s push to sell the popular video-sharing app in the US.
The Beijing-based company It has budgeted Rmb40bn ($5.5bn) to acquire AI chips in China by 2025, according to two people familiar with the plan, double what it spent last year. The group plans to invest about $6.8 billion in foreign investment to boost its base model training capabilities using advanced Nvidia chips.
About 60 percent of ByteDance’s domestic semiconductor orders go to Chinese suppliers such as Huawei and Cambricon, while the rest is spent on NVIDIA chips watered down to comply with US export controls.
Beijing has informally instructed Chinese tech companies to buy at least 30 percent of their chips from domestic suppliers, the people added.
A $6.8 billion foreign investment budget has been earmarked to provide ByteDance’s AI computational capabilities for model training. That investment could face challenges from U.S. export controls designed to prevent Chinese companies from developing sensitive technologies.
The push comes as ByteDance faces pressure in its core social media business. TikTok restored service to 170 million US users on Sunday after President Donald Trump said the companies that distribute and host the platform will not be held liable for violating US law unless it is sold.
When Trump signed an executive order on Monday to keep TikTok open for 75 days, he said he wants the American company to own 50 percent of TikTok in the future. Trump said he would “definitely” impose tariffs on China if it reneges on the deal.
Any such transaction could hurt ByteDance’s plans for a future initial public offering, with the company valuing itself at $300 billion during a recent buyback program.
The company has set its massive procurement budget for graphics processing units in 2025 ahead of recent interventions in the US.
Under the leadership of its technology team founder Zhang Yiming, ByteDance, a leading player in China’s AI competition, is building its own AI infrastructure to train its base model, as well as implementing AI functions on various platforms.
It has boosted computing capacity in South-East Asia, particularly Malaysia. Although Chinese companies are barred from buying Nvidia chips outside the US starting in 2023, they have been able to secure access to the chips through lease agreements with third-party data center suppliers, according to several industry experts.
That loophole was closed last week by the outgoing Biden administration, which enacted a new law requiring chip owners and operators to undergo an identity verification process.
While Trump may take a different stance on export controls, the rules — if strictly enforced — will make ByteDance chip purchases more difficult than ever.
This year, it has given large orders to build overseas capacity, such as lease agreements, according to one of the people. In the year It should be enough for most of the company’s needs by 2025, but what happens after that is uncertain, the person added.
ByteDance’s budget overseas purchase of AI chips was previously reported by news outlet The Information. In response to the FT report, ByteDance said: “The anonymous source’s information about our plans is incorrect.”
Baidu, Alibaba, and Tencent are also facing big-pocketed domestic competitors who are investing heavily in generative AI, and byte dance challenges. Alongside these rivals, it is pushing more capable models and lowering costs for developers.
Chinese companies still need to increase the capacity of onshore AI data centers to support the use of AI applications after the models are trained.
ByteDance plans to use most of its Chinese AI chips — including Huawei’s Ascend and Cambricon — for “data” functions, the kind of computation that responds to requests from large language models.
ByteDance released AI chatbot Doubao in August 2023 and the AI app has become the most popular AI app in China, according to Aicpb.com website analytics.
Dubao, which means “bean” in Chinese, had 71 million regular monthly active users as of December, compared to OpenAI’s 300mn weekly active users globally.
Nivea recorded $11.6 billion in revenue from China, including Hong Kong, or 13 percent of the global total, in the first three quarters of 2024.
ByteDance is Nvidia’s biggest customer in China. For Chinese data centers, like Tik Tok’s parent Nvidia H20, they can only buy a special, low-power version of its GPUs to comply with US export controls.
In the year It has ordered about 230,000 Nvidia chips, mostly H20s, by 2024, according to estimates by technology consultancy Omdia. This compares to 485,000 of the more advanced “hopper” chips purchased by Microsoft last year and 224,000 purchased by Meta.
Tech companies worldwide will spend an estimated $229 billion on servers by 2024, according to Omdia, led by Microsoft’s $31 billion in capital spending and Amazon’s $26 billion.
Additional reporting by Ryan McMorrow in Beijing and Demetri Sevastopulo in Washington
