TikTok-owner ByteDance plans to spend $12bn on AI chips in 2025

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TikTok owner ByteDance plans to spend more than $12 billion on artificial intelligence infrastructure this year, betting on the cutting-edge technology for new growth while under pressure from Washington to sell its popular video-sharing app in the United States.

The Beijing-based company has budgeted 40 billion Rmb ($5.5 billion) to buy artificial intelligence chips in China in 2025, according to two people familiar with the plans, which would double what it spent last year.The group also plans to invest about 6 .8 billion abroad to enhance its fund model training capabilities developed through Nvidia. chips.

About 60 percent of ByteDance’s domestic semiconductor orders will go to Chinese suppliers such as Huawei and Cambricon, while the rest will be spent on Nvidia chips, which have been scaled back to comply with U.S. export controls.

Beijing has given Chinese tech companies an informal guideline to buy at least 30 percent of their chips from the country’s own suppliers, the people added.

A $6.8 billion foreign investment has been budgeted to develop ByteDance’s AI computing capabilities for model training, an investment that could counter the challenges of recently expanded US export controls designed to hinder Chinese companies from creating sensitive technology.

Push comes as ByteDance under pressure in its core social media business TikTok restored service to 170 million US users on Sunday after the country’s new president, Donald Trump, promised that the companies that distribute and host the platform would not be held liable for violating a US law that bans the video app. , until it sells out.

Before Trump signed an executive order On Monday, in order for TikTok to remain open for 75 days, he said he wanted the American company to own 50 percent of TikTok in the future. .

Any such deal could affect a future ByteDance initial public offering, with the company valuing itself at $300 billion in its latest share buyback program.

The company has budgeted its huge purchases for graphics processing units in 2025 ahead of the latest interventions in the US.

ByteDance, which has emerged as the frontrunner in China’s AI race under the tech group’s founder Zhang Yiming, is doubling down on building its own AI infrastructure to retrain its founding model as well as implement AI functions across its various platforms.

It has ramped up computing capacity in Southeast Asia, particularly in Malaysia.Although Chinese companies have been barred from buying Nvidia chips outside the U.S. since 2023, they have been able to secure access to the chips through lease agreements with third-party data center providers, an industry insider said. how many insiders?

The loophole was closed last week by the outgoing Biden administration, which issued new rules requiring the identity of both the owner and operator of the chips to go through a review process.

While Trump may take a different stance on export controls, the regulations, if strictly enforced, would make it harder than ever to buy ByteDance’s chips overseas.

It has already placed large orders to build AI capacity overseas this year, such as through leases, which should be enough for most of the company’s needs in 2025, but what happened after that remained unclear, one of the people said. added the person.

ByteDance’s budget for overseas AI chip purchases was previously reported by The Information.In response to the FT report, ByteDance said:

ByteDance also faces challenges from deep-pocketed domestic rivals such as Baidu, Alibaba and Tencent, which are investing heavily in generative AI alongside these rivals, pushing out more capable models and downsizing costs to developers.

Chinese companies have yet to develop the capabilities of onshore AI data centers to support the use of AI applications even after the models are trained.

ByteDance plans to use most of its Chinese AI chips, including Huawei’s Ascend and Cambricon. “conclusion” for assignmentscomputation performed by large language models to respond to a prompt.

ByteDance released its AI chatbot Doubao in August 2023, and the AI ​​app has become the most popular AI app in China, according to analytics website Aicpb.com.

Doubao, which means “beanbag” in Chinese, had 71 million regular monthly active users as of December, compared to OpenAI’s 300 million weekly active users worldwide.

Nvidia posted $11.6 billion in revenue from China, including Hong Kong, during the first three quarters of 2024, or about 13 percent of its global total, according to a company filing.

ByteDance is Nvidia’s biggest customer in China. TikTok’s parent can only buy less advanced chips like Nvidia’s H20 for Chinese data centers, a specialized and less powerful version of its GPUs that is customized To comply with US export controls.

In 2024, it ordered about 230,000 Nvidia chips, mostly H20s, according to estimates from technology consultancy Omdia. with

Tech companies around the world will spend an estimated $229 billion on servers in 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 Sevastopoulo in Washington