As TikTok faces uncertainty and mounting pressure in the US, its parent company ByteDance plans an ambitious $12 billion investment in artificial intelligence infrastructure for 2025.
That’s according to a report in the Financial Times, which cited two people familiar with the plans as saying that ByteDance has allocated RMB 40 billion ($5.5 billion at current exchange rates) for AI chip purchases within China. This doubles the company’s spending from the previous year.
An additional $6.8 billion is reportedly earmarked for overseas expansion of ByteDance’s AI capabilities, particularly focusing on advanced Nvidia chip acquisitions for foundation model training. ByteDance is Nvidia’s largest client in China to date. In 2024, it purchased about 230,000 of Nvidia’s chips, mostly H20s, the FT said, citing estimates from tech consultancy Omdia.
However, a person from ByteDance told Beijing-based Pandaily: “The related news is not accurate. ByteDance values the development and investment in the field of artificial intelligence, but the rumors about related budgets and plans are not correct.”
The purported AI push comes at a critical moment for ByteDance, with President Donald Trump recently proposing a 50% US ownership stake in the TikTok platform and threatening potential tariffs on China if a deal isn’t reached.
On Monday (January 20), Trump signed an executive order delaying the enforcement of the US’s TikTok “divest-or-ban” law by 75 days.
However, the president warned that tariffs could be imposed on China if the country rejected a deal.
“If we wanted to make a deal with TikTok and it was a good deal and China wouldn’t approve it, then I think ultimately they’d approve it, because we’d put tariffs on China,” Trump said. “I’m not saying I would, but you certainly could do that.”
While the 75-day extension granted by Trump offers the platform temporary breathing room, it still potentially threatens ByteDance’s $300 billion valuation. ByteDance’s reported AI push indicates an attempt to diversify beyond social media.
The FT report comes three months after ByteDance was reported to have implemented job cuts across its global operations, particularly in Malaysia, as it shifted focus to AI content moderation.
The newspaper said ByteDance has ramped up computing capacity in Southeast Asia, particularly in Malaysia. In August 2023, ByteDance launched its AI chatbot Doubao, which has attracted 71 million monthly active users. However, this still fell short of OpenAI‘s 300 million weekly global users.
Chinese tech companies have received informal guidance to source at least 30% of their chips from domestic suppliers. ByteDance now reportedly plans to direct 60% of its domestic semiconductor orders to Chinese manufacturers like Huawei and Cambricon, while the remainder will go toward purchasing Nvidia chips that comply with US export restrictions.
The company’s aggressive AI push positions it against domestic tech giants Baidu, Alibaba, and Tencent, which are also making substantial investments in generative AI, the FT said. ByteDance reportedly plans to use most of its Chinese-made AI chips for “inference” tasks – the processes that enable large language models to generate responses to user prompts.
However, the FT noted that ByteDance’s overseas AI ambitions could face headwinds from the Biden administration’s new export controls, which require owners and operators of AI chips to undergo a review process. Industry insiders told the news outlet that Chinese companies have been able to access advanced chips through third-party data center rental agreements.
In September 2024, the US announced a tariff hike on all Chinese chip imports. Then in December 2024, the Biden administration launched a probe into China’s mature chip node sector, which according to US Trade Representative Katherine Tai, has lowered prices and hurt competition.
In response to these measures, China launched a probe into US chip subsidies last week, citing the “harm” that they have caused to Chinese mature node chipmakers.
“The Biden administration has given a large amount of subsidies to the chip industry, and US enterprises have thus gained an unfair competitive advantage and exported relevant mature node chip products to China at low prices, which has undermined the legitimate rights and interests of China’s domestic industry,” China’s commerce ministry said in a statement.
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