ByteDance’s Ambitious Investment Plans
As TikTok navigates uncertainty and increasing pressure in the US, its parent company ByteDance is preparing for a significant $12 billion investment in artificial intelligence infrastructure by 2025.
According to a report by Financial Times, citing two sources familiar with the plans, ByteDance has earmarked 40 billion yuan ($5.5 billion at current exchange rates) to acquire artificial intelligence chips from China. This investment will double the company’s expenses compared to the previous year.
Additionally, $6.8 billion is reportedly allocated to enhance ByteDance’s AI capabilities abroad, primarily focusing on procuring advanced Nvidia chips for training models. ByteDance remains Nvidia’s largest customer in China, expecting to purchase around 230,000 Nvidia chips, mainly H20s, according to estimates by technology consulting firm Omdia.
Response and Market Context
However, an insider from ByteDance stated to Pandaily: “The relevant news is not true. ByteDance values the development and investment in artificial intelligence, but the rumors regarding the budgets and plans are unfounded.”
This supposed initiative toward artificial intelligence comes at a critical juncture for ByteDance, as President Donald Trump recently proposed a 50% US stake in the TikTok platform amid potential tariffs on China if an agreement is not finalized.
On January 20, Trump signed an executive order postponing the enforcement of the US law banning TikTok for 75 days.
Nevertheless, the president cautioned that tariffs could be enacted against China if the deal does not go through. He remarked, “If we wanted to do a deal with TikTok, and it was a good deal, and China didn’t approve of it, then I think they would ultimately approve it because we would impose tariffs on China,” Trump said. “I’m not saying I would do it, but you definitely could do it.”
While the 75-day extension offers a temporary respite for the platform, it continues to pose a potential threat to ByteDance, valued at $300 billion. The company’s reported advancements in artificial intelligence suggest a strategy to diversify beyond social media.
FT indicates that the report follows three months after ByteDance announced job cuts globally, particularly in Malaysia, as it pivoted towards AI-driven content moderation.
Moreover, it has been reported that ByteDance has increased its computing capacity in Southeast Asia, especially in Malaysia. In August 2023, ByteDance launched an artificial intelligence chatbot, Dubao, which attracted 71 million active users monthly. However, this still lags behind OpenAI's 300 million global weekly users.
Chinese tech firms have received informal directives to source at least 30% of their chips from domestic suppliers. ByteDance is reportedly planning to allocate 60% of its domestic semiconductor orders to Chinese manufacturers like Huawei and Cambricon, while the remainder will be spent on Nvidia chips that adhere to US export restrictions.
The company’s aggressive pursuit of artificial intelligence places it in competition with major domestic tech giants such as Baidu, Alibaba, and Tencent, all heavily investing in generative artificial intelligence, FT reported. ByteDance intends to utilize most of its Chinese-manufactured AI chips for “inference” tasks, enabling large language models to generate responses to user queries.
However, FT noted that ByteDance’s ambitions for international AI expansion may encounter challenges due to new export controls established by the Biden administration, requiring owners and operators of AI chips to undergo a vetting process. Industry insiders told the news outlet that Chinese firms have accessed advanced chips through agreements to lease third-party data centers.
In September 2024, the USA announced an increase in tariffs on all imports of Chinese chips. Following this, in December 2024, the Biden administration initiated an investigation into China’s mature processor node sector, claiming that it Katherine Tai had lowered prices and compromised competition.
In retaliation to these measures, China launched an investigation into US chip subsidies last week, citing the “harm” they inflicted on Chinese mature node chip manufacturers.
“The Biden Administration has provided a large amount of subsidies to the chip industry, leading to an unfair competitive advantage for US enterprises, which have exported relevant mature chip products to China at low prices, undermining the legitimate rights and interests of China’s domestic market,” the Ministry of Commerce of China stated in the announcement.
ByteDance eyes $12B AI chip investment this year amid TikTok uncertainty (report)
