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TikTok-owner ByteDance plans to spend more than $12bn on artificial intelligence this year, betting on the cutting-edge technology for new growth as it comes under pressure from Washington to sell the app. the most popular video sharing site in the United States.
The Beijing-based company has budgeted Rmb40bn ($5.5bn) to acquire AI chips in China by 2025, according to two people familiar with the plans, which would double what it spent last year. The group also plans to invest about $ 6.8bn overseas to strengthen its ability to train the model using advanced Nvidia. chips.
About 60 percent of ByteDance’s domestic semiconductor orders would go to Chinese suppliers such as Huawei and Cambricon, while the rest would be used for Nvidia chips that have been watered down to comply with foreign control. US state, according to people.
Beijing has given Chinese technology companies an informal directive to buy at least 30 percent of their chips from domestic suppliers, the people added.
The $6.8bn overseas investment was aimed at building ByteDance’s AI computing capabilities for model training. The investment could face challenges from recently expanded US export controls designed to hinder Chinese companies building light technologies.
Pushing comes as ByteDance is facing pressure on its core social media business. TikTok restored service to its 170 million US users on Sunday after the country’s incoming President, Donald Trump, vowed that the companies that run and operate the platform would not be held liable for violating the law. The US has banned the use of video unless it is for sale.
While he is Trump sign the executive order on Monday to keep TikTok open for 75 days, he said he wants the American company to have a 50 percent stake in TikTok in the future. Trump said he could “of course” impose tariffs on China if it rejects the deal.
Any such move could affect ByteDance’s future initial public offering plans, with the company hoping to raise $300bn during its latest share buyback program.
The company has established its largest budget for the purchase of imaging processing units in 2025 ahead of the latest US operation.
ByteDance, which under the leadership of the tech group’s founder, Zhang Yiming, has been an early leader in China’s AI race, has doubled down on its own AI infrastructure to train its basic model, as well as implementing AI functions across its various platforms.
It has increased computing capacity in Southeast Asia, particularly Malaysia. Although Chinese companies are barred from buying Nvidia chips outside the US from 2023, they have been able to gain access to the chips through lease agreements with third-party data center providers, many of which industry entrants said.
This site was closed last week by the progressive Biden administration, which issued new rules that the identity of the owner of the chips must be verified.
While Trump may take a different view on foreign controls, the regulations — if strictly enforced — could make ByteDance’s overseas acquisitions more difficult than ever. first.
It has already made large orders to build AI capabilities overseas this year, such as lease deals, according to one of the people. It should meet most of the company’s needs by 2025 but what happened after that remained uncertain, the person added.
ByteDance’s budget to buy AI chips overseas was previously reported by news outlet The Information. In response to the FT report, ByteDance said: “The anonymous information about our project is incorrect.”
ByteDance is also facing challenges from serious domestic competitors, such as Baidu, Alibaba and Tencent, which are investing heavily in artificial intelligence. Alongside these rivals, it is pushing more capable models and lowering costs for manufacturers.
Chinese companies still need to build onshore AI data center capabilities 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 – for “inference” tasks.computer generated examples of large languages to produce an answer to a question.
ByteDance released its AI chatbot in Doubao in August 2023 and the AI tool has become China’s most popular AI tool, according to the website Aicpb.com.
Doubao, which means “beanbag” in Chinese, had 71 million monthly active users as of December, compared to OpenAI’s 300 million active users worldwide.
Nvidia reported $11.6bn in revenue from China, including Hong Kong, or 13 per cent of its global total, during the first quarter of 2024, according to company reports.
ByteDance is Nvidia’s biggest customer in China. TikTok’s parent can buy more advanced chips like Nvidia’s H20 for China’s data centers, a specialized and less powerful version of its GPUs designed to connect with US foreign control.
In 2024, it ordered about 230,000 Nvidia chips, mostly H20s, according to estimates from technology specialist Omdia. This compares to 485,000 of the highly advanced “Hopper” bought by Microsoft last year and 224,000 acquired by Meta.
Tech companies worldwide will spend an estimated $229bn on servers by 2024, according to Omdia, led by Microsoft’s $31bn in spending and Amazon’s $26bn.
Additional reporting by Ryan McMorrow in Beijing and Demetri Sevastopulo in Washington
