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ByteDance, the owner of TikTok, plans to spend more than $12 billion on artificial intelligence infrastructure this year, betting on cutting-edge technology for new growth as it comes under pressure from Washington to sell its popular video-sharing app in the US.
The Beijing-based company has planned Rmb40 billion ($5.5 billion) to buy AI chips in China in 2025, according to two people familiar with the plans, which would double the amount it spent last year. The group also plans to invest about $6.8 billion overseas to improve its core model training capabilities 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 spent on Nvidia chips that have been watered down to comply with U.S. export controls, the people said.
Beijing has given Chinese technology companies informal guidelines to buy at least 30 percent of their chips from their own suppliers in the country, the people added.
A $6.8 billion investment abroad is planned to build ByteDance’s AI computing capacity to train models. This investment could face challenges from recently expanded US export controls designed to hinder Chinese companies from building sensitive technologies.
Push comes as ByteDance is facing pressure in its core social media business. TikTok restored service to 170 million US users on Sunday after President-elect Donald Trump promised that companies that distribute and host the platform would not be held liable for violating a US law that bans the video app unless it is sold.
While Trump signed the executive order on Monday to keep TikTok open for 75 days, he said he wants the American company to have 50 percent ownership in TikTok in the future. Trump said he could “certainly” slap tariffs on China if it rejects the deal.
Any such transaction could affect plans for a future initial public offering by ByteDance, with the company valued at $300 billion during a recent share buyback program.
The company has made its huge budget for the acquisition of graphics processing units in 2025 before the recent interventions in the US.
ByteDance, which has become a front-runner in the AI race in China under the leadership of the tech group’s founder Zhang Yiming, is doubling down to build its own AI infrastructure to train its core model as well as deploy AI functions on its various platforms.
It has increased computing capacity in Southeast Asia, particularly in Malaysia. Although Chinese companies have been barred from buying Nvidia chips outside the US since 2023, they have been able to secure access to the chips through lease agreements with third-party data center providers, several industry insiders said.
This loophole was closed last week by the outgoing Biden administration, which issued new rules requiring the identity of both chip owners and operators to pass a review process.
While Trump may take a different stance on export controls, the regulations — if strictly enforced — would make it more difficult than ever for ByteDance to buy chips overseas.
It has already made large orders to build overseas AI capacity this year, such as leases, according to one of the people. It should be sufficient for most of the company’s needs in 2025, but what happened after that remains uncertain, the person added.
ByteDance’s budget for buying AI chips abroad was previously reported by news portal The Information. In response to the FT’s reporting, ByteDance said: “The anonymous information about our plan is incorrect.”
ByteDance also faces challenges from deep-pocketed local rivals such as Baidu, Alibaba and Tencent, which are investing heavily in generative artificial intelligence. Along with these competitors, it released more capable models and reduced costs for developers.
Chinese companies still need to build onshore AI data center capacity 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 “conclusion” tasks.computation undertaken by large language models to generate query responses.
ByteDance released its AI chatbot Doubao in August 2023 and the AI app has become the most popular AI app in China, according to website analytics site Aicpb.com.
Doubao, which means “bean sack” in Chinese, had 71 million regular monthly active users in December, compared to OpenAI’s 300 million weekly active users worldwide.
Nvidia recorded $11.6 billion in revenue from China, including Hong Kong, or about 13 percent of its global total, during the first three quarters of 2024, according to a company filing.
ByteDance is by far the largest client for Nvidia 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 tailored to comply with US export controls.
In 2024, it ordered about 230,000 Nvidia chips, mostly H20, according to estimates by technology consultancy Omdia. That compares with the 485,000 more advanced “Hopper” chips Microsoft bought last year and 224,000 bought by Meta.
Tech companies worldwide will spend an estimated $229 billion on servers in 2024, according to Omdia, led by Microsoft’s $31 billion in capital expenditures and Amazon’s $26 billion.
Additional reporting by Ryan McMorrow in Beijing and Demetri Sevastopulo in Washington
