Unlock Editor's Digest without spending a dime
Roula Khalaf, editor of the FT, picks her favorite stories on this weekly newsletter.
TikTok owner ByteDance plans to spend greater than $12 billion on artificial intelligence infrastructure this yr, banking on cutting-edge technology for brand new growth while facing pressure from Washington to shut its popular video-sharing app on the market within the USA.
The Beijing-based company has budgeted RMB40 billion ($5.5 billion) to accumulate AI chips in China in 2025, which might double the quantity it spent last yr, based on two people conversant in the plans . The group also plans to speculate around $6.8 billion abroad to enhance its training capabilities for base models with advanced Nvidia chips.
About 60 percent of ByteDance's domestic semiconductor orders would go to Chinese suppliers resembling Huawei and Cambricon, while the remaining can be spent on Nvidia chips which were watered all the way down to conform to U.S. export controls, the people said.
Beijing has given informal instructions to Chinese technology corporations to purchase at the very least 30 percent of their chips from the country's own suppliers, the people added.
The foreign investment of $6.8 billion was intended to expand ByteDance's AI computing capability for model training. That investment could face challenges from recently expanded U.S. export controls designed to forestall Chinese corporations from developing sensitive technologies.
The move comes as ByteDance faces pressure in its core social media business. TikTok restored service to 170 million U.S. users on Sunday after the country's latest president, Donald Trump, promised that corporations that distribute and host the platform wouldn’t be held accountable for violations of a U.S. law, that bans the video app unless it’s sold.
While Trump signed an executive order on Monday to maintain TikTok open for 75 days, he said he wanted a U.S. company to own 50 percent of TikTok in the long run. Trump said he could “definitely” impose tariffs on China if the country rejected a deal.
Such a transaction could impact ByteDance's plans for a future IPO, as the corporate valued itself at $300 billion as a part of a recent share buyback program.
The company set its huge purchasing budget for graphics processing units in 2025 before the recent interventions within the US.
ByteDance, which has emerged as a frontrunner in China's AI competition under the leadership of the tech group's founder Zhang Yiming, is ramping up efforts to construct its own AI infrastructure to coach its base model and AI capabilities on its various platforms to implement.
It has increased computing capability in Southeast Asia, particularly Malaysia. Although Chinese corporations have been banned from buying Nvidia chips outside the United States since 2023, they’ve been in a position to secure access to chips through rental agreements with third-party data center providers, several industry insiders said.
That loophole was closed last week by the outgoing Biden administration, which issued latest rules requiring the identity of each the owner and operator of the chips to undergo a verification process.
While Trump could take a unique stance on export controls, the regulations — if strictly implemented — would make ByteDance's chip purchases abroad harder than ever.
According to one among the respondents, the corporate has already placed large orders to construct AI capacities abroad this yr, for instance through rental agreements. It was expected to be sufficient for a lot of the company's needs in 2025, but what happened after that remained uncertain, the person added.
ByteDance's budget for purchasing AI chips abroad was previously reported by The Information news agency. In response to the FT's reporting, ByteDance said: “The information collected anonymously about our plan is inaccurate.”
ByteDance also faces challenges from cash-rich local competitors resembling Baidu, Alibaba and Tencent, that are investing heavily in generative AI. Along with these competitors, the corporate has launched more powerful models and reduced costs for developers.
Chinese corporations must proceed to construct the capability of onshore AI data centers to support the deployment of AI applications even after the models are trained.
ByteDance plans to make use of most of its Chinese AI chips – including Huawei's Ascend and Cambricon – for “inference” tasks, the computation performed by large language models to generate a solution to a prompt.
ByteDance released its AI chatbot Doubao in August 2023 and the AI ​​app has develop into China's hottest AI application, based on website analytics site Aicpb.com.
Doubao, which suggests “bean bag” in Chinese, had 71 million regular monthly lively users as of December, in comparison with OpenAI’s 300 million weekly lively users worldwide.
Nvidia generated $11.6 billion in revenue in China, including Hong Kong, in the primary three quarters of 2024, or about 13 percent of its total global revenue, based on company filings.
ByteDance is by far Nvidia's largest customer in China. TikTok's parent company can only buy less advanced chips for Chinese data centers like Nvidia's H20, a specialized and lower-power version of its GPUs tailored to comply with U.S. export controls.
Technology consulting firm Omdia estimates that the corporate ordered about 230,000 chips from Nvidia in 2024, mostly H20. That compares with 485,000 of the more advanced “hopper” chips that Microsoft bought last yr and 224,000 that Meta acquired.
According to Omdia, tech corporations all over the world spent an estimated $229 billion on servers in 2024, led by Microsoft at $31 billion and Amazon at $26 billion.
