Unlock Editor’s Digest for free
Roula Khalaf, editor-in-chief of the FT, selects her favorite stories in this weekly newsletter.
TikTok owner ByteDance plans to spend more than $12 billion on artificial intelligence infrastructure this year, betting on cutting-edge technology for new growth, while under pressure from Washington to sell its popular video sharing app in the United States.
The Beijing-based company has budgeted 40 billion RMB ($5.5 billion) to acquire AI chips in China in 2025, according to two people familiar with the matter, which would double the amount spent in the year last. The group also plans to invest approximately $6.8 billion overseas to strengthen its core model training capabilities using Nvidia’s advanced technologies. chips.
About 60% of ByteDance’s domestic semiconductor orders would go to Chinese suppliers such as Huawei and Cambricon, while the rest would go to Nvidia chips that have been watered down to align with U.S. export controls , according to sources.
Beijing has given Chinese tech companies informal guidelines to buy at least 30% of their chips from the country’s own suppliers, the sources added.
The $6.8 billion overseas investment was budgeted to strengthen ByteDance’s AI computing capacity for model training. That investment could face challenges from recently expanded U.S. export controls intended to hamper Chinese companies developing sensitive technologies.
The push comes like ByteDance faces pressures in its core social media business. TikTok restored service to 170 million U.S. users on Sunday after the country’s new president, Donald Trump, promised that companies that distributed and hosted the platform would not be held liable for violating a U.S. law banning the video application unless it is sold.
While Trump signed a decree On Monday, to keep TikTok open for 75 days, he said he wants an American company to own 50 percent of TikTok in the future. Trump said he could “certainly” impose tariffs on China if it rejected a deal.
Such a transaction could affect ByteDance’s plans for a future IPO, with the company valued at $300 billion in a recent share buyback program.
The company set its massive graphics processing unit purchasing budget in 2025, ahead of recent interventions in the United States.
ByteDance, which under the leadership of the technology group’s founder Zhang Yiming has become the leader in China’s AI race, is stepping up efforts to build its own AI infrastructure to train its core model, as well only to implement AI functions on its various platforms.
It has increased computing capacity in Southeast Asia, particularly Malaysia. Although Chinese companies have been banned from purchasing Nvidia chips outside the United States since 2023, they have been able to secure access to the chips through leasing agreements with third-party data center providers, said several industry insiders.
That loophole was closed last week by the outgoing Biden administration, which issued new rules requiring the identity of the chip’s owner and operator to undergo a review process.
Although Trump could take a different stance on export controls, the regulations, if strictly enforced, would make ByteDance’s chip purchases abroad more difficult than ever.
According to one of the sources, the company has already placed significant orders this year to strengthen its AI capabilities abroad, for example through leasing contracts. That should be enough to cover most of the company’s needs in 2025, but what happens next remains unclear, the source added.
ByteDance’s budget for overseas AI chip purchases has already been reported by The Information media outlet. In response to the FT’s information, ByteDance said: “The anonymous information about our project is incorrect. »
ByteDance also faces challenges from deep-pocketed local competitors, such as Baidu, Alibaba and Tencent, which are investing heavily in generative AI. Alongside these competitors, it offers more efficient models and reduces costs for developers.
Chinese companies still need to build the capacity of onshore AI data centers to support the use of AI applications, even after the models have been trained.
ByteDance plans to use most of its Chinese AI chips, including Huawei’s Ascend and Cambricon. for “inference” tasksthe computation undertaken by large language models to generate a response to a prompt.
ByteDance launched 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, meaning “beanbag” in Chinese, had 71 million regular monthly active users as of December, compared to OpenAI’s 300 million weekly active users worldwide.
Nvidia recorded $11.6 billion in revenue in China, including Hong Kong, or about 13% of its global total, in the first three quarters of 2024, according to company filings.
ByteDance is by far Nvidia’s largest customer in China. TikTok’s parent company can only buy less advanced chips such as Nvidia’s H20 for Chinese data centers, a specialized, less powerful version of its GPUs designed to align with U.S. export controls.
In 2024, it has ordered around 230,000 Nvidia chips, mainly H20s, according to estimates from technology consultancy Omdia. That compares to the 485,000 most advanced “Hopper” chips purchased by Microsoft last year and the 224,000 acquired by Meta.
Tech companies around the world spent about $229 billion on servers in 2024, according to Omdia, leading Microsoft’s $31 billion and Amazon’s $26 billion in capital spending.
Additional reporting by Ryan McMorrow in Beijing and Demetri Sebastopulo in Washington