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TikTok-owner ByteDance plans to spend more than $12 billion on artificial intelligence infrastructure this year, betting on the cutting-edge technology for new growth amid pressure from Washington to sell its popular video-sharing app in the United States.
The Beijing-based company has budgeted Rmb40bn ($5.5bn) to acquire AI chips in China in 2025, according to two people familiar with the plans, which would double last year’s spending. The group plans to invest about $6.8 billion overseas to expand its foundation model training capabilities using advanced Nvidia Chips.
About 60 percent of ByteDance’s domestic semiconductor orders will go to Chinese suppliers such as Huawei and Cambricon, while the rest will be spent on Nvidia chips that have been watered down to align with U.S. export controls, according to the people.
Beijing has given informal instructions to Chinese tech companies to buy at least 30 percent of their chips from the country’s own suppliers, the people added.
$6.8 billion in foreign investment was budgeted to build ByteDance’s AI computing capabilities for model training. That investment could face challenges from recently expanded U.S. export controls designed to prevent Chinese companies from building sensitive technologies.
comes as a shock Bytedance Its core social media business faces pressure. TikTok restored service to 170 million US users on Sunday after the country’s incoming President Donald Trump promised that the companies that distributed and hosted the platform would not be held liable for violating US laws that banned the video app until it was sold.
When Trump signed an executive order On Monday to keep TikTok open for 75 days, he said he wants a US company to own 50 percent of TikTok in the future. Trump said he could “absolutely” impose tariffs if China reneges on a deal.
Any such transaction could affect ByteDance’s plans for a future initial public offering, with the company valuing itself at $300bn during a recent share buyback program.
Before the recent intervention in the US, the company made its huge purchase budget for graphic processing units in 2025.
ByteDance, which has become a pioneer in China’s AI race under the direction of Tech Group founder Zhang Yiming, is doubling down on building its own AI infrastructure to train its foundation models, as well as implement AI functions across its various platforms.
It has increased computing power in Southeast Asia, particularly in Malaysia. Although Chinese companies have been banned from buying Nvidia chips outside the US since 2023, they have been able to secure access to the chips through rental agreements with third-party data center providers, several industry insiders said.
The loophole was closed last week by the outgoing Biden administration, which issued new rules that the identity of both the owner and operator of the chips must go through a review process.
While Trump may take a different stance on export controls, the regulations — if strictly enforced — will make buying ByteDance’s chips abroad more difficult than ever.
It has already placed large orders this year to build overseas AI capabilities, such as through rental agreements, according to one of the people. That should be enough for most of the company’s needs in 2025 but what happened after that was uncertain, the person added.
ByteDance’s budget to buy foreign AI chips was previously reported by news outlet The Information. In response to the FT’s report, ByteDance said: “The information received anonymously about our plans 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 rivals, it is pushing more capable models and lowering costs for developers.
After training the models, Chinese companies still need to build the capacity of AI data centers onshore to support the use of AI applications.
ByteDance plans to use most of its Chinese AI chips – including Huawei’s Ascend and Cambricon. For “guess” workComputations undertaken by large language models to produce a response to a prompt.
Bytedance released its AI chatbot Doubao in August 2023 and the AI app has become the most popular AI application in China, according to website analytics site Aicpb.com.
Doubao, which means “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 from China, including Hong Kong, in the first three quarters of 2024, or about 13 percent of its global total, according to company filings.
ByteDance is by far the largest client for Nvidia in China. The TikTok parent can only buy less advanced chips for Chinese data centers like Nvidia’s H20, a specialized and less-powerful version of its GPUs designed to align with US export controls.
In 2024, it ordered about 230,000 chips from Nvidia, mostly H20, according to estimates by technology consultancy Omdia. That compares with 485,000 of the more advanced “hopper” chips bought by Microsoft last year and 224,000 acquired by Meta.
The world’s tech companies will spend an estimated $229bn on servers in 2024, according to Omdia, led by Microsoft’s $31bn in capital spending and Amazon’s $26bn.
Additional reporting by Ryan McMorrow in Beijing and Demetri Sebastopolou in Washington
