TikTok Strengthens AI: The Company Will Purchase Nvidia and Huawei Chips for $12 Billion.

The Owner of TikTok Plans to Spend Over $12 Billion on Artificial Intelligence Infrastructure

ByteDance, the owner of TikTok, plans to spend over $12 billion on developing artificial intelligence infrastructure this year. They are focusing on advanced technologies for further growth.

According to the Financial Times, the company plans to spend 40 billion yuan ($5.5 billion) on AI chip production in China by 2025, which is double the amount spent last year. Additionally, they plan to invest about $6.8 billion abroad to enhance the computational capabilities for training foundational models using Nvidia chips.

About 60% of semiconductor orders will be placed with Chinese suppliers like Huawei and Cambricon, while the rest will be directed towards Nvidia chips with reduced specifications that comply with U.S. export restrictions.

Foreign Investment of $6.8 Billion to Enhance ByteDance's Computing Power

The foreign investment of $6.8 billion is designated for expanding ByteDance's computing power for training AI models. However, this plan may face challenges due to new U.S. export restrictions, which impede Chinese companies' efforts to create crucial technologies.

ByteDance has already earmarked a significant amount for purchasing graphics processing units by 2025, even before the introduction of U.S. bans.

The company, led by founder Zhang Yiming, holds a leading position in the field of artificial intelligence in China. They are actively developing their own AI infrastructure for training foundational models and implementing AI features on their platforms.

ByteDance has also increased its computing power in Southeast Asia, particularly in Malaysia. Although, since 2023, Chinese companies have been prohibited from purchasing Nvidia chips outside the U.S., they still have access to them through leasing agreements with third-party data centers.

However, this possibility has been restricted by new rules from the Biden administration, which require owner and operator verification processes for chips.

If the rules are strictly enforced, acquiring chips abroad for ByteDance will become even more challenging, regardless of Trump's stance on export restrictions. However, the company has already placed large orders to establish foreign computational capacities this year, including through leasing agreements.