TikTok parent in talks with Samsung to manufacture AI chips
What's the story
ByteDance, the Chinese tech giant that owns TikTok, is developing its own artificial intelligence (AI) chip. The company is in talks with Samsung Electronics to manufacture the chip, two people familiar with the matter told Reuters. The move comes as ByteDance looks to secure a steady supply of advanced processors for its operations.
Production goals
Chip designed for AI inference tasks
ByteDance plans to produce at least 100,000 units of its AI chip this year. The company hopes to receive sample chips by the end of March. They also revealed that ByteDance intends to gradually increase production capacity up to 350,000 units. The chip is specifically designed for AI inference tasks and will be a key part of the company's tech infrastructure.
Strategic negotiations
ByteDance denies reports of in-house chip project
The ongoing negotiations between ByteDance and Samsung also include access to memory chip supplies. These are in extremely short supply due to the global AI infrastructure build-out, making this deal particularly attractive. ByteDance's chip development efforts date back to at least 2022 when it started hiring chip-related staff. Global tech giants such as Google's Alphabet, Amazon, and Microsoft have developed their own AI chips to reduce dependence on NVIDIA, the leading supplier of advanced chips crucial for AI development.
Market dynamics
Urgency heightened by US export controls on advanced chips
The urgency for Chinese tech companies like ByteDance to develop their own AI chips has been heightened by US export controls on advanced chip sales to China. While ByteDance is yet to launch its own chip, rivals Alibaba and Baidu are ahead in the race. Alibaba recently launched its Zhenwu chip for large-scale AI workloads, while Baidu sells chips externally and plans an IPO for its chip unit Kunlunxin soon.
Strategic push
ByteDance's larger strategy to invest in AI development
The AI chip project, codenamed SeedChip, is part of ByteDance's larger strategy to invest in AI development across all areas. This includes everything from chips to large language models. The company founded Seed in 2023 for developing and promoting the use of these models. ByteDance plans to spend over ¥160 billion ($22 billion) on AI-related procurement this year, with more than half going toward purchasing NVIDIA chips and advancing its in-house chip project.