The parent company of TikTok could bypass Nvidia and AMD as it is reported to use 100,000 Huawei artificial intelligence chips to train its next language model.
ByteDance is interested in acquiring more hardware manufactured in China.
Following the trade restrictions imposed by the United States that prevented Nvidia from exporting its advanced artificial intelligence chips to China, the company has responded by developing the H20 GPU. This modified version complies with regulations by offering lower performance levels, yet still meets the AI processing demands of Chinese companies.
Despite the existence of a thriving black market for Nvidia's high-end GPUs, ByteDance, the parent company of TikTok, cannot afford the legal and reputational risks associated with participating in these illegal markets. Therefore, it has begun acquiring Nvidia's lower-capacity processors to meet its AI needs. So far, ByteDance has become the largest buyer of H20 in China, having invested over $2 billion in this hardware in 2024 alone.
ByteDance is expected to continue using Nvidia GPUs; however, reports indicate that the company is now shifting its focus towards local chip suppliers like Huawei to fulfill its AI ambitions. Nonetheless, this transition is not without challenges.
It has been reported that ByteDance has acquired over 100,000 Ascend 910B chips to date, making it one of the largest buyers of Huawei's AI hardware in China. However, as of July, the company had received less than a third of its order. Training AI models is a process that demands significant computing power, which explains the high demand for high-end GPUs like those from Nvidia. Transitioning to Huawei’s Ascend chips may be a strategy for the TikTok owner, but it could also present difficulties.
ByteDance's existing AI models, such as Doubao and Jimeng, were developed using more powerful hardware and are used in applications ranging from chatbots to text-to-video tools. The company’s ultimate goal is to reduce its dependency on Nvidia, but migrating to Huawei’s Ascend chips could hinder its ability to train more complex models.
ByteDance's strategy seems to focus on navigating through U.S. trade restrictions while seeking local suppliers to help maintain its competitiveness in AI and other sectors. Recently, the company has also invested in Xinyuan Semiconductors, a Chinese memory chip manufacturer, which could lead to developments such as a potential virtual reality headset to compete with Meta's Quest and Apple's Vision Pro.
