Unlock Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newsletter.

TikTok owner ByteDance plans to spend more than $12bn on artificial intelligence infrastructure this year, betting on the latest technology for new growth as Washington pushes to sell the popular video- sharing app in the US.

The Beijing-based company has budgeted Rmb40bn ($5.5bn) to acquire AI chips in China by 2025, according to two people familiar with the plans, which is double the amount spent last year. The group also plans to invest about $6.8bn overseas to increase 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 scaled back to align with U.S. export controls, according to sources. man.

Beijing has given Chinese technology companies informal guidance to buy at least 30 percent of their chips from the country’s own suppliers, the people added.

A $6.8bn overseas investment is budgeted to build ByteDance’s AI computing capacity for model training. This investment could face challenges from recently expanded US export controls designed to prevent Chinese companies from building sensitive technologies.

The push comes as ByteDance facing pressure on the core business of social media. TikTok restored service to 170 million US users on Sunday after the country’s incoming President Donald Trump promised that the companies that distribute and host the platform will not be held liable for violating US law. which prohibits the video app unless it is for sale.

While 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 “definitely” slap tariffs on China if it reneges on a deal.

Any transaction could affect plans for ByteDance’s upcoming initial public offering, where the company valued itself at $300bn during a recent share buyback program.

The company took the big purchase budget for graphic processing units in 2025 before the new interventions in the US.

ByteDance, which under the direction of tech group founder Zhang Yiming has become a frontrunner in China’s AI race, is doubling down on building its own AI infrastructure to train its foundational model, as well as implementing AI functions on its various platforms.

It boosts computing capacity in southeast Asia, particularly in Malaysia. Although Chinese companies have been banned from buying Nvidia chips outside the US since 2023, they have gained access to the chips through lease agreements with third-party data center providers. party, many industry insiders said.

This loophole was closed last week by the outgoing Biden administration, which issued new rules that the identity of 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 ByteDance’s chip purchases abroad more difficult than ever.

It has already made large orders to build AI capacity overseas this year, such as through lease agreements, according to one of the people. It should be enough for most of the company’s needs by 2025 but what happens after that remains uncertain, the person added.

ByteDance’s budget for buying AI chips abroad was previously reported by news outlet The Information. In response to the FT’s report, ByteDance said: “An anonymous source’s information about our plan is incorrect.”

ByteDance also faces challenges from deep-pocketed local competitors, such as Baidu, Alibaba and Tencent, which have invested heavily in generative AI. Together with these rivals, it drives more capable models and lowers costs for developers.

Chinese companies still need to build the capacity of offshore 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” tasks.the computation performed by large language models to generate 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 $11.6bn in revenue from China, including Hong Kong, or about 13 percent of its total, in the first three quarters of 2024, according to company filings.

ByteDance is the largest client for Nvidia in China. The TikTok parent can only buy less advanced chips like Nvidia’s H20 for Chinese data centers, a special and less powerful version of its GPUs tailored to align with US export controls.

In 2024, it ordered about 230,000 Nvidia chips, mostly H20s, according to estimates from tech consultancy Omdia. This compares to 485,000 of the more advanced “Hopper” chips that Microsoft bought last year and the 224,000 that Meta acquired.

Tech companies worldwide spent an estimated $229bn on servers in 2024, according to Omdia, led by $31bn in capital spending by Microsoft and $26bn by Amazon.

Additional reporting by Ryan McMorrow in Beijing and Demetri Sevastopulo of Washington