TikTok parent company ByteDance is in advanced discussions to purchase at least 50,000 AI chips from Shanghai-based Iluvatar CoreX (9903.HK), according to a Reuters exclusive report. The move highlights the intensifying efforts by Chinese tech giants to secure AI computing capacity amid ongoing U.S. export restrictions on advanced semiconductors.
Deal Details and Strategic Shift
The chips from Iluvatar CoreX are primarily targeted for inference workloads — the process of running trained AI models in real-world applications, such as powering ByteDance’s expanding Doubao AI chatbot and other generative AI services. If finalized, the agreement would position Iluvatar CoreX as ByteDance’s third major domestic GPU supplier, following Huawei (Ascend series) and Cambricon.
ByteDance is also actively considering Baidu’s Kunlunxin chips for similar purposes. Tencent is already a customer of Kunlunxin, underscoring growing adoption of homegrown solutions across China’s tech ecosystem.
Discussions remain ongoing, and final terms could still change, sources familiar with the matter told Reuters. Neither ByteDance, Iluvatar CoreX, Baidu, nor Tencent immediately responded to requests for comment.
Why This Matters: China’s AI Self-Sufficiency Drive
This potential deal is part of a broader national strategy to reduce reliance on foreign technology, particularly Nvidia GPUs, which have faced stringent U.S. export controls. Chinese companies are increasingly mixing limited Nvidia supplies with domestic alternatives to fuel massive AI infrastructure buildouts.
Iluvatar CoreX, one of China’s notable “Little Dragons” in the GPU space, specializes in general-purpose GPUs (GPGPUs) and full-stack AI computing solutions, including chips, accelerators, servers, and software toolkits for both training and inference. The company has seen strong revenue growth in recent periods, though it continues to operate in a challenging profitability environment typical of emerging domestic semiconductor players.
For ByteDance, the world’s most valuable private tech company, scaling AI capabilities is critical. The firm has been aggressively investing in its own AI models and infrastructure, including developing custom CPUs and exploring in-house chip designs.
Market and Geopolitical Implications
- Stock Reaction: Iluvatar CoreX shares rose significantly on the news, reflecting investor optimism about major commercial validation beyond government-backed projects.
- Industry Ripple Effects: The deal could accelerate momentum for other domestic chipmakers and signal to global markets that China’s AI ecosystem is maturing despite external pressures.
- Broader Context: ByteDance reportedly plans substantial spending on AI chips in 2026, balancing domestic sourcing with any available high-end international options.
As geopolitical tensions around technology continue, moves like this reinforce China’s long-term goal of semiconductor self-reliance. For ByteDance, securing reliable supply chains ensures it can keep pace in the global AI race while supporting its vast user base across TikTok, Douyin, and enterprise AI services.