Full Breakdown
ByteDance Negotiates Domestic AI Chip Deals Amid Push for Self-Reliance
6/15/2026, 12:06:49 PM
Core Negotiations: ByteDance’s AI Chip Procurement Plans
ByteDance, the parent of TikTok, is in confidential talks to acquire at least 50,000 graphics processing units (GPUs) from Shanghai-based Iluvatar CoreX for inference workloads that power its Doubao chatbot. The company is also evaluating Baidu’s Kunlunxin chips for similar purposes. If finalized, Iluvatar CoreX would become ByteDance’s third major domestic GPU supplier after Huawei and Cambricon, expanding the firm’s AI-infrastructure portfolio.
Background: China’s Drive for Indigenous AI Hardware
Beijing has intensified policies encouraging the use of locally developed AI chips to reduce dependence on foreign technology, especially after U.S. export controls tightened access to advanced semiconductors. Chinese GPU and AI-chip makers captured roughly 41 % of the domestic AI accelerator server market last year, effectively displacing Nvidia, whose market share in China has fallen to zero according to its chief executive.
Key Players and Market Landscape
The negotiation involves four principal technology firms: ByteDance, Iluvatar CoreX, Baidu, and Tencent, the latter already a Kunlunxin customer. Huawei and Cambricon remain ByteDance’s existing GPU suppliers. Iluvatar CoreX, listed in Hong Kong in January, has historically focused on government procurement projects but is now targeting large commercial clients such as ByteDance.
Data & Financial Stakes
Iluvatar CoreX reported 1 billion yuan ($148 million) in 2025 revenue, with about 90 % derived from GPU sales. Huatai Securities projects revenue of 3.04 billion yuan ($449.8 million) for the current year, forecasting a 139 % jump in shipments to over 100,000 chips. The Zhikai inference chips, intended for ByteDance, carry an average price of 12,000 yuan ($1,775) each.
Official Statements & Policy Context
Chinese authorities have urged firms to adopt domestically produced AI chips to boost self-reliance amid export restrictions. Executives note that large-scale availability of Chinese AI chips is expected in the second half of the year. Nvidia CEO Jensen Huang said the company’s market share in China has effectively vanished, highlighting the shift toward home-grown solutions.
Verbatim Quotes
- “If a deal is agreed, Iluvatar CoreX would become ByteDance's third major domestic supplier of graphics processing units (GPUs) after Huawei and Cambricon(688256.” — Reuters source
- “While Nvidia's market share in China has effectively fallen to zero, according to its CEO Jensen Huang, Chinese AI chips would become available in large quantities in the second half of this year, Tencent's Chief Strategy Officer James Mitchell said in May.” — James Mitchell, Chief Strategy Officer, Tencent
- “TikTok parent ByteDance is also considering using Baidu's(9888.” — Reuters source
What’s Next for ByteDance and China’s AI Chip Sector
If the Iluvatar CoreX and Baidu chip agreements are finalized, ByteDance plans to use the hardware to expand Doubao’s inference capacity. The transactions would mark a commercial milestone for Iluvatar CoreX, which has so far supplied primarily government projects, and they coincide with expectations that Chinese AI chips will become widely available in the second half of the year.
