TikTok Owner ByteDance’s $12B AI Bet Amid U.S. Sanctions

ByteDance, the parent company of TikTok, is rumored to be planning a $12 billion investment in AI chips by 2025, according to a report by the Financial Times. The figure represents a doubling of its AI budget from last year as the Chinese tech giant navigates geopolitical tensions and U.S. sanctions.

Breaking Down the AI Budget

The report suggests ByteDance’s AI investment would be split between domestic and overseas efforts:

• $5.5 billion earmarked for domestic chip purchases from manufacturers like Huawei and Cambricon.
• $6.8 billion for overseas AI infrastructure, though this faces significant hurdles due to export restrictions on high-performance AI chips from the U.S.

Beijing’s Push for Local AI Leadership

Chinese tech companies are under increasing pressure from Beijing to boost domestic production and reduce reliance on foreign chips, particularly Nvidia AI cards. U.S. sanctions have curtailed the export of cutting-edge chips to China, fueling efforts to develop local alternatives.

Doubao, ByteDance’s AI chatbot, is already leading the domestic market with 60 million monthly active users—nearly half of all AI chatbot visits in China. According to QuestMobile, the number of active AI app users in China has doubled over the past five months.

ByteDance Denies Reports

Despite the Financial Times’ report, ByteDance has denied the claims. A company spokesperson told Chinese media:

“The anonymously sourced information about our plan is incorrect. ByteDance gives great importance to the development and investment in the field of artificial intelligence, but the relevant budget and planning rumors are not correct.”

Past Rumors and Clarifications

This isn’t the first time ByteDance has addressed speculation about its AI strategy:

1. Nvidia Chips in Southeast Asia: Reports claimed ByteDance stored Nvidia chips in Southeast Asia to bypass U.S. sanctions. The company denied the allegations, stating it had not bought H100 chips for use outside the U.S. since the sanctions took effect.
2. AI Chip Development: In September, ByteDance refuted reports of building its own AI chips, stating its semiconductor efforts are still in the early stages and focused on improving its ad and recommendation systems.

ByteDance emphasized that all projects comply with trade regulations.

With U.S. sanctions restricting exports and Beijing pushing for local innovation, ByteDance’s path to AI dominance remains fraught with challenges. The company’s commitment to AI is evident, but questions about its strategy and execution will continue to fuel speculation.