ByteDance ramps up AI spending to $23 billion as it chases US tech giants amid chip restrictions

TiKTok parent ByteDance to beef up AI spending to $23B next year - SiliconANGLE

TikTok's parent company ByteDance Ltd. has revealed plans to ramp up its already heavy spending on artificial intelligence infrastructure next year as it races to catch up with U.S. technology giants, according to a report in the Financial Times. Tuesday's report, which cites two people familiar with the company's plans, said it's expected to increase its capital expenditure to 160 billion yuan (around $23.1 billion) in fiscal 2026, up from approximately 150 billion yuan it spent on AI infrastructure this year. More than half of the proposed amount would be spent on acquiring advanced semiconductors that will be used for training AI models and running AI applications in production, the people said. ByteDance is best known as the company behind the immensely popular TikTok app and its Chinese counterpart Douyin, but its business expands well beyond video sharing. In China, it also develops a popular news aggregator called Toutiao, a video editing application called CapCut and a lifestyle-focused social media platform known as Lemon8. The company has integrated AI features into all of its main applications and also offers a standalone chat application called Duobao, which is similar to ChatGPT and has more than 100 million users in its home country. In addition, it's the creator of a widely-used text-to-video generator app called Jimeng, an AI image generator called Xinghui and an emotional support app called Maoxing. Given its interest in AI, it's not surprising that ByteDance has emerged as one of China's biggest spenders on AI infrastructure, though the $23 billion figure is still a lot less than many of America's biggest technology firms, which have collectively spent more than $300 billion on data center buildouts this year. The Financial Times said ByteDance has set aside around 85 billion yuan for AI processors in 2026, although that number could change as there's still a lot of uncertainty over its ability to access high-end graphics processing units from Nvidia Corp. While U.S. President Donald Trump recently said he has eased export controls on Nvidia's previous generation H200 GPUs, China's government has not yet allowed any Chinese companies to buy them, as it also wants to protect its own, nascent chipmaking industry. However, Nvidia has reportedly told some Chinese companies that it's hopeful it will be able to ship its first batch of H200 chips to them by February 2026 at the latest. It's also hoping to ramp up production of the H200s to ensure it can meet the expected demand from China's leading AI developers. The Financial Times said ByteDance may even increase the amount it spends on AI processors if the restrictions on Nvidia's chips are eased. As a back up plan, the company is also expected to step up its leasing of overseas data centers in order to access more advanced AI chips.

ByteDance to invest $23B in AI to bridge US tech gap

According to Financial Times, ByteDance, the Beijing-based parent of TikTok, plans to invest 160 billion yuan, approximately $23 billion, in artificial intelligence infrastructure in 2026 to narrow the gap with U.S. tech firms amid semiconductor restrictions. This marks an increase from 150 billion yuan allocated this year, with about half, or 85 billion yuan, dedicated to advanced AI processors, according to the Financial Times. The planned expenditure highlights the investment disparity between Chinese and American technology companies. Microsoft, Alphabet, Amazon, and Meta together project spending between $350 billion and $400 billion on AI infrastructure in 2025, which surpasses ByteDance's 2026 allocation. U.S. export controls have blocked Chinese companies from acquiring Nvidia's most advanced chips. As a result, these firms have focused on creating AI models that operate with reduced computational demands. In early December, President Donald Trump stated that the United States would authorize Nvidia to export its H200 processor to approved customers in China. The H200 ranks below Nvidia's highest-end products in performance. Nvidia intends to start shipping H200 chips to China by mid-February, with the first batch consisting of 40,000 to 80,000 units. ByteDance has expressed interest in purchasing 20,000 H200 units initially, at an estimated cost of $20,000 per unit. ByteDance has achieved prominence in consumer AI despite hardware limitations. Its Doubao chatbot holds the position of China's leading AI assistant, recording 157 million monthly active users in August according to analytics firm QuestMobile. Doubao expanded to 159 million monthly active users by October, exceeding rivals including DeepSeek. This growth draws from ByteDance's proficiency in developing widely adopted mobile applications and its close linkage with Douyin, the Chinese version of TikTok. ByteDance's daily token usage, which gauges engagement with AI services, surpassed 30 trillion tokens in October. By December, this figure climbed to 50 trillion tokens, nearing Google's reported 43 trillion tokens, based on data from Goldman Sachs and ByteDance executives.

TikTok Parent ByteDance To Invest $23 Billion In AI To Compete With US Tech Giants: Report - Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG)

ByteDance, the Chinese parent company of TikTok, is reportedly set to ramp up its investment in artificial intelligence (AI) to the tune of $23 billion next year amid a broader strategy to keep up with its U.S. competitors. ByteDance Sets Sights On AI Leadership ByteDance is planning to increase its capital expenditure in AI infrastructure in 2026. The company has set aside CNY160 billion ($23 billion) for this purpose, a significant increase from the CNY150 billion it invested this year, according to a report by the Financial Times on Tuesday. About half of the budget will be directed toward purchasing advanced semiconductors to build AI models and applications. Despite continued uncertainty over Chinese companies' access to Nvidia (NASDAQ:NVDA) chips, ByteDance has set aside CNY 85 billion ($12.07 billion) for AI processors next year. ByteDance, one of China's top AI infrastructure builders, is aiming to establish itself as a global leader in the space. However, its investment levels pale in comparison with those of U.S. tech giants such as Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN), and Meta Inc. (NASDAQ:META), which together have poured nearly $400 billion this year into building data centers to power AI models and products. The company did not immediately respond to Benzinga's request for comment. See Also: Trump Media Stock Gains After-Hours As On-Chain Data Shows Company-Linked With President Purchased Bitcoin Worth $40 Million TikTok US Owners Face Limited Control This significant investment in AI comes on the heels of a series of strategic moves by ByteDance. Earlier this month, TikTok signed an agreement to create a new U.S.-based joint venture with major American investors, including Oracle Corp. (NYSE:ORCL), Silver Lake, and Emirati investment firm MGX, in a bid to avoid a U.S. ban. However, a leaked memo revealed that these new U.S. owners may have less control than expected over key business areas. TikTok CEO Shou Chew said new investors will not control key operations such as TikTok Shop or ad sales, though they may share in profits. He said a new U.S. joint venture based on TikTok's U.S. Data Security unit will operate independently and control data protection, algorithm security, content moderation, and software assurance, while TikTok's global U.S. entities will continue managing global product integration and commercial activities such as e-commerce, advertising, and marketing. READ NEXT: Nvidia Shares Rise To Start The Week: What's Going On With The AI Chip Stock? Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMZNAmazon.com Inc$228.21-0.10%OverviewGOOGAlphabet Inc$311.08-0.08%METAMeta Platforms Inc$661.870.06%MSFTMicrosoft Corp$485.280.07%NVDANVIDIA Corp$182.98-0.39%ORCLOracle Corp$197.44-0.47%Market News and Data brought to you by Benzinga APIs