ByteDance pursues AI chip manufacturing deal with Samsung amid $22 billion AI investment push

ByteDance Advances In-House AI Chip Development

ByteDance is developing an artificial intelligence chip and has entered manufacturing talks with Samsung Electronics, marking a significant milestone in the TikTok parent company's multi-year effort to build in-house chips for AI workloads 1

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. The Chinese tech giant aims to receive sample chips by the end of March and plans to produce at least 100,000 units of the AI inference chip this year, according to Reuters sources familiar with the matter 2

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. Production could eventually scale to as many as 350,000 units gradually, demonstrating ByteDance's commitment to securing its position in the competitive AI landscape 1

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The chip project, code-named SeedChip, represents part of ByteDance AI development strategy to channel resources into AI technologies spanning from chips to large language models 3

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. ByteDance's chip efforts date back to at least 2022, when the company began hiring chip-related talent in earnest 1

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. However, a ByteDance spokesperson told Reuters that information about the in-house chip project was inaccurate, without elaborating, while Samsung declined to comment 3

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Securing Memory Chip Supplies Amid Global Shortage

Negotiations with Samsung Electronics extend beyond manufacturing to secure memory chip supplies, which remain in exceptionally short supply amid the global AI infrastructure build-out 3

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. This aspect makes the deal particularly attractive for ByteDance as memory chips are in tight demand across the industry 1

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. The company's strategy addresses both manufacturing capacity and critical component access, positioning it to support AI workloads across its business portfolio spanning short video, e-commerce, and enterprise cloud services 3

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ByteDance plans to spend over 160 billion yuan ($22 billion) on AI-related procurement this year, with more than half allocated to purchasing Nvidia chips, including H200 models, and advancing its in-house chip 3

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. This massive investment signals the company's determination to compete in AI despite facing U.S. export controls on advanced chip sales to China, which have added urgency for Chinese tech companies to develop their own AI chips 3

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Competing in China's AI Chip Race

ByteDance's chip development effort follows a broader industry trend where global tech giants including Alphabet's Google, Amazon, and Microsoft have developed their own AI chips to reduce reliance on Nvidia, the dominant supplier of advanced processors essential for AI development 3

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. Among Chinese competitors, Alibaba and Baidu are ahead in AI chip development: Alibaba last month unveiled its Zhenwu chip for large-scale AI workloads, while Baidu sells chips to external clients and plans to list its chip unit Kunlunxin soon 3

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Reuters previously reported in June 2024 that ByteDance was working with Broadcom on an advanced AI processor, with manufacturing planned to be outsourced to Taiwan's TSMC 3

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. The current Samsung partnership represents another avenue for the company to secure manufacturing capacity for different chip designs.

ByteDance executive Zhao Qi told employees at a January all-hands meeting that the company's AI investment would benefit all divisions, according to sources briefed on the meeting 3

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. Zhao, who oversees ByteDance's Doubao chatbot and its overseas version Dola, acknowledged the company's AI models lagged behind global leaders like OpenAI but pledged continued support for AI development this year 3

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. The company founded Seed in 2023 to develop AI models and promotes their applications across its platform ecosystem 3

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