ByteDance's $7 Billion Nvidia Chip Strategy: Navigating US Export Controls

ByteDance's $7B Nvidia Gambit -- Chips Reportedly Stored Offshore to Sidestep US Export Rules

ByteDance appears to be navigating U.S. export controls by acquiring Nvidia chips in regions outside of China. ByteDance will reportedly circumvent U.S. restrictions on artificial intelligence (AI) chip exports to China by acquiring Nvidia GPUs for its data centers in other regions, such as Southeast Asia. However, the TikTok parent company is not relying on Nvidia alone; other Chinese firms have started manufacturing high-performing chips. ByteDance To Spend $7B On Nvidia Chips ByteDance, the parent company of TikTok, is reportedly planning a significant purchase of Nvidia chips in 2025 despite U.S. restrictions. According to sources cited by The Information , ByteDance intends to spend $7 billion on these chips, making the company one of the largest owners of Nvidia chips globally. This comes amid U.S. efforts to block Chinese firms from acquiring American AI chips. ByteDance currently uses Huawei's Ascend 910B chip to train large-scale language models, primarily for less compute-intensive inference tasks involving pre-trained AI models to make predictions. However, training AI models is far more demanding and requires vast amounts of data, necessitating the use of high-performance chips like Nvidia's premium graphics processing units. Avoiding U.S. Export Ban In 2022, the U.S. imposed export restrictions on certain AI chips to countries like China, where ByteDance is headquartered. These restrictions have become progressively stricter over time. ByteDance appears to be circumventing these restrictions by taking advantage of a loophole. Instead of importing the chips directly into China, the company stores them in data centers located in other regions, such as Southeast Asia. This approach allows ByteDance to stay within U.S. regulations' bounds, as The Information reports. The company insists it has complied with all U.S. export restrictions, with a spokesperson saying : "ByteDance has not bought H100 chips for its data centers outside of the U.S. since the relevant U.S. export control rules took effect." While the U.S. has blocked ByteDance from purchasing Nvidia GPUs and using American cloud services, it cannot prevent the company from accessing cloud services in other regions, such as the Middle East or Asia. This allows ByteDance to legally acquire American processors while technically complying with U.S. sanctions aimed at China's AI and high-performance computing sectors. No Longer Looking For Alternatives? Despite reports of Nvidia chips being smuggled into China, the Chinese AI sector will likely need to find alternative sources of high-performance GPUs if it is to continue growing. Chinese companies are developing their own versions of Nvidia's chips. This may mean firms like ByteDance may no longer need to seek Nvidia alternatives as Chinese companies produce them. Huawei is leading the effort with its Ascend 910B, which performs similarly to Nvidia's A100. The company is also promoting its upcoming Ascend 910C, which is comparable to Nvidia's H100. While Huawei may still lag behind Nvidia, its chips are now sufficiently advanced for ByteDance to use the 910Bs to train a new large language model (LLM). In addition to working with Huawei, ByteDance is collaborating with Broadcom to develop two custom GPUs, which will enter production by 2026.

ByteDance to sidestep US sanctions by renting Nvidia GPUs in the cloud

That's a big chunk of the TikTok owner's $20 billion AI infrastructure budget. Like other Chinese entities, TikTok owner ByteDance cannot buy the highest-performance Nvidia GPUs and install them into its datacenters in China. However, the company has found that it can still use Nvidia GPUs that are physically located in cloud datacenters in other countries. Next year the company aims to expand its usage of such GPUs and spend as much as $7 billion on access to Nvidia GPUs, reports The Information citing its own sources. ByteDance plans to invest over $20 billion in AI infrastructure, including $7 billion on accessing advanced Nvidia GPUs in the cloud, datacenters, and even submarine cables, the report says. The U.S. prohibits ByteDance from purchasing Nvidia GPUs and using American cloud services. However, it cannot block ByteDance's access to cloud services elsewhere, for example, in the Middle East or Asian countries. As a result, ByteDance can access American processors while technically adhering to U.S. sanctions against China's AI and HPC sectors. ByteDance itself denied plans to invest $7 billion in Nvidia GPUs next year. However, if the report is correct and ByteDance does indeed invest $7 billion in cloud access to Nvidia GPUs, it will be one of the world's largest consumers of AI hardware. On-demand access to Nvidia's H100 GPUs is readily available. In the U.S., the price of access to H100 GPUs starts at $1.33 per hour for longer-term commitments. Pricing in other countries should be more or less comparable, and at around $1.3 per hour, ByteDance will be able to rent a cluster of 614,682 H100 GPUs working 24/7/365 in 2025 for $7 billion. We are not sure that there are nearly 615,000 H100 GPUs available for rent in the Middle East and Asia, and we are also not sure that ByteDance needs that many processors for its training and inference workloads, as its AI projects are fairly limited. For example, it has the Doubao AI chatbot with 51 million active users, which is believed to be its largest project. Therefore, either the company will spend less on renting its AI infrastructure, or it plans to significantly expand its AI projects and therefore needs more AI capabilities, or it intends to continue procuring Nvidia's cut-down H20 HGX and B20 GPUs to run in its own datacenters in China in addition to renting processors from cloud providers. For instance, ByteDance has reportedly spent over $2 billion on more than 200,000 Nvidia H20 GPUs in 2024, and it is unlikely that the company will cease buying its own hardware and refocus entirely on relying on cloud providers from other countries. It is noteworthy that ByteDance is also reportedly working with Broadcom to develop its own AI processors to reduce its reliance on Nvidia. The company is rumored to be working on two processors: one for training and another for inference. The chips are projected to be made by TSMC on its N4/N5 process technologies and will enter mass production in 2026. Although ByteDance will unlikely be able to make its GPUs significantly faster than Nvidia's HGX H20 due to U.S. export control restrictions (which would prevent TSMC from shipping high-performance GPUs to Chinese entities), in-house processors will be considerably more cost-effective for the company.

TikTok parent ByteDance plans to spend $7B on cloud-based GPUs this year to fuel its AI ambitions - SiliconANGLE

TikTok parent ByteDance plans to spend $7B on cloud-based GPUs this year to fuel its AI ambitions TikTok's parent company ByteDance Ltd. reportedly has a plan to get around tough U.S. restrictions on the export of advanced computer chips to China. The company is said to be planning to spend a whopping $7 billion on Nvidia Corp.'s most powerful graphics processing units to fuel the development of cutting edge artificial intelligence models. It doesn't seek to buy any chips, but rather just rent access to them via data centers located outside of mainland China. ByteDance's plans were reported by The Information, which cites a number of anonymous sources familiar with the matter. The sources said ByteDance founder Zhang Yiming is personally negotiating with data center operators across Southeast Asia and the Middle East, trying to secure access to Nvidia's next-generation Blackwell GPUs, which are expected to become widely available later this year. In conversations with those chip suppliers, Zhang has reportedly indicated that his company's AI investments will dwarf the combined spending of all of its rivals, including the likes of Alibaba Cloud, Tencent Holdings Ltd., Baidu Inc. and Huawei Technologies Co. Ltd. ByteDance needs a workaround because Chinese companies are prohibited from buying advanced processors from western companies due to national security fears. The U.S. is convinced that China will use the chips to develop more sophisticated weapons systems and so it has taken numerous steps to stop Chinese firms from getting their hands on them. That has forced Chinese technology giants to resort to renting access to chips instead. ByteDance is already believed to be using data centers located outside of China to utilize Nvidia's previous-generation Hopper AI GPUs, which are not allowed to be exported to its home nation. However, the U.S. government may yet scupper ByteDance's plans. Last year, the Wall Street Journal reported that U.S. officials are working on yet more rules that would restrict the ability of Chinese companies to rent chips from cloud providers in the U.S. In addition, the U.S. is developing regulations that would position companies such as Google LLC and Microsoft Corp. as "gatekeepers" to cutting-edge AI chips. Under the proposed rules, those companies would need to report key information on their customers to the U.S. government and ensure Chinese firms are not allowed to access them. In exchange, they would be allowed to offer AI capabilities via global data centers without any licenses. Other cloud providers would have to compete for licenses to obtain a limited number of high-end chips in each country. While some Chinese firms are engaged in a game of cat and mouse with the U.S. government, looking to bypass its chip export restrictions, others have resorted to doing more with less. For instance, the Chinese AI startup DeepSeek recently announced a new, open-source large language model that it says can compete with OpenAI's GPT-4o, despite only being trained with Nvidia's downgraded H800 chips, which are allowed to be sold in China. DeepSeek reportedly trained its DeepSeek-R1 model at a total cost of just $5.6 million, far less than its rivals have spent to develop comparable models.

ByteDance appears to be skirting U.S. restrictions to buy Nvidia chips

TikTok parent company ByteDance has big plans to buy Nvidia chips in 2025 -- despite U.S. restrictions. ByteDance plans to spend $7 billion on the chips in 2025, according to reporting from The Information, citing inside sources. If ByteDance follows through, it will become one of the world's top owners of Nvidia chips, despite U.S. efforts to restrict Chinese companies from buying U.S. AI chips like these. In 2022, the U.S. announced export restrictions on certain kinds of AI chips to countries including China where ByteDance is headquartered. These restrictions have gotten tighter multiple times since. ByteDance is technically adhering to these restrictions by using a loophole: The company isn't bringing the chips directly to China and is instead storing them in data centers located in other regions like Southeast Asia, according to The Information's reporting. This doesn't technically violate U.S. restrictions. ByteDance runs Doubao, China's "hottest" AI chatbot with 51 million active users, according to the South China Morning Post. TechCrunch reached out to ByteDance for more information.

ByteDance appears to be skirting US restrictions to buy Nvidia chips: report | TechCrunch

TikTok parent company ByteDance has big plans to buy Nvidia chips in 2025 -- despite U.S. restrictions. ByteDance plans to spend $7 billion on the chips in 2025, according to reporting from The Information, citing inside sources. If ByteDance follows through, it will become one of the world's top owners of Nvidia chips, despite U.S. efforts to restrict Chinese companies from buying U.S. AI chips like these. In 2022, the U.S. announced export restrictions on certain kinds of AI chips to countries including China where ByteDance is headquartered. These restrictions have gotten tighter multiple times since. ByteDance is technically adhering to these restrictions by using a loophole: The company isn't bringing the chips directly to China and is instead storing them in data centers located in other regions like Southeast Asia, according to The Information's reporting. This doesn't technically violate U.S. restrictions. ByteDance runs Doubao, China's "hottest" AI chatbot with 51 million active users, according to the South China Morning Post. TechCrunch reached out to ByteDance for more information.

Chinese cloud giants bought more of Nvidia's flagship AI chips than anybody else - except Microsoft

Chinese cloud giants Tencent and TikTok's parent company ByteDance were the major buyers of Nvidia's flagship AI chips in 2024, coming second only to Microsoft, according to a report from Omdia and analysis from the Financial Times. The two Chinese companies ordered approximately 230,000 of Nvidia's Hopper GPUs each, including the H20 model which has been developed to adhere to strict US export restrictions for China. The report reveals that Microsoft bought 485,000 Hopper chips in 2024, far ahead of its competitors. "Good data center infrastructure, they're very complex, capital-intensive projects," Alistair Speirs, Microsoft's senior director of Azure Global Infrastructure, told the Financial Times. "They take multi-years of planning. And so forecasting where our growth will be with a little bit of buffer is important." In contrast, Meta bought 224,000 Hopper GPUs in 2024, followed by Amazon and Google with 196,000 and 169,000 units, respectively. All three tech giants are increasingly moving away from reliance on Nvidia hardware by developing their own in-house custom silicon. The FT says Google deployed 1.5 million TPUs, Meta 1.5 million MTIA chips, and Amazon 1.3 million Trainium and Inferentia chips, while Microsoft, still in its early stages, installed around 200,000 Maia chips. According to Omdia, Nvidia captured 43 percent of server hardware spending in 2024, but AMD also performed strongly, with Microsoft purchasing 96,000 of its Instinct MI300 chips and Meta acquiring 173,000. While Microsoft leads comfortably in GPU acquisitions, the substantial investments made by ByteDance and Tencent reflect the determination of Chinese firms to secure a strong position in the AI race - a momentum that is expected to carry into 2025. In outspending Google, Meta, Tesla/xAI and Amazon in units purchased, the two Chinese companies have shown they can compete with the biggest of the American tech giants, despite the significant challenges posed by the ongoing trade restrictions which are expected to intensify even further under the Trump administration.