ByteDance denies plans to replace Nvidia chips; has no intention of developing its own chips

TikTok owner ByteDance has denied reports that it plans to develop its own chips to reduce its reliance on Nvidia. The Chinese tech giant said its semiconductor initiatives are in the early stages, aimed at optimizing costs and are fully compliant with trade regulations.

ByteDance rejects plans to replace Nvidia

TikTok owner ByteDance, a Chinese digital giant, has denied rumors that it intends to develop and produce two types of semiconductors by 2026 in order to reduce the demand for cooperation with Nvidia, a well-known American chip maker.

The Beijing-based company, which operates Douyin, the Chinese version of TikTok, said its semiconductor initiatives “are at an early stage and focus on optimizing the costs of recommendations, advertising and other businesses,” local media reported, citing a statement written in Chinese by ByteDance.

ByteDance confirms compliance with trade regulations

ByteDance said all of its semiconductor initiatives are “in compliance with relevant trade control regulations.”

US news outlet The Information (via SCMP) claimed on Monday that ByteDance plans to hire the world’s largest chip foundry, Taiwan Semiconductor Manufacturing Company (TSMC), to mass produce two 5-nanometer semiconductors built by the Chinese unicorn. That sparked a backlash.

The article says the goal of these initiatives is to reduce ByteDance’s dependence on Nvidia in order to circumvent US export regulations.

Nvidia Covered by US Export Regulations

The A100 and H100 GPUs, which are highly coveted by AI training systems, cannot be exported to China by Nvidia due to U.S. trade penalties. To satisfy its Chinese customers, the American company has developed solutions such as the H20.

According to the report, citing an anonymous source, ByteDance has spent more than $2 billion on more than 200,000 H20 devices this year, according to Yahoo Finance. The study claims that ByteDance could save a significant amount of money by developing its own training and inference chips and outsourcing their production to a foundry.

When a ByteDance representative said the company was looking for prospective AI chip customers in 2021, it was the company’s first public announcement that it was entering the semiconductor market. The company had been working with Broadcom, a U.S. chip designer, on a 5-nanometer AI processor, Reuters reported in June.

ByteDance Semiconductor Investments

In March, ByteDance invested in InnoStar Semiconductor, in 2022 in Silicon Integrated, and in 2021 in U.S.-sanctioned Moore Threads Technology – two Chinese semiconductor design firms.

On Wednesday, more than 260 job offers related to semiconductor production were posted on the company’s official website.