ByteDance negotiating purchase of 50,000+ Chinese AI chips

ByteDance is negotiating to acquire at least 50,000 AI chips from Shanghai-based Iluvatar CoreX, primarily for inference workloads supporting its Doubao chatbot expansion, according to sources familiar with the discussions reported by Reuters.

The TikTok parent company is also exploring a similar arrangement with Baidu to use its Kunlunxin chips, the sources said. If finalized, Iluvatar CoreX would join Huawei and Cambricon as ByteDance's third major domestic GPU supplier.

Why it matters

This procurement strategy reflects how U.S. export controls are reshaping China's AI infrastructure landscape. As Chinese companies lose access to Nvidia's advanced chips, domestic alternatives are moving from experimental deployments to production-scale orders at major tech firms. ByteDance's commitment to tens of thousands of locally-made chips validates the commercial viability of Chinese GPU manufacturers and accelerates the bifurcation of global AI hardware markets.

Domestic chips capture market share

Chinese GPU and AI chipmakers secured nearly 41% of China's AI accelerator server market in 2025, according to Reuters reporting from April. Nvidia's market share in China has effectively dropped to zero, CEO Jensen Huang has acknowledged.

Tencent's Chief Strategy Officer James Mitchell said in May that Chinese AI chips would become available in large quantities during the second half of this year. Tencent is already using Baidu's Kunlunxin chips, one source confirmed.

Commercial breakthrough for Iluvatar CoreX

A contract with ByteDance would represent a significant milestone for Iluvatar CoreX, which has primarily served government procurement projects until now, sources said. The company, which listed in Hong Kong this January, reported 1 billion yuan ($148 million) in 2025 revenue, with approximately 90% derived from GPU sales.

Most of the chips destined for ByteDance will be used for inference tasks—answering user queries—rather than the more computationally intensive work of training AI models. Iluvatar CoreX manufactures its Tiangai series for training workloads and its Zhikai series for inference applications.

Huatai Securities projects Iluvatar CoreX revenue will reach 3.04 billion yuan ($449.8 million) this year, with total chip shipments expected to surge 139% to over 100,000 units. The broker estimates Zhikai inference chips carry an average selling price of approximately 12,000 yuan ($1,775).

The terms of the potential agreements remain under negotiation and could still change, sources cautioned. ByteDance, Iluvatar CoreX, Baidu, and Tencent all declined to comment on the discussions.

These details were first reported by Reuters correspondents Liam Mo, Che Pan, and Ryan Woo.