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ByteDance is going all in on AI, planning to pump over $12 billion into AI infrastructure in 2025. That includes $5.5 billion for AI chips in China and another $6.8 billion to build up its overseas AI muscle, mainly using Nvidia (NASDAQ:NVDA) chips. But with U.S. export controls tightening, ByteDance is stuck with watered-down versions while shifting more orders to Chinese suppliers like Huawei and Cambricon. This comes as the company faces mounting pressure from Washington to offload TikTok's U.S. operationsa move that could shake up its long-term strategy.
Even with the regulatory squeeze, ByteDance isn't slowing down. It's expanding AI capacity in Southeast Asia, particularly Malaysia, to sidestep chip restrictions. The U.S. just closed a loophole that let Chinese firms rent Nvidia's high-end chips through third parties, making future access even trickier. Meanwhile, competition is heating up at home, with Baidu, Alibaba, and Tencent doubling down on generative AI. That means ByteDance has to move fast, securing chips and scaling infrastructure before restrictions tighten further.
For investors, this isn't just about ByteDanceit's about the bigger AI race unfolding in China. Nvidia still plays a crucial role, even under trade restrictions, while Chinese chipmakers gain ground. With AI spending surging and geopolitical risks in flux, the battle lines are clear: those with the best AI infrastructure will win. ByteDance is betting big, but whether it pays off depends on how fast it can adapt to shifting U.S.-China tech policies.
This article first appeared on GuruFocus.