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ByteDance, the company behind TikTok and Seedance, is close to an agreement with MediaTek to secure custom AI chips for its data centers operations, Bloomberg reported, citing people familiar with the matter. This aggrement would help TikTok’s owner secure advanced AI chips, while MediaTek would see it as a major push towards expanding beyond mobile processors.
The chips would support ByteDance’s operations as the company expands its AI infrastructure. The Taiwanese firm will reportedly provide Application Specific Integrated Circuits (ASICs) or chips customized to work with a client’s platform, although the volume of the discussion has not been disclosed.
The agreement has yet to be finalized. If it goes through, which seems likely to be happening, ByteDance may become MediaTek’s second major customer for such ASICs after Google.
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ByteDance, like any other big tech giant right now, is putting a lot of money into hardware spending as it bets AI as its next big growth engine. However, it’s barred from the most cutting-edge AI chips from Nvidia, and all other Chinese tech giants, including Alibaba and Tencent.
TikTok’s owner is thus exploring alternatives to keep up with the rising compute demant, including partnerships with chip designers, which is allowed under current US export restrictions, but for as long as the AI computing power of the company doesn’t exceed a certain threshold. The Chinese firm struck a similar deal with Qualcomm earlier this year to procure millions of AI chips, per Bloomberg.
ByteDance is betting big on AI and is therefore considering boosting its spending up to $70 billion on data centers and AI infrastructure, which is more than double of last year’s total. The spending may reach $100 billion in 2027. The company had secured a $30 billion load in September to fund its AI growth.
This deal would also mean a huge win for the Taiwanese chip giant and a big push to its efforts to diversify away from mobile processors and compete with Qualcomm and Broadcom in data centers. The company expects its AI chip sales to reach about $2 billion this year, and is targeting 15% of the $80 billion market next year.
ByteDance and MediaTek have yet to officially confirm anything on this matter. With talks nearing the final stages, we expect an official confirmation soon, if everything remains favourable.
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