ByteDance to Pour Over $20 Billion into AI Infrastructure

ByteDance, the Chinese owner of TikTok, has earmarked over 150 billion yuan ($20.64 billion) for capital expenditure this year, with much of it focused on artificial intelligence, two sources with knowledge of the matter said.

The privately held tech giant plans to spend about half of that on AI-related infrastructure, mainly data centers and network equipment.

Chipmakers Huawei Technologies and Cambricon Technologies, as well as U.S. supplier Nvidia, are set to be major beneficiaries of the spending, said the sources, who declined to be identified as the information is confidential.

ByteDance said: "Anonymous reporting on our spending is inaccurate." It did not elaborate.

Nvidia declined to comment. Huawei and Cambricon did not immediately respond to requests for comment on Thursday.

The spending will help ByteDance defend its AI lead at home. From being a relative laggard in early 2019, it now has over 15 independent AI apps, more than rivals Baidu and Tencent Holdings, including chatbot Doubao.

The money will also bolster its AI offerings overseas as ByteDance grapples with the future of TikTok in the United States. U.S. President Donald Trump on Monday signed an executive order deferring for 75 days the ban on the short-video app.

It was not clear how the 2021 plan compares with previous years, as the privately held company does not disclose financials.

On Tuesday, the Financial Times reported that ByteDance planned to invest $12 billion in AI infrastructure. In December, The Information reported a plan to spend up to $7 billion to gain access to Nvidia chips outside of China, where the United States restricts sales of advanced technologies.

ByteDance is already the largest buyer of Nvidia's H20 AI chips, which the U.S. company customized for China in response to the restrictions, Reuters reported in September.

The TikTok owner is also Microsoft's largest customer in Asia for Nvidia chips accessed via its cloud, sources have told Reuters.

Its AI applications in China include Doubao, which has 75 million monthly active users, according to data from QuestMobile.

It also runs text-to-video generator Simmeng and image generator Xinghui, as well as Kouzi, a platform for building custom chatbots, and MoXiang, which offers role-playing games and emotional support.

Unlike its domestic peers, ByteDance has created international counterparts for its most important apps: Doubao is called Cici, and Simmeng is Dreamina.

On Wednesday, ByteDance updated its flagship AI model - also named Doubao - with the aim of taking on Microsoft-backed OpenAI's reasoning-like products.

Its spending, however, remains modest compared with U.S. tech giants. Google parent Alphabet planned to invest $50 billion in chips, data centers and other spending last year, while Microsoft spent $55.7 billion in its fiscal year ended June 30, a significant chunk of it on AI infrastructure.

($1 = 7.2671 Chinese yuan)

(Reporting by Yingzhi Yang, Brenda Goh, and Katie Paul; Editing by Christopher Cushing)