TMTPOST—TikTok’s parent company ByteDance is working with U.S. chip designer Broadcom on developing an advanced AI processor, two sources familiar with the matter said, a move that would help TikTok's owner secure sufficient supply of high-end chips amid U.S.’s restrictions.

The 5-nanometer chip, a customized product known as an application-specific integrated chip (ASIC), would be compliant with U.S. export restrictions and manufacturing work would be outsourced to Taiwan's TSMC, the sources added.

Public information shows that ASICs are specialized chips designed for specific application scenarios, optimizing performance and energy efficiency through algorithm solidification. They offer strong performance, low power consumption, and high cost-effectiveness but require significant upfront investment and long development time.

Since the Biden administration unveiled export controls for cutting-edge semiconductors in 2022, there have been no publicly disclosed collaborations on chip development involving 5nm or more advanced technology between Chinese and U.S. companies. Typically, U.S.-China agreements in this sector focus on less advanced technologies.

Sources familiar with the matter revealed that ByteDance's partnership with Broadcom, an established business associate, aims to reduce procurement costs and ensure a steady supply of high-end chips.

However, TSMC is not expected to commence manufacturing the new chip this year, according to the sources. They indicated that while the chip's design process is progressing well, the "tapeout" phase, marking the transition from design to manufacturing, has yet to begin.

ByteDance and Broadcom did not respond to requests for comment. TSMC declined to comment.

Like many multinational technology firms, ByteDance has embarked on a significant expansion into generative artificial intelligence. However, the company, along with other Chinese counterparts, faces severe constraints in acquiring AI chips compared to their international peers.

Nvidia's latest chipsets are inaccessible due to U.S. export restrictions aimed at limiting China's advancements in AI and supercomputing. Competition is intense for U.S.-produced chips tailored for the Chinese market, as well as those from Huawei, one of the few Chinese companies manufacturing AI accelerators.

ByteDance and Broadcom have been business partners since at least 2022. According to Broadcom's public statements, ByteDance has procured the U.S. company's Tomahawk 5nm high-performance switch chip and Bailly switch for AI computer clusters.

Securing AI chips is crucial for ByteDance to enhance the capabilities of its algorithms. Apart from operating TikTok and Douyin, ByteDance manages various popular apps, including Doubao, a chatbot service similar to ChatGPT, which boasts 26 million users.

To bolster its AI initiatives, ByteDance has accumulated Nvidia chips, as disclosed by a source familiar with the matter. This includes A100 and H100 chips acquired before initial U.S. sanctions, as well as A800 and H800 chips initially made for the Chinese market but later subjected to restrictions. The source mentioned that ByteDance allocated $2 billion for Nvidia chip purchases last year.

ByteDance has also procured Huawei's Ascend 910B chips last year, as confirmed by two separate sources familiar with the transaction.

In the fundamental large model domain, ByteDance launched its first large language model "Doubao" and the multimodal large model BuboGPT in August 2023.

In the AI application layer, ByteDance established a new AI department, Flow, in November last year, which has since launched three AI conversation products: Doubao, Kouzi, and Cici. Doubao is a chatbot that can handle Q&A, text generation, language translation, and adaptive Q&A based on user needs and context, providing personalized services. Kouzi is an all-in-one AI Bot development platform that allows users to quickly build various Q&A Bots based on AI models, regardless of programming experience, handling both simple Q&A and complex dialogues.

In 2024, ByteDance has accelerated product development, releasing AI products such as AI learning companion Hippo Love Learning, AI interactive storytelling product Cat Box, AI image generation product PicPci, multimodal digital human products, and AI-generated image and video products.

ByteDance is also exploring AI hardware, with one product line focusing on wearable AI devices, based on the recently acquired headphone brand Oladance, and another line exploring handheld AI devices, which are more closely related to mainstream computing devices and closely integrated with the Flow AI application team.

Regarding AI computing infrastructure, ByteDance's Volcano Engine recently launched its self-developed video codec chip.

However, Yang Zhenyuan, Vice President of ByteDance, disclosed that the company has no commercial plans for general-purpose chips and does not engage in CPU or GPU businesses.