ByteDance Eyes Chinese AI Chips as Nvidia Alternatives Gain Ground

Introduction

Chinese tech giant ByteDance, the parent company of TikTok and AI chatbot Doubao, is reportedly in talks with Shanghai-based AI chipmaker Iluvatar CoreX to purchase large volumes of AI inference chips. According to a Reuters report, ByteDance is also evaluating AI processors from Baidu's chip division, Kunlunxin, as it expands its artificial intelligence infrastructure.

The development highlights a major shift underway in China's AI industry: local chipmakers are increasingly replacing foreign suppliers as U.S. export restrictions continue to reshape the global semiconductor landscape.

What Is Happening?

Sources familiar with the discussions told Reuters that ByteDance is negotiating with Iluvatar CoreX for AI chips primarily intended for inference workloads—the process of running AI models and generating responses for users. The company is also considering Baidu's Kunlunxin chips as another domestic option.

If finalized, Iluvatar CoreX would become ByteDance's third major Chinese GPU supplier after Huawei and Cambricon. The move reflects growing confidence in China's domestic semiconductor ecosystem.

Why ByteDance Needs More AI Chips

ByteDance has emerged as one of the world's biggest AI infrastructure investors. Its AI chatbot, Doubao, continues to attract users across China, creating enormous demand for computing power. Reuters previously reported that ByteDance is developing custom AI processors, building its own CPUs, and investing heavily in AI hardware.

As AI services scale, companies need two types of computing:

• Training chips to build AI models
• Inference chips to run those models efficiently for millions of users

The reported Iluvatar CoreX deal focuses mainly on inference workloads, which are becoming increasingly important as AI adoption accelerates.

Who Is Iluvatar CoreX?

Iluvatar CoreX is one of China's leading GPU startups focused on AI and high-performance computing. The company recently listed in Hong Kong and generated approximately 1 billion yuan in revenue during 2025, with most sales coming from AI GPUs. Reuters reports that revenue could more than triple in 2026 as demand for domestic AI chips grows.

The company develops two major chip families:

• Tiangai Series – designed for AI model training
• Zhikai Series – optimized for AI inference tasks

Its Zhikai chips reportedly sell for around 12,000 yuan ($1,775) each and are expected to play a key role in the proposed ByteDance deployment.

China's Push for AI Self-Reliance

The talks come amid China's broader effort to reduce dependence on foreign semiconductor technology. U.S. export controls have limited access to some advanced AI chips, encouraging Chinese companies to develop domestic alternatives.

According to Reuters, Chinese GPU and AI chipmakers captured nearly 41% of China's AI accelerator server market last year, significantly reducing Nvidia's dominance in the country.

Major Chinese AI chip players now include:

• Huawei Ascend
• Cambricon
• Baidu Kunlunxin
• Iluvatar CoreX
• Enflame
• MetaX
• Moore Threads

These companies are benefiting from increased government support and rising demand from China's internet giants.

Why This Matters for the AI Industry

The potential ByteDance-Iluvatar partnership represents more than a commercial agreement. It signals that Chinese AI firms are becoming increasingly willing to deploy locally developed chips at scale.

For years, Nvidia dominated AI computing worldwide. However, export restrictions, supply concerns, and China's self-sufficiency goals are accelerating investment in domestic hardware. ByteDance's decision could serve as a major endorsement for Chinese GPU manufacturers and encourage other technology companies to follow a similar path.

If successful, the deal could strengthen China's AI supply chain while giving Iluvatar CoreX its biggest commercial customer to date.

Conclusion

ByteDance's reported discussions with Iluvatar CoreX and Baidu's Kunlunxin underscore a significant transformation in the global AI chip market. As AI demand explodes and geopolitical tensions reshape technology supply chains, China's homegrown chipmakers are gaining unprecedented opportunities.

Whether the deal is finalized or not, one thing is clear: the race to power the next generation of AI is no longer dominated by a single company. China's AI hardware ecosystem is rapidly emerging as a serious competitor on the global stage.

Key Takeaways

• ByteDance is reportedly negotiating to buy AI chips from Iluvatar CoreX.
• The company is also evaluating Baidu's Kunlunxin processors.
• Most chips would be used for AI inference workloads supporting Doubao.
• Chinese AI chipmakers now hold roughly 41% of China's AI accelerator market.
• The move highlights China's growing push toward semiconductor self-reliance.