ByteDance, the parent company of TikTok, is collaborating with U.S. chip designer Broadcom (AVGO.O) to develop a cutting-edge 5-nanometer application-specific integrated circuit (ASIC) aimed at securing a stable supply of high-end chips amidst ongoing U.S.-China tensions, sources familiar with the matter revealed.
This strategic move comes in response to U.S. export restrictions on advanced semiconductors introduced in 2022, which have significantly limited Chinese access to state-of-the-art chip technology. The ASIC, designed to comply with U.S. export regulations, will be manufactured by Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW), a global leader in semiconductor fabrication.
While the design phase of the ASIC is reportedly well underway, manufacturing is not expected to commence this year. ByteDance’s partnership with Broadcom, an established business ally, is anticipated to reduce procurement costs and ensure a consistent supply of high-performance chips critical for its AI initiatives.
Both ByteDance and Broadcom declined to comment on the collaboration, citing the sensitivity of semiconductor issues involving China. TSMC also refrained from providing specific remarks.
ByteDance’s pursuit of advanced AI capabilities underscores its strategic focus on enhancing algorithmic capabilities across its portfolio, which includes popular apps such as TikTok and Douyin. The company faces intense competition for AI chips tailored for the Chinese market, with limitations imposed by U.S. export controls affecting access to Nvidia’s advanced chipsets, among others.
In preparation for its AI expansion, ByteDance has accumulated Nvidia chips, including models like A100, H100, A800, and H800, procuring approximately $2 billion worth of Nvidia chips last year. Additionally, ByteDance acquired Huawei’s Ascend 910B chips to bolster its semiconductor inventory.
The company’s aggressive hiring in the semiconductor sector, including specialized roles in ASIC chip design, and efforts to recruit top talent from Chinese AI chip firms underscore its commitment to strengthening its technological capabilities in artificial intelligence.
As ByteDance navigates the complex landscape of global semiconductor supply chains and regulatory challenges, its collaboration with Broadcom marks a pivotal step towards securing critical components for its AI-driven platforms and sustaining competitive advantage in the evolving tech industry.
