After US trade restrictions prevented Nvidia from exporting its advanced AI chips to China, the company responded by developing the H20 GPU, a modified version that complies with regulations by offering lower levels of performance while still meeting the requirements. AI processing demands of Chinese companies.
Although there is a thriving black market for Nvidia's high-end GPUs, TikTok's parent company ByteDance, which is already under intense scrutiny in the US, cannot afford the legal and reputational risks of participating in such illegal markets, so it has been buying Nvidia's lower capacity GPUs. processors for your AI needs. ByteDance is reported to be the largest buyer of H20 in China, having spent more than $2 billion on hardware in 2024 alone.
While it is expected to continue using Nvidia GPUs, Reuters claims ByteDance is now turning its attention to domestic chip suppliers like Huawei to fulfill its AI ambitions.
Not without challenges
The report claims that ByteDance has purchased more than 100,000 Ascend 910B chips to date, making it one of the largest buyers of Huawei AI hardware in China, although as of July it had received less than a third of the order.
Training AI models is a computationally demanding process, which is why high-end GPUs like Nvidia's are in such demand. Making the switch to Huawei's Ascend chips could be a strategic move for the TikTok owner, but it won't be without its challenges.
ByteDance's existing AI models, such as Doubao and Jimeng, were built using more powerful hardware and are used in applications ranging from chatbots to text-to-video tools. The company's ultimate goal is to reduce its dependence on Nvidia, but the switch to Huawei's Ascend chips could hamper its ability to train more complex models, Reuters says.
ByteDance's strategy appears to be to navigate US trade restrictions while seeking local suppliers to help it maintain its competitive advantage in AI and more. The company recently invested in Xinyuan Semiconductors, a Chinese memory chip maker, which could lead to developments such as a potential virtual reality headset to compete with Meta's Quest and Apple's Vision Pro.