TikTok’s parent company is working on custom computer processors to fuel its artificial intelligence operations as rising costs and supply chain issues hamper expansion efforts, according to three sources with knowledge of the project.
ByteDance’s initiative highlights the tech industry’s growing focus on “inference” – the process where AI systems are put to work on tasks requiring more processing power from central processing units alongside the graphics cards from companies like Nvidia that have powered the AI revolution.
This trend has led to processor shortages in recent months, pushing major tech companies including Google’s parent Alphabet, Amazon and Microsoft to create their own custom chips to cut expenses and optimize performance for their specific needs. The development has also positioned major processor manufacturers Intel and AMD as key competitors to Nvidia’s AI market leadership.
The Beijing-based company plans to use its custom-built processors in its own servers and data centers for internal operations while preparing a large-scale launch of AI-powered products including its Coze platform, according to the first source.
ByteDance has reached out to multiple external partners for assistance with the project, with these collaborators expected to help both with chip design and securing production capacity at manufacturing facilities, sources indicated. The initiative is still in early development stages, the first source noted.
The sources requested anonymity since the plans have not been made public.
ByteDance did not provide a response to requests for comment.
The company’s strategy puts it among a growing number of technology firms that have determined the financial benefits of custom processors outweigh the challenges of developing them.
ByteDance is pursuing dual development paths for its processor project – one using technology from SoftBank-owned Arm and another based on the open-source RISC-V design framework, as it evaluates which approach best meets its long-term data center needs, sources revealed.
Creating two designs at once is a typical strategy for major tech companies, allowing them to compare options before investing in expensive, large-scale production.
Arm did not immediately provide comment when contacted.
The custom chip development effort comes as Intel has informed Chinese customers of server processor delivery delays extending up to six months, as previously reported in February.
Intel announced last month that first-quarter demand from AI companies was so intense that the company sold processors it had previously considered unsaleable.
AMD’s chief executive warned recently that the worldwide processor market remains “tight,” with demand exceeding projections and supply limitations expected to continue.
ByteDance currently purchases processors from Intel and AMD, with both companies implementing substantial price increases ranging from 10% to 35% quarter-over-quarter in recent months, according to two sources, spurring ByteDance to speed up its internal chip development efforts.
Intel stated it had adjusted pricing on certain products due to continued strong demand, higher component and material costs, and changing market conditions. AMD did not immediately respond to comment requests.
Nvidia is moving beyond graphics cards into the processor market, with its chief executive hoping the company’s new “Vera” central processors will provide access to a $200 billion market opportunity.
The company introduced a new central processor and AI system using technology from Groq – a startup focused on inference processing – in March, as part of efforts to maintain its position in the AI chip sector.
