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After US trade restrictions stopped Nvidia from exporting its advanced AI chips to China, the company responded by developing the H20 GPU, a modified version which complies with the regulations by offering lower performance levels while still meeting the AI processing demands of Chinese firms.
Although there is a thriving black market for Nvidia’s high-end GPUs, TikTok’s parent company ByteDance, already under intense scrutiny in the US, cannot afford the legal and reputational risks of engaging in such illegal markets, and so has been purchasing Nvidia’s lower-capability processors for its AI needs. ByteDance is reportedly the largest buyer of H20s in China, having spent over $2 billion on the hardware in 2024 alone.
While it is expected to continue using Nvidia GPUs, Reuters claims ByteDance is now shifting its attention towards domestic chip suppliers like Huawei to meet 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’s 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 so in demand. Making the shift to Huawei’s Ascend chips might 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 aim is to reduce its dependency on Nvidia, but the shift to Huawei’s Ascend chips could hinder its ability to train more complex models, Reuters says.
ByteDance’s strategy appears to be to navigate US trade restrictions while looking for local suppliers to help it maintain its competitive edge in AI, and beyond. The company recently invested in Xinyuan Semiconductors, a Chinese memory chip manufacturer, which could lead to developments such as a potential VR headset to compete with Meta’s Quest and Apple‘s Vision Pro.