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Howard Liu

Ann Cao

As Chinese technology giant ByteDance accelerates its shift towards domestic chips for artificial intelligence workloads, a few smaller domestic suppliers stand to benefit – if they can deliver at scale amid a void left by Nvidia due to regulatory hurdles.
The Beijing-based owner of TikTok is considering turning to a handful of so-called tier-two chipmakers in China – smaller rivals to Huawei Technologies and Cambricon Technologies – for its cloud infrastructure, according to sources and analysts.
Suppliers in this group, which analysts said included Biren Technology, MetaX Integrated Circuits, Iluvatar CoreX, Moore Threads Technology and Enflame Technology, have been trying to win orders from one of China’s largest cloud service providers as Beijing pushes for greater use of home-grown semiconductors.
In a recent case, ByteDance quietly bought tens of thousands of AI processors from Shanghai-based Iluvatar at a favourable price, according to two sources familiar with the matter.
The company was also in talks with a few other domestic chipmakers for potential orders, the sources said.
ByteDance and Iluvatar did not immediately respond to requests for comment on Thursday.
Iluvatar had emerged as one of the fastest-moving domestic AI chip start-ups, according to Alex Zhang, an analyst at ZICC, a Chinese semiconductor industry research platform.
“Among these top four or five companies, Iluvatar is probably the one making the smoothest and fastest progress at the moment,” Zhang said. “Its products can be delivered and have been verified, and they are basically capable of competing with Cambricon’s products.”
Iluvatar’s access to overseas manufacturing partners had helped support the volume delivery of its chips, Zhang said, giving the company a near-term advantage over some domestic peers that face greater constraints in using foreign foundry services.
But that reliance could also become a vulnerability if the company faced tighter external scrutiny in the future, Zhang said. In that case rivals that could shift more production to domestic foundries would gain an advantage in supply security, he said.
The suppliers follow different design methodologies. Moore Threads, Biren and Iluvatar are the leading contenders in general-purpose graphics processing units, which are able to handle massive calculations simultaneously for complex AI networks. Enflame joins Huawei and Cambricon in choosing to focus on highly specialised application-specific integrated circuits.
However, this was no longer the only important factor for these companies, Zhang said.
“The design capabilities of these companies are not the main concern,” he said, adding that the competition now was about whether they could secure domestic production or, failing that, achieve stable mass production overseas.
“Given the shortage of AI chips in China, cloud service providers are willing to buy from whoever can supply them,” said a person at a domestic AI chip company. “What matters is whether the chips have been validated and can be delivered at scale.”

The latest move by ByteDance aligned with its plan to ramp up spending on AI infrastructure in 2026. The company boosted its planned capital expenditure this year to more than 200 billion yuan (US$29.6 billion), at least 25 per cent more than in a preliminary plan late last year, the South China Morning Post reported in May. Bloomberg later reported that the firm was considering lifting the amount to US$70 billion.
Domestic chipmakers are rushing to fill a void left by Nvidia amid geopolitical tensions. Imports of Nvidia’s H200 AI processors have remained in limbo after US approval met an ambiguous response from Beijing.
Although the tier-two chipmakers had limited experience as suppliers to China’s top cloud service providers, some of them could “break into the supply chain” of such clients in the longer term, JPMorgan analyst Billy Feng said in a recent research report.
“Iluvatar CoreX’s product portfolio is designated to leverage foundry services from both local and international providers,” he said. “Hence we believe the company is likely to achieve more design wins from top Chinese cloud service providers with sufficient supply.”


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Iluvator CoreX and a few of its peers are vying for spots in top AI infrastructure builders’ supply chains. Photo: Shutterstock Images

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TikTok owner’s expanding spending could benefit a few second-tier domestic chipmakers, with Iluvatar CoreX in pole position, analysts say


TikTok owner’s expanding spending could benefit a few second-tier domestic chipmakers, with Iluvatar CoreX in pole position, analysts say.


As ByteDance spends billions on AI, which Chinese chip start-ups stand to gain?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}TikTok owner’s expanding spending could benefit a few second-tier domestic chipmakers, with Iluvatar CoreX in pole position, analysts say

TikTok owner’s expanding spending could benefit a few second-tier domestic chipmakers, with Iluvatar CoreX in pole position, analysts say