[News] ByteDance Reportedly Turns to TSMC on in-house AI Chips to Cut Purchase Cost on NVIDIA

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ByteDance, the parent company of TikTok, is said to be collaborating with TSMC, eyeing for the mass production of two self-developed AI chips by 2026, according to reports by Economic Daily News and The Information.

ByteDance’s AI chips are expected to be made with TSMC’s 5nm node, which would be one generation behind the foundry giant’s most advanced process, the reports suggest, making the move comply with the U.S. export regulations to China. The chips are similar to NVIDIA’s next-generation flagship AI chip, Blackwell, which are manufactured with TSMC’s 4NP node.

Citing sources familiar with the matter, the reports note that the tech giant in China aims to reduce its reliance on NVIDIA for AI model development. Though the chips are still in the design phase and the plan is subject to change, ByteDance’s self-designed chips could save billions of dollars compared to purchasing NVIDIA’s products, according to the reports.

The Information estimates that ByteDance’s spending on developing generative AI models has been increasing, and it is rumored that the company has ordered over 200,000 NVIDIA H20 chips this year, costing it over USD 2 billion, with some orders still pending delivery.

In response to US export bans, NVIDIA launched AI chip H20, L20 and L2, specially designed for the Chinese market earlier this year. According to a previous report by Wccftech, H20 GPU has 41% fewer Cores and 28% lower performance versus H100. Still, the product is reportedly seeing strong demand for AI servers among Chinese Cloud Service Providers (CSPs) and enterprises, including Huawei and Tencent.

However, due to its lower computing power, Chinese companies need to purchase more H20 chips to build clusters with equivalent computing capacity, which raises costs, Economic Daily News notes.

According to TSMC’s financial report in the second quarter, North American clients contributed 65% of its total revenue. While China, the second-largest market, contributed 16% of its quarterly revenue, with a significant jump from 9% in the first quarter and 12% during the same period last year.

Read more

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• [News] Broadcom Reportedly Developing 5nm AI Chip with ByteDance, Manufactured by TSMC

(Photo credit: ByteDance)