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TikTok owner ByteDance is set to expand its multibillion-dollar outlay on artificial intelligence next year, as China’s top tech groups seek to keep pace with their US rivals.
According to two people with knowledge of the matter, the Beijing-based tech company has made preliminary plans to spend Rmb160bn ($23bn) in capital expenditure in 2026.
The figure would represent an increase from the Rmb150bn it invested in AI infrastructure this year. Around half the total would be used to acquire advanced semiconductors to develop AI models and applications, the people said.
They added that ByteDance had budgeted to spend Rmb85bn on AI processors next year, despite ongoing uncertainty over whether top Chinese groups would be able to access Nvidia chips.
ByteDance is among the biggest Chinese builders of AI infrastructure with ambitions of being a global leader in the space.
However, its spending is dwarfed by US Big Tech groups. Microsoft, Alphabet, Amazon and Meta have spent more than $300bn between them this year in the race to build data centres that power AI models and products.
Chinese groups have been hamstrung by US export controls that have meant they cannot buy Nvidia’s market-leading chips. That has led companies such as ByteDance and Alibaba to create cheaper and more efficient models that require less computing power.
This month, US President Donald Trump lifted a ban for Nvidia to sell its H200 processor, a less powerful chip than its most cutting-edge hardware, to “approved customers in China”. Those sales could still be hampered by opposition from some Washington lawmakers and Chinese authorities.
Should the sales be allowed, ByteDance as well as other Chinese tech groups had indicated they wanted to make large orders of H200s, according to one of the people familiar with its plans.
ByteDance plans to buy 20,000 H200s in a test order, which could cost about $20,000 per unit, the person said.
The tech giant could significantly increase its capital expenditure for 2026 if it gained unlimited access to buy more H200s, according to people with knowledge of the company’s plans.
The company also continues to spend billions on leasing data centres overseas, where it can legally access the most advanced hardware from Nvidia, to train AI models and service clients outside China. The rental agreements are typically not counted as capital expenditure but as operating costs.
While the performance of ByteDance’s open-source Doubao models lags behind local rivals such as Alibaba’s Qwen and DeepSeek on independent benchmarks, the company is dominant in consumer-facing AI applications.
Its Doubao chatbot surpassed DeepSeek to become the most popular in China, in terms of monthly active users and downloads, according to local data analytics firm QuestMobile. The company is also fiercely competing with Alibaba by pushing its Volcano Engine cloud offering to businesses.
These products have contributed to ByteDance’s AI services becoming the most used in China, according to Goldman Sachs.
The investment bank’s analysts found that, in October, ByteDance saw a substantial increase in its daily token usage — a measure of how much consumers use AI services — to more than 30tn. This compares with Google’s 43tn for the same month.
“Compared with other Chinese big techs such as Alibaba and Tencent, ByteDance has the advantage of not being a public company, [which] allows it more flexibility to invest aggressively and play the long game in AI,” said a ByteDance investor.
ByteDance did not respond to requests for comment.
Additional reporting by Eleanor Olcott in Beijing
