China’s ByteDance, the parent company of TikTok, is partnering with U.S. chip designer Broadcom to develop a cutting-edge AI processor, according to sources familiar with the matter. This strategic move aims to secure a steady supply of high-end chips amidst ongoing U.S.-China trade tensions.

The project involves creating a 5-nanometer application-specific integrated chip (ASIC), which complies with U.S. export regulations. The manufacturing of this advanced chip will be outsourced to Taiwan’s TSMC, the sources revealed.

This collaboration marks a significant milestone, as it is one of the few publicly known partnerships between Chinese and U.S. companies involving such advanced technology since the U.S. imposed export controls on high-end semiconductors in 2022. Typically, U.S.-China collaborations in this sector have focused on less advanced technology.

By partnering with Broadcom, ByteDance aims to reduce procurement costs and ensure a reliable supply of advanced chips, crucial for its AI initiatives. However, TSMC is not expected to begin manufacturing the new chip this year, as the design phase, known as “tapeout,” has not yet started.

Both ByteDance and Broadcom declined to comment on the matter, and TSMC also refrained from commenting.

ByteDance, like many global tech companies, is heavily investing in generative artificial intelligence. However, Chinese firms face a more limited supply of AI chips compared to their international counterparts, largely due to U.S. export controls designed to hinder China’s military advancements in AI and supercomputing. Consequently, competition for available AI chips, including those designed for the Chinese market by Nvidia and Huawei, is intense.

ByteDance and Broadcom have been collaborating since at least 2022. ByteDance has previously purchased Broadcom’s Tomahawk 5nm high-performance switch chip and Bailly switch for AI computer clusters, as publicly stated by Broadcom.

Securing advanced AI chips is essential for ByteDance to enhance its algorithms. The company operates a wide range of popular applications, including Douyin, the Chinese version of TikTok, and Doubao, a ChatGPT-like chatbot with 26 million users.

To support its AI endeavors, ByteDance has stockpiled Nvidia chips, including A100 and H100 models obtained before U.S. sanctions, as well as A800 and H800 models designed for the Chinese market but later restricted. The company reportedly allocated $2 billion for Nvidia chip purchases last year.

Additionally, ByteDance acquired Huawei’s Ascend 910B chips and is actively recruiting semiconductor talent, with numerous job openings for ASIC chip designers and other roles related to semiconductor development.

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