(Bloomberg) — Qualcomm Inc. reached a deal with TikTok owner ByteDance Ltd. to supply chips for artificial intelligence data centers, according to people familiar with the matter, marking a key win for a company trying to expand from smartphone processors into AI infrastructure.
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ByteDance is set to procure millions of Qualcomm chips known as application-specific integrated circuits, which will help support the social media company’s AI agent software, said the people, who asked not to be identified because the discussions are private.
Qualcomm’s shares extended their gains to as much as 8.3% higher to a new intraday record.
Representatives for San Diego-based Qualcomm declined to comment. A ByteDance spokesperson didn’t respond to requests for comment.
The Chinese tech giant is poised to become one of the chipmaker’s first major customers for the AI-focused ASICs. Qualcomm Chief Executive Officer Cristiano Amon has previously said that the company is beginning to line up clients for the chips. During a post-earnings conference call last month, he mentioned “engagement” with a number of companies. Amon didn’t identify potential customers, but the remarks helped trigger a Qualcomm stock rally.
Qualcomm has long sought to increase its foothold in the AI chip industry, but finding customers has been a key challenge. Nvidia Corp. remains dominant in the market for AI computing chips, though Advanced Micro Devices Inc., Broadcom Inc. and Alphabet Inc.’s Google are all making inroads.
Qualcomm’s partnership with ByteDance could provide a key opportunity: a high-volume customer and a path into one of the fastest-growing segments of the semiconductor industry. The US company now makes chips through partners such as Taiwan Semiconductor Manufacturing Co. So long as the Qualcomm chips fall within legally acceptable computing thresholds, Qualcomm’s partners wouldn’t run afoul of existing US restrictions on the production of AI chips for Chinese firms like ByteDance.
ByteDance, meanwhile, has been stepping up its spending. It boosted its AI infrastructure budget by 25% to 200 billion yuan ($29.4 billion), South China Morning Post reported earlier this month.
The company’s Doubao software — similar to OpenAI’s ChatGPT, Anthropic PBC’s Claude and Google’s Gemini — was China’s most-downloaded AI chatbot for most of last year, according to Bloomberg Intelligence.
