ByteDance is holding discussions to acquire AI chips from Chinese startup Iluvatar CoreX, marking a deliberate shift away from longtime supplier Nvidia. The talks come as U.S. export controls tighten on advanced semiconductors, pushing Beijing's biggest tech firms to look for domestic alternatives.
A strategic pivot from Nvidia
ByteDance, the parent company of TikTok and Douyin, has been one of Nvidia's largest customers in China, using its graphics processing units to train large language models and power recommendation algorithms. But new U.S. regulations restricting the sale of high-end chips like Nvidia's A100 and H100 have made that supply chain less dependable. By sourcing from Iluvatar CoreX, a Chinese firm specializing in AI accelerators, ByteDance gains a supplier that isn't subject to U.S. export bans.
The change isn't just about compliance. Iluvatar CoreX's chips are designed for deep-learning workloads and could replace some Nvidia GPUs in ByteDance's data centers. Neither company has confirmed the talks publicly, but people familiar with the matter say discussions are advanced.
China's semiconductor push
The negotiations fit into a broader national effort to cut reliance on foreign chip makers. Beijing has poured billions into domestic semiconductor development through initiatives like the National Integrated Circuit Industry Investment Fund, often called the “Big Fund.” Chinese tech giants including Alibaba, Baidu, and Tencent have all been scouting local chip alternatives amid the trade war with Washington.
Iluvatar CoreX was founded in 2015 by veterans of Intel and other chip firms. The startup has raised hundreds of millions of dollars from state-backed funds and private investors. Its flagship product, the BI series, targets AI inference and training tasks that ByteDance runs at scale.
Still, matching Nvidia's performance won't be easy. Nvidia's CUDA software ecosystem and mature chip designs give it a huge lead. Switching to a new architecture means rewriting software stacks and retuning models, a costly and time-consuming process.
ByteDance hasn't cut ties with Nvidia entirely. The company continues to buy Nvidia chips where possible, and it's also developing its own custom AI accelerators. The Iluvatar CoreX deal would add another leg to its supply chain, not replace everything overnight.
The outcome of the talks remains unclear. Neither side has set a deadline, and technical hurdles still need sorting. But the very existence of the discussions shows how the chip landscape in China is reshaping — away from one dominant supplier and toward a more fragmented, homegrown base.
