ByteDance in Talks to Acquire Domestic AI Chips from Innosilicon and Baidu's Kunlun
Claire Weston
ByteDance is negotiating to buy domestic AI chips from Iluvatar CoreX and Baidu's Kunlun unit to meet surging inference demand from Doubao's 345 million monthly users — a deal would make Iluvatar its third major domestic GPU supplier after Huawei and Cambricon.
Why does ByteDance need more domestic chips right now?
Doubao hit 345 million monthly active users as of March 2026, making it China's largest AI-native app. It added 100 million active users in Q1 alone.
Every user query runs an inference pass — the process of running a trained AI model to generate a response. More users means more chips burned per day.
This means → ByteDance's chip hunger is not a long-term plan. It is a bill coming due today: daily active users sit at roughly 140 million, each generating real compute cost.
How big is the Iluvatar CoreX deal?
Sources say Iluvatar CoreX (芯动科技) expects to ship at least 50,000 chips to ByteDance this year, mostly for inference workloads.
Iluvatar listed in Hong Kong in January. Its 2025 revenue was about RMB 1 billion (~$148 million), with roughly 90% from GPU sales. Huatai Securities forecasts 2026 revenue at RMB 3.04 billion, with total chip shipments up 139% year-on-year to over 100,000 units.
In plain terms = Iluvatar has relied mostly on government procurement so far. Landing ByteDance as a customer would be its first real foothold in commercial internet — a genuine commercialization turning point.
Where does Baidu's Kunlun fit in?
ByteDance is also considering chips from Baidu's Kunlun unit as another inference compute source.
Tencent is already a Kunlun customer; adding ByteDance would expand Kunlun's commercial reach further.
This means → ByteDance is not betting on a single vendor. The strategy is multi-supplier diversification — Huawei, Cambricon, Iluvatar, Kunlun — spreading risk across the domestic ecosystem.
How much room does Nvidia have left in China?
Chinese GPU and AI chip makers captured nearly 41% of China's AI accelerator server market last year.
Nvidia CEO Jensen Huang has said the company's China market share has "effectively fallen to zero."
Tencent Chief Strategy Officer James Mitchell said in May that Chinese AI chips will reach mass supply in the second half of this year.
This reflects a broader shift: U.S. export controls are pushing China's tech giants from passive substitution into actively building a domestic chip ecosystem — and ByteDance's current procurement talks are the latest step on that path.
What is still uncertain about this deal?
Reuters' sources explicitly stated: deal details are not yet finalized and may still change.
ByteDance, Iluvatar CoreX, Baidu, and Tencent all declined to comment.
In plain terms = the real test is not just signing a contract. Whether ByteDance can deliver stable inference performance on domestic chips at the scale of 345 million monthly users will be the decisive proof point for this round of domestic substitution.
Content is for reference only, not financial advice.