ByteDance to invest $20B in capex in 2025, and most will go to AI

ByteDance has allocated over 150 billion yuan ($20.64 billion) in capital expenditure for 2024, with a significant focus on artificial intelligence infrastructure and development.

Investment breakdown: ByteDance plans to spend approximately half of its allocated budget on international AI infrastructure, primarily focusing on data centers and networking equipment.

• The spending will be distributed among key suppliers including Huawei Technologies, Cambricon Technologies, and U.S.-based Nvidia
• ByteDance has disputed the accuracy of these spending figures, though without providing specific details
• The investment follows earlier reports by Financial Times of a $12 billion AI infrastructure plan and The Information’s report of up to $7 billion for Nvidia chips outside China

Strategic positioning: ByteDance has rapidly expanded its AI presence in China’s competitive tech landscape, launching over 15 standalone AI applications.

• The company’s chatbot Doubao has gained significant traction with 75 million monthly active users
• Additional AI offerings include text-to-video generator Jimeng, image generator Xinghui, and custom chatbot development platform Kouzi
• ByteDance has created international versions of its major apps, with Doubao becoming Cici and Jimeng becoming Dreamina globally

Technical partnerships: ByteDance has established strong relationships with major technology providers while navigating complex international regulations.

• The company is currently Nvidia’s largest buyer of H20 AI chips, which were specifically designed for the Chinese market
• ByteDance maintains position as Microsoft’s biggest client in Asia for Nvidia chips accessed through cloud computing
• Recently updated its flagship AI model to compete with OpenAI’s reasoning model products

Market context: While substantial, ByteDance’s AI investments remain modest compared to U.S. tech giants’ expenditures.

• Google parent Alphabet allocated $50 billion for chips, data centers, and related expenses last year
• Microsoft invested $55.7 billion in its fiscal year through June 2023, with significant AI infrastructure spending
• The company’s AI expansion comes amid ongoing uncertainty regarding TikTok’s future in the United States, with President Trump recently signing a 75-day delay in enforcement of a potential ban

Strategic implications: ByteDance’s substantial AI investment signals its determination to compete globally in AI development while balancing geopolitical challenges and export restrictions, though success will depend on executing effectively within an increasingly complex international regulatory environment.