Qualcomm will supply chips to ByteDance for artificial intelligence data centers
Shares soar for the largest U.S. smartphone processor manufacturer on Nasdaq, following a report by Bloomberg stating that Qualcomm has reached an agreement with the Chinese company owning TikTok to sell millions of chips destined for its data centers and needed to power artificial intelligence applications. Qualcomm shares extended their gains up to 8.3%, reaching a new intraday high.
ByteDance, according to informed sources cited by Bloomberg, is preparing to purchase millions of Qualcomm chips, known as ASICs (Application-Specific Integrated Circuits), which will support the social media company’s artificial intelligence software.
This is an important victory for the San Diego-based company, which is seeking to expand from smartphone processors to AI infrastructure. Last month Qualcomm stated it had made progress in the lucrative data center market and forecasted a recovery in the mobile phone sector in China, Bloomberg also reported.
All the details.
BYTEDANCE FIRST CUSTOMER OF QUALCOMM’S AI CHIPS
Thus, the Chinese tech giant could become one of the first major customers of the chip manufacturer for ASICs dedicated to artificial intelligence.
Recently, ByteDance has accelerated investments in artificial intelligence. According to the South China Morning Post, the group increased its AI infrastructure budget by 25%, bringing it to 200 billion yuan, approximately 29.4 billion dollars.
Also according to Bloomberg Intelligence, Doubao – the chatbot developed by ByteDance and competitor to OpenAI’s ChatGPT, Anthropic’s Claude, and Google’s Gemini – was for much of last year the most downloaded artificial intelligence software in China.
THE SAN DIEGO MANUFACTURER’S PURSUIT
For its part, Qualcomm considers artificial intelligence data centers one of the main sources of potential growth. “It is changing the way we think about the broad opportunities offered by artificial intelligence, as well as the pace of our diversification efforts,” Qualcomm CEO Cristiano Amon said during a conference call with analysts last month.
The slowdown in the smartphone market, worsened by weak demand in China, has weighed on Qualcomm’s traditional activities in recent years, whose chips are at the heart of many mobile devices. For this reason, Qualcomm has long aimed to strengthen its presence in the semiconductor sector for artificial intelligence, although winning new customers has proven complex.
So much so that the San Diego-based company has been trying for some time to strengthen its position in the AI chip sector, but finding customers has proven to be a challenge.
Nvidia Corp. remains dominant in the AI computing chip market, although AMD, Broadcom, and Google are all gaining ground, Bloomberg recalls.
CHINESE ASSISTANCE FOR THE AMERICAN MANUFACTURER
The collaboration between Qualcomm and ByteDance could therefore turn into a strategic opportunity for both companies, guaranteeing the U.S. group a top-tier customer and access to one of the most dynamic segments of the semiconductor industry.
Currently, Qualcomm entrusts the production of its chips to partners like TSMC. As long as semiconductors remain within the computing capacity limits allowed by U.S. regulations, partner manufacturers will not violate the restrictions imposed by the United States on the export of AI chips to Chinese companies like ByteDance.
Finally, according to one of the sources cited by Bloomberg, the agreement will help ByteDance turn an already completed internal chip project into a semiconductor ready for production.
