TikTok owner ByteDance is preparing to significantly increase its investment in artificial intelligence (AI) as it looks to strengthen its position against leading US technology companies. The Beijing-based group is planning capital expenditure of about Rmb160 billion, or $23 billion, in 2026, underlining its long-term commitment to AI infrastructure and applications, according to a news report in Financial Times.
The proposed spending marks an increase from the Rmb150 billion ByteDance invested in AI infrastructure this year. Nearly half of the 2026 budget is expected to be directed towards advanced semiconductors used for developing AI models and applications, highlighting the central role of computing power in the company’s strategy.
Focus on AI chips despite supply uncertainty
ByteDance has reportedly earmarked around Rmb85 billion for AI processors in 2026. This comes despite uncertainty over Chinese companies’ access to Nvidia’s most advanced chips due to US export controls. ByteDance is among the largest builders of AI infrastructure in China and has ambitions to be a global leader in the sector.
US restrictions have limited Chinese tech groups’ ability to purchase Nvidia’s top-end hardware, forcing companies such as ByteDance and Alibaba to focus on building more efficient AI models that require less computing power. These constraints have shaped a different innovation path compared with US rivals.
Potential boost from Nvidia H200 access
Earlier this month, US President Donald Trump lifted a ban allowing Nvidia to sell its H200 processor, a less powerful alternative to its most advanced chips, to approved customers in China. While these sales could still face opposition from US lawmakers and Chinese regulators, they may provide some relief to Chinese AI developers.
ByteDance is considering a test order of about 20,000 H200 chips, potentially costing around $20,000 per unit. If ByteDance were to gain broader access to these processors, its overall capital expenditure for 2026 could rise further.
Overseas data centres support global AI ambitions
In parallel, ByteDance continues to spend billions of dollars leasing data centres outside China. These overseas facilities allow the company to legally access Nvidia’s most advanced hardware to train AI models and serve international customers. Such leasing costs are typically classified as operating expenses rather than capital expenditure, but they form a critical part of ByteDance’s global AI strategy.
Consumer AI strength offsets model performance gap
Although ByteDance’s open-source Doubao models trail competitors such as Alibaba’s Qwen and DeepSeek on some independent benchmarks, the company has established a strong lead in consumer-facing AI services. Its Doubao chatbot has overtaken DeepSeek to become the most popular in China by monthly active users and downloads, according to QuestMobile data.
ByteDance is also intensifying competition with Alibaba in enterprise services by expanding its Volcano Engine cloud platform. These offerings have helped make ByteDance’s AI services the most widely used in China, according to Goldman Sachs.
Token usage growth highlights scale advantage
Goldman Sachs analysts noted that ByteDance recorded a sharp increase in daily token usage, a measure of AI service consumption, reaching more than 30 trillion tokens in October. This compares with Google’s 43 trillion tokens during the same period, underscoring ByteDance’s growing scale in AI engagement.
ByteDance declined to comment on its investment plans, but the scale of its proposed spending signals a clear intention to remain at the forefront of the global AI race despite geopolitical and supply chain challenges.
RAJANI BABURAJAN
