TikTok owner plans $23B investment in AI capex to keep pace with US rivals

TikTok owner ByteDance is preparing to step up its already sizeable investment in artificial intelligence as China’s leading technology groups seek to narrow the gap with US competitors, reported Financial Times.

The report citing people familiar with the matter said, the Beijing-based company has made preliminary plans to spend about Rmb160 billion ($23 billion) in capital expenditure in 2026, underscoring the scale of its ambition to remain a major global AI player.

The proposed outlay would mark an increase from the roughly Rmb150 billion ByteDance invested in AI infrastructure this year.

The company is among the largest builders of AI infrastructure in China, even as its spending remains far smaller than that of US Big Tech groups such as Microsoft, Alphabet, Amazon, and Meta, which have together spent more than $300 billion this year on data centres that power AI models and products.

Heavy focus on chips and infrastructure

Around half of ByteDance’s planned 2026 spending would be directed toward acquiring advanced semiconductors used to develop AI models and applications.

Within that total, the company has budgeted about Rmb85 billion specifically for AI processors next year, despite uncertainty over Chinese access to Nvidia’s most advanced chips due to US export controls.

Those restrictions have prevented Chinese companies from purchasing Nvidia’s market-leading hardware, pushing groups such as ByteDance and Alibaba to develop cheaper and more efficient AI models that require less computing power.

This approach has allowed them to continue scaling AI services, albeit with different technological trade-offs compared with US peers.

This month, US President Donald Trump lifted a ban that allows Nvidia to sell its H200 processor — a less powerful chip than its most cutting-edge products — to “approved customers in China.”

The move could still face opposition from some US lawmakers and Chinese authorities. If sales proceed, ByteDance and other Chinese technology groups have indicated an interest in placing large orders.

One person familiar with the plans said ByteDance intends to buy about 20,000 H200 chips as a test order, potentially costing around $20,000 per unit.

Overseas capacity and competitive position

ByteDance could further increase its 2026 capital expenditure if it were granted broader access to H200 chips, the report added.

In parallel, the company continues to spend billions of dollars leasing data centres overseas, where it can legally access Nvidia’s most advanced hardware.

These overseas rental agreements are typically treated as operating costs rather than capital expenditure.

While ByteDance’s open-source Doubao models lag behind domestic rivals such as Alibaba’s Qwen and DeepSeek on some independent benchmarks, the company remains dominant in consumer-facing AI applications.

Its Doubao chatbot has overtaken DeepSeek to become the most popular in China by monthly active users and downloads, according to QuestMobile.

ByteDance is also competing aggressively with Alibaba in cloud services through its Volcano Engine platform.

According to Goldman Sachs, these products have made ByteDance’s AI services the most widely used in China.

The bank’s analysts noted that in October, the company recorded daily token usage of more than 30tn, compared with Google’s 43tn in the same month.

One ByteDance investor said the company’s private ownership gives it greater flexibility to invest aggressively and pursue a long-term AI strategy.