Key Takeaways:
ByteDance is negotiating to purchase at least 50,000 AI inference chips from Shanghai-based Iluvatar CoreX, a deal that would make the startup the TikTok parent's third major domestic GPU supplier.
ByteDance's potential purchase of at least 50,000 AI chips from Iluvatar CoreX signals a major acceleration in China's domestic semiconductor adoption, as US export controls push the country's largest technology companies away from Nvidia.
"A deal with ByteDance would be a significant commercial milestone for Iluvatar CoreX," one of the sources said, speaking on condition of anonymity because the talks are private. The Shanghai-based startup has historically supplied government procurement projects rather than large-scale commercial deployments.
Iluvatar CoreX, which listed in Hong Kong in January, reported 1 billion yuan ($148 million) in 2025 revenue, about 90% from GPU sales. Huatai Securities projects revenue will reach 3.04 billion yuan ($449.8 million) this year, with total chip shipments jumping 139% to more than 100,000 units. The company's Zhikai series, tailored for inference tasks, carries an average selling price of about 12,000 yuan ($1,775), according to the broker.
If finalized, the deal would make Iluvatar CoreX ByteDance's third major domestic GPU supplier after Huawei and Cambricon, while ByteDance also explores using Baidu's Kunlunxin chips — a move that would further erode Nvidia's presence in what was once its most important overseas market. Chinese GPU and AI chipmakers already captured nearly 41% of China's AI accelerator server market last year, according to Reuters.
The talks come as ByteDance expands the customer base for Doubao, its flagship AI chatbot, which requires substantial inference compute capacity. Inference workloads — answering user queries rather than training models — typically use less powerful chips than training, making them a natural fit for Iluvatar CoreX's Zhikai series rather than its Tiangai training line.
Nvidia's market share in China has effectively fallen to zero, Chief Executive Officer Jensen Huang said, as US export controls bar the sale of advanced chips like the H100 and B200 to Chinese buyers. Tencent's Chief Strategy Officer James Mitchell said in May that Chinese AI chips would become available in large quantities in the second half of this year. Tencent is already a Kunlunxin customer, according to one source.
For Iluvatar CoreX, a ByteDance deal would mark a transition from government contracts to commercial scale. The startup's 2025 revenue of 1 billion yuan, while growing, remains small relative to Huawei's chip division or Cambricon, which reported 1.2 billion yuan in 2024 revenue. But the projected 139% shipment increase this year suggests demand is accelerating as Chinese technology giants race to secure domestic supply.
For investors, the implications cut both ways. Iluvatar CoreX's Hong Kong-listed shares could benefit from the commercial validation, while Nvidia faces a structural revenue headwind in China that no near-term policy change is likely to reverse. ByteDance, as a private company, does not disclose its AI infrastructure spending, but the scale of this potential deal — at least 50,000 chips at roughly $1,775 each — implies procurement costs exceeding $88 million from this supplier alone.
This article is for informational purposes only and does not constitute investment advice.
