ByteDance is in discussions with Shanghai-based Iluvatar CoreX to purchase AI chips for inference workloads and is also considering a similar arrangement with Baidu, according to two sources familiar with the matter, News.Az reports, citing Reuters.

If finalized, Iluvatar CoreX would become ByteDance’s third major domestic supplier of graphics processing units (GPUs), after Huawei and Cambricon, the sources added.

The TikTok parent is also weighing the use of Baidu’s Kunlunxin chips, they said, requesting anonymity as the talks are not public. Tencent is already a customer of Kunlunxin chips, according to one of the sources.

ByteDance, Iluvatar CoreX, Baidu, and Tencent did not respond to requests for comment.

The potential agreements highlight how Chinese chipmakers are increasingly offering alternatives to foreign AI chips, as Beijing pushes for greater technological self-reliance amid ongoing U.S. export controls on advanced semiconductors.

Chinese GPU and AI chipmakers accounted for nearly 41% of China’s AI accelerator server market last year, reducing Nvidia’s once-dominant position in one of its key overseas markets, Reuters reported in April.

While Nvidia’s market share in China has effectively dropped to zero, according to CEO Jensen Huang, Chinese AI chips are expected to become widely available in large volumes in the second half of this year, Tencent Chief Strategy Officer James Mitchell said in May.

Iluvatar CoreX, one of China’s leading GPU startups, is expected to ship at least 50,000 chips to ByteDance this year, with most of them intended for inference workloads, as the company expands usage of its AI chatbot Doubao, the sources said.

Inference workloads involve processing user queries and differ from AI model training, which typically requires the most powerful chips.

The details of the potential deals are still not finalized and may change, the sources said.

A deal with ByteDance, one of China’s largest technology companies and a major spender on AI infrastructure, would represent a significant commercial milestone for Iluvatar CoreX. Until now, the Shanghai-based company has mainly supplied government procurement projects, one source said.

Iluvatar CoreX, which listed in Hong Kong in January, reported 1 billion yuan ($148 million) in 2025 revenue, about 90% of which came from GPU sales, benefiting from rising demand for domestic AI hardware.

Its Tiangai series chips are designed for AI training, while its Zhikai series focuses on inference tasks, according to its website.

The company’s revenue is projected to reach 3.04 billion yuan ($449.8 million) this year, with total shipments expected to rise 139% to more than 100,000 chips, according to a Huatai Securities research note. The broker estimated Zhikai inference chips had an average selling price of 12,000 yuan (about $1,775) each.

Following the Reuters report, Iluvatar CoreX shares rose 12% in Hong Kong.

News.Az 

By Nijat Babayev