ByteDance purchased tens of thousands of Iluvatar CoreX AI processors. The TikTok owner is pivoting from Nvidia to second-tier Chinese chipmakers for cloud AI workloads.
Key facts
- ByteDance bought tens of thousands of Iluvatar CoreX AI processors.
- Iluvatar is a Shanghai-based second-tier Chinese chipmaker.
- Five tier-two chipmakers are competing for ByteDance cloud orders.
- US export restrictions created the void from Nvidia.
- Huawei and Cambricon are the dominant domestic alternatives.
ByteDance quietly bought tens of thousands of AI processors from Shanghai-based Iluvatar CoreX at a favourable price, according to two sources familiar with the matter per the SCMP report. The company is also in talks with several other domestic chipmakers for potential orders, the sources said.
Beijing-based ByteDance is considering turning to a handful of so-called tier-two chipmakers — smaller rivals to Huawei Technologies and Cambricon Technologies — for its cloud infrastructure. Analysts identified Biren Technology, MetaX Integrated Circuits, Iluvatar CoreX, Moore Threads Technology and Enflame Technology as suppliers in this group. Iluvatar CoreX is in pole position, analysts say, as one of China's largest cloud service providers accelerates its shift toward domestic semiconductors amid US export restrictions that have left a void from Nvidia.
Why Iluvatar Won the First Batch
Iluvatar CoreX secured the initial order due to a combination of competitive pricing and the ability to deliver tens of thousands of units at scale — a threshold that other tier-two players have struggled to meet. ByteDance did not disclose the exact number of processors purchased or the total value of the deal. The company and Iluvatar did not immediately respond to requests for comment.
The broader context: ByteDance is spending billions on AI infrastructure, and the Iluvatar order represents a concrete signal that Beijing's push for domestic chip adoption is translating into real procurement decisions. Nvidia, which dominated China's AI chip market before US export controls, has seen its shipments restricted, creating an opening that Huawei's Ascend line has partially filled. Now second-tier players are getting a look-in.
The Competitive Landscape
Huawei and Cambricon remain the dominant domestic options, but their chips are often allocated to state-linked projects or carry high prices. Tier-two chipmakers offer lower-cost alternatives, though they face questions about performance parity with Nvidia's H100 and Blackwell series. The Iluvatar order validates that at least one second-tier supplier can deliver at cloud scale — a critical test for the rest of the cohort.
ByteDance's move mirrors a broader industry trend: Chinese hyperscalers are diversifying chip supply to reduce reliance on any single vendor, domestic or foreign. Tencent and Alibaba have made similar overtures to domestic chip startups, but ByteDance's scale — it operates one of the world's largest cloud and AI training fleets — makes its procurement decisions particularly consequential.
What to watch
Watch for ByteDance to disclose additional orders from other tier-two chipmakers in Q3 2026. Iluvatar's ability to scale further — and whether competitors like Biren or Moore Threads secure follow-on deals — will signal whether this is a one-off or the start of a permanent shift in China's AI chip supply chain.
Source: scmp.com
