ByteDance, the owner of the TikTok app, is getting ready to boost its massive investments in artificial intelligence next year, as leading Chinese technology companies aim to keep pace with their American competitors.
According to two informed sources who spoke to the "Financial Times," the Beijing-based Chinese company has preliminary plans to spend 160 billion yuan ($23 billion) on capital expenditures in 2026.
This amount represents an increase from the 150 billion yuan the company invested in artificial intelligence infrastructure this year.
The sources explained that about half of this amount will be allocated for purchasing advanced semiconductors to develop artificial intelligence models and applications.
They added that ByteDance has allocated 85 billion yuan for artificial intelligence processors next year, despite ongoing uncertainty about the ability of major Chinese companies to obtain Nvidia chips.
ByteDance is among the largest Chinese companies in developing artificial intelligence infrastructure and aspires to become a global leader in this field.
However, its spending is still modest compared to its giant American counterparts in the technology sector.
Microsoft, Alphabet, Amazon, and Meta, combined, spent more than $300 billion this year in the race to build data centers that support artificial intelligence models and products.
American export controls have hindered Chinese companies, preventing them from purchasing leading Nvidia chips in the market.
This has pushed companies like ByteDance and Alibaba to innovate cheaper and more efficient models that require less computing power.
This month, U.S. President Donald Trump lifted the ban on selling the Nvidia H200 processor, which is less powerful than its latest products, to "approved customers in China."
However, these sales may face opposition from some lawmakers in Washington and Chinese authorities.
If these sales are permitted, ByteDance, along with other Chinese tech companies, has indicated a desire to place large orders for H200 processors, according to someone familiar with their plans.
ByteDance plans to purchase 20,000 H200 devices in a trial order, at a cost that could reach $20,000 per device, according to an informed source.
This technology giant could significantly increase its capital expenditures for 2026 if it has the opportunity to purchase more H200 devices without restrictions, according to sources familiar with the company's plans.
The company also continues to spend billions of dollars on renting data centers abroad, where it can legally access the latest Nvidia devices, to train artificial intelligence models and provide services to customers outside China.
Leasing agreements are usually not counted within capital expenditures but are included in operating costs.
Although the performance of ByteDance's open-source Doubao models still lags behind local competitors like Qwen from Alibaba and DeepSeek in independent performance tests, the company dominates consumer-directed artificial intelligence applications.
According to QuestMobile, a company specializing in local data analytics, the automated chat program Doubao surpassed DeepSeek to become the most popular in China in terms of monthly active users and number of downloads.
The company is competing fiercely with Alibaba by promoting its cloud offering, "Volcano Engine," to businesses.
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These products have made ByteDance's artificial intelligence services the most used in China, according to Goldman Sachs.
Bank analysts found that ByteDance saw a significant increase in daily usage of its digital tokens in October—an indicator of consumer use of artificial intelligence services—to exceed 30 trillion tokens.
This figure compares to 43 trillion tokens for Google in the same month.
One of ByteDance's investors said, "Compared with other major Chinese technology companies like Alibaba and Tencent, ByteDance enjoys the advantage of being a non-publicly traded company, giving it greater flexibility to invest strongly and strategically in the long term in the field of artificial intelligence."
