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ByteDance, the Chinese company behind TikTok, is nearing an agreement to buy custom artificial intelligence (AI) chips from Taiwanese semiconductor maker MediaTek. The deal would help ByteDance secure computing hardware for its data centers while allowing MediaTek to expand beyond its traditional smartphone processor business.
According to a Bloomberg report, the discussions involve application-specific integrated circuits (ASICs), which manufacturers design to perform specific computing tasks. These chips could support ByteDance’s growing AI infrastructure requirements.
ByteDance to Buy Custom AI Chips From MediaTek for Data Centers
If the agreement goes ahead, ByteDance would become MediaTek’s second major customer for custom ASICs after Alphabet, Google’s parent company.
MediaTek Targets the AI Data Center Market
MediaTek has traditionally focused on processors for smartphones and other consumer electronics. However, rising demand for AI computing has encouraged the company to expand into the data center market.
A major contract with ByteDance could strengthen MediaTek’s position against established competitors, including Qualcomm and Broadcom, which are also competing for opportunities in the AI semiconductor industry.
According to the report, MediaTek expects its AI chip sales to reach around $2 billion in 2026. The company is also targeting a 15% share of the estimated $80 billion market next year.
These ambitions highlight MediaTek’s growing interest in custom chips as technology companies invest heavily in AI computing infrastructure.
ByteDance Plans Massive AI Investment
ByteDance is also preparing to spend heavily on data centers and AI infrastructure. The company is considering investments of up to $70 billion in 2026, with spending potentially reaching $100 billion in 2027.
The company reportedly secured a $30 billion loan in September to help finance its expansion plans.
This investment reflects the growing importance of computing infrastructure as technology companies develop and deploy more advanced AI systems. Custom chips could help ByteDance meet its processing needs and support its expanding range of AI services.
See Also: MediaTek Shares Jump 10% After $3.5 Billion Nvidia AI Chip Deal
A Competitive Market for Custom AI Chips
The potential agreement could benefit both companies. ByteDance would gain another source of specialized computing hardware, while MediaTek could establish a stronger presence in a market currently attracting major semiconductor manufacturers.
Custom ASICs can offer performance and efficiency advantages for specific workloads because engineers design them for particular tasks rather than general-purpose computing.
However, the companies have not publicly confirmed the final terms of the proposed deal. The number of chips involved and their delivery schedule also remain undisclosed.
If finalized, the agreement could mark an important step in MediaTek’s efforts to compete in the AI data center market while helping ByteDance secure the hardware needed for its long-term infrastructure expansion.
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