Qualcomm lands ByteDance AI chip deal amid push beyond smartphone market

Qualcomm Inc. has finalized a deal with ByteDance Ltd., the parent company of TikTok, to supply AI-focused application-specific integrated circuits (ASICs) for its data centers. The chips will support ByteDance’s AI agent software, with the company planning to procure millions of units, according to sources familiar with the matter. This marks a significant milestone for Qualcomm as it seeks to expand its presence in the AI chip market, beyond its traditional smartphone processor business. ByteDance will become one of Qualcomm’s first major customers for these AI chips, following CEO Cristiano Amon’s earlier comments about securing clients for the technology. Amon had mentioned engagement with unnamed companies during a post-earnings conference call, which contributed to a stock rally. The partnership could provide Qualcomm with high-volume demand and entry into one of the fastest-growing segments of the semiconductor industry. While Qualcomm manufactures its chips through partners like Taiwan Semiconductor Manufacturing Co., the deal avoids potential US restrictions on AI chip production for Chinese firms, as long as the chips meet legally acceptable computing thresholds. ByteDance has already increased its AI infrastructure budget by 25% to 200 billion yuan ($29.4 billion), reflecting its aggressive push into AI technology. ByteDance’s Doubao software, an AI chatbot similar to OpenAI’s ChatGPT and Google’s Gemini, was China’s most-downloaded AI chatbot for much of last year, according to Bloomberg Intelligence. The new deal will help ByteDance transition its in-house chip design into a production-ready semiconductor, further accelerating its AI capabilities. Qualcomm’s shares surged by as much as 8.3% to an intraday record following the announcement. Despite Nvidia Corp.’s dominance in AI computing chips, competitors like Advanced Micro Devices Inc., Broadcom Inc., and Alphabet Inc.’s Google are also gaining ground in the market. This deal underscores Qualcomm’s ambition to challenge established players in the AI chip space.