ByteDance is in advanced talks to acquire custom data center chips from Taiwan's MediaTek, Bloomberg has reported, as the TikTok owner pursues an additional source of AI computing power while US export restrictions continue to block its access to Nvidia's most advanced processors.

The company is seeking application-specific integrated circuits, or ASICs — chips tailored to the computing needs of a single customer. According to Bloomberg, the order volume has yet to be decided and no agreement has been reached so far. If the talks are completed, a deal would make ByteDance MediaTek's second major ASIC customer after Google. The unresolved order size and lack of a signed agreement mean the scope of any cooperation remains uncertain.

Why ByteDance is shopping for custom silicon

US export restrictions have led ByteDance to look for alternatives to Nvidia's advanced AI chips. ByteDance, Alibaba, and Tencent are currently unable to acquire Nvidia's most powerful processors, while domestic suppliers such as Huawei have struggled to keep up with demand. The restrictions have limited the chip options available to China's largest technology companies as they build out AI infrastructure.

US rules, however, still allow Chinese companies to work directly with chip designers, as long as the computing power they acquire stays below a specified threshold, Quartz reported. ByteDance has already taken advantage of this approach, agreeing in May to purchase millions of ASICs from Qualcomm for its AI data centers. A potential MediaTek order would therefore add another custom-chip supplier rather than replace the company's broader effort to secure computing capacity under the export rules.

MediaTek to gain more ground

The Taiwanese chipmaker, best known for its mobile processors, is leveraging that expertise to expand into data center infrastructure, and a deal of this scale would strengthen its foothold in a market that has been largely dominated by Qualcomm and Broadcom. Securing a major customer such as ByteDance could further speed up that transition.

MediaTek expects AI chip sales to reach about $2 billion this year and is targeting a 15% share of an $80 billion market by 2027, Bloomberg reported. Its ambitions received a further boost in September, when Nvidia announced a $3.5 billion investment in the company through convertible bonds. That deal also gave MediaTek access to Nvidia's NVLink Fusion platform for developing custom accelerator chips, Quartz reported.

With a market value of about $210 billion, MediaTek is Taiwan's second-largest company by market value, well behind TSMC.

ByteDance's spending surge behind the push

ByteDance's expanding ambitions have led it to consider capital expenditure of up to $70 billion this year, more than double its spending in the previous year, with outlays potentially approaching $100 billion in 2027 if conditions remain favorable, Bloomberg reported. In September, the company secured a $30 billion loan to help finance the expansion.

ByteDance's AI strategy is built on flagship models such as Seedance, which compete with products including Alibaba's Happy Horse, Kuaishou's Kling AI, and Google's offerings. The potential MediaTek agreement, along with ByteDance's existing Qualcomm arrangement, underscores that the company's infrastructure plans involve sourcing custom chips from multiple designers while access to Nvidia's leading processors remains restricted.