(May 27): ByteDance Ltd, the developer of TikTok and a leading force in artificial intelligence, is planning to sharply increase its capital spending this year and next in a bid to lead the Chinese AI market and challenge the top US players abroad.
The Beijing-based social media leader is discussing expenditures of as much as US$70 billion (RM277.5 billion) this year as it builds out data centres and other AI infrastructure, according to people familiar with the matter. The company will underwrite much of that spending through the roughly US$50 billion of profit it earned in 2025, said the people, asking not to be identified because the company’s financial details are confidential.
The expenditure figures are preliminary and subject to adjustment at least every quarter, the people said, so the ultimate spending could be very different. Capital expenditures for this year could be 400 billion yuan to 500 billion yuan, one of the people said.
ByteDance has discussed boosting its capital spending to roughly US$100 billion next year if economic and business conditions are favourable, said the people. Its capital expenditures last year were about US$25 billion, the people said.
Representatives with ByteDance didn’t respond to requests for comment.
ByteDance’s strategic discussions highlight a yawning gap between the US and China in their approach to artificial intelligence. Four US hyperscalers — Amazon.com Inc, Alphabet Inc, Microsoft Corp and Meta Platforms Inc — have said they plan as much as US$725 billion in capital spending this year, as they build out AI data centres and develop new models. That’s about US$181 billion each on average.
China’s internet leaders, including Tencent Holdings Ltd and Alibaba Group Holding Ltd, have been far more tentative in their spending. Tencent said its capital expenditures for 2025 were 79.2 billion yuan, while Alibaba said its capex was 126 billion yuan for the fiscal year ended in March.
ByteDance’s spending would mark a new, much more aggressive push to cement its early lead in key segments like chatbots and video, and expand its influence overseas. It could benefit from the fact that data centre costs in China are much lower so ByteDance may be able to build equivalent capacity with far lower spending than its US counterparts. The company recently struck a deal to buy millions of Qualcomm Inc chips to support its agentic AI services, Bloomberg News reported this week.
“ByteDance, Tencent, and Alibaba are all converging on the view that AI infrastructure is now a strategic asset rather than a discretionary line item,” said Ke Yan, a Singapore-based tech analyst with DZT Research. “The spending gap between China’s tech champions and US peers like Microsoft, Amazon and Meta is narrower than headline figures suggest once adjusted for local cost structures — and the divide in raw ambition is narrower still.”
ByteDance’s Doubao chatbot is the country’s most popular, amassing over 300 million monthly users — so much so that the company is preparing to charge subscription fees, which for now remain rare in a country where users dislike paying for online services. Its underlying text and video models — such as Seedance — power a plethora of products from video editors to coding tools and automated agents. Part of that success stems from TikTok’s Chinese sibling Douyin, the ubiquitous short-video hub that the company leverages to market newer products.
Like the largest US firms, ByteDance and its Chinese rivals plan to ramp up spending on the basic infrastructure required to train and run AI services — in anticipation of widespread consumer adoption as the technology evolves in coming years.
“The AI push creates a positive feedback loop for ByteDance and the benefits are highly visible,” said Ke.
ByteDance’s targeted outlay is far bigger than its local rivals, at least for now. Tencent has vowed to at least double its AI investments to more than 36 billion yuan this year, while Alibaba maintains a rolling target of more than US$50 billion over three years — an amount executives say will grow significantly.
TikTok’s owner is one of the country’s largest buyers of servers and computing chips in part because it already runs the nation’s biggest video platform. The spending is intended to relieve a global computing crunch as AI development takes off. ByteDance will review AI capital expenditure on a quarterly basis as is the usual practice, the people said. Budgets can shift based on business needs and the availability of hardware and electricity, they said.
The South China Morning Post reported this month that ByteDance increased its planned spending on AI infrastructure by 25% to around US$30 billion this year, citing unnamed sources.
It’s unclear how ByteDance — last valued at US$550 billion in a stake sale, Reuters reported — intends to bankroll its spending over time. The company has long been regarded as a prime IPO candidate, though it’s given few signs it’s in a hurry to do so. Over the past year, the Chinese company has exited businesses such as gaming, raising capital to focus on its core AI and social media arms.
Uploaded by Magessan Varatharaja