China’s ByteDance is working with US chip designer Broadcom to develop an advanced AI processor, Reuters reported, citing two sources familiar with the matter. 

The move would provide the owner of TikTok with a sufficient supply of high-end chips, as tensions between China and the US remain heightened. 

The advanced processor, a five-nanometre chip, would be compliant with US export regulations, according to the news report. 

No chip development collaborations have been publicly announced between US and Chinese companies since the Biden administration enforced export controls on advanced tech in 2022. 

The US has also been working to solidify its domestic production of semiconductors through the US CHIPS Act, which provides millions of dollars worth of manufacturing incentives. 

The partnership between Broadcom and ByteDance would make procurement of chips cheaper while also offering a steady and reliable supply, sources told Reuters.

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As part of the deal, manufacturing work will be outsourced to Taiwan Semiconductor Manufacturing Company.

ByteDance first partnered with Broadcom in 2022, when the Chinese company bought the semiconductor designer’s Tomahawk 5nm high-performance switch chips.

China’s AI lags behind the US on AI deals

The US outpaces China in the value of its AI deals, according to GlobalData’s deal database.

In 2023, the value of US AI deals totalled $50bn, growing considerably from 2022 which saw deals total $33bn.

The value of AI deals in China totalled just $7.9bn in 2023, remaining almost unchanged from 2022 which saw deals total $7.4bn.

GlobalData forecasts that the overall AI market will be worth $909bn by 2030, having grown at a compound annual growth rate (CAGR) of 35% between 2022 and 2030. 

In the GenAI space, revenues are expected to grow from $1.8bn in 2022 to $33bn in 2027 at a CAGR of 80%.