TikTok owner ByteDance in talks with Broadcom about possible TSMC-made AI chips

U.S. chip designer Broadcom and Beijing's ByteDance have discussed 5-nanometer specialized chips, according to a person familiar with the talks. The two companies have not yet reached an agreement, and Broadcom is already supplying ByteDance with older-generation 7-nanometer AI processors for its data centers, the person said, asking not to be identified because the information is private.

Reuters, citing anonymous sources, reported that the proposed chips would comply with U.S. trade restrictions on China. The companies' existing business relationship revolves mainly around server and networking equipment, and Broadcom listed ByteDance as a customer in a press release.

Broadcom told investors in March that it had added a new customer for its consumer AI accelerator business and planned to ship products to the company within the next few months, but did not disclose the name.

According to Reuters, if the two companies reach an agreement, the customized chips would be manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC) Co. A partnership between TikTok's owner and two global semiconductor companies is unusual, given that Washington has been actively trying to curb China's semiconductor manufacturing ambitions through a series of wide-ranging production and export restrictions.

The deal is aimed at ensuring a steady supply of chips to ByteDance, which runs the world's largest short-video platform as well as Chinese services Douyin and Toutiao, which became China's most popular AI chatbot this year.

ByteDance's global rivals, from Meta Platforms Inc. and Microsoft Corp. to Alphabet Inc.'s Google, are all developing or already using their own custom chips for AI tasks. TikTok's parent company has made AI a priority this year and will likely try to keep up with its U.S. rivals.

Representatives for ByteDance, Broadcom and TSMC did not respond to requests for comment.