TikTok owner ByteDance reportedly designed AI chips with TSMC

As China advances its artificial intelligence industry—so much for US frustration — competition is forming among its homegrown AI developers. Now, it appears that one is working on its own chips with a major chip maker.

ByteDance designed two chips with Taiwan Semiconductor Manufacturing Company (TSM) that it plans to mass produce by 2026, The Information reported, citing unnamed people familiar with the matter. By making its own chips, the company could become less dependent on Nvidia’s (NVDA) expensive graphics processing units or GPUssubject to US export controls, the people told The Information.

Neither ByteDance nor TSMC immediately responded to Quartz’s request for comment.

Last August, ByteDance launched its AI powered chatbot, Doubaowhich proved to be a tough rival of Baidu (BIDU) Ernie Bot – Considered China’s version of OpenAI’s ChatGPT, which is not allowed in the country. In China, Doubao passed Ernie Bot in downloads last yearand had more monthly active users on iOS, Bloomberg reported. ByteDance launched a series of Doubao large language models (LLM) for businesses in May, which it costs less than rival models who have been forced to cut prices by up to 97% amid increasing competition, according to The Information.

The TikTok owner has placed orders for more than 200,000 of Nvidia’s H20 chips – one of three designed specifically for complies with US export controls. The company is still waiting for the more than $2 billion order, The Information reported. However, ByteDance now plans to order tokens for training and deduction from TSMC, which would save billions of dollars, The Information estimated, adding that the chips are still being designed and plans are not finalized.

Meanwhile, Baidu has reportedly designed its own AI chip, the Kunlun 3, which will soon begin production at TSMC, a person told The Information. Earlier this month, the US launched its the latest set of export controls on critical technologies as it steps up its efforts to curtail China’s technological advances. The ability of Chinese companies to work with TSMC depends on compliance with the controls, which are updated annually.