QUALCOMM reached a deal with TikTok owner ByteDance to supply chips for AI data centers, Bloomberg News reported on Tuesday, citing people familiar with the matter.
Shares of the smartphone chip designer rose nearly 5 percent.
ByteDance is set to procure millions of Qualcomm chips known as application-specific integrated circuits to help support the social media company's AI agent software, according to the report.
The Chinese tech giant is poised to become one of the first major customers for Qualcomm's AI-focused application-specific integrated circuits (ASICs), marking a key win for the chip company trying to expand from smartphone processors into AI infrastructure, the report said.
The deal will help ByteDance turn an already completed in-house chip design into a semiconductor that is ready for production, according to the report.
Qualcomm CEO Cristiano Amon said last month the company is working with customers on three kinds of chips: central processing units (CPUs), accelerators for inference, and custom chips called ASICs, a booming market for rivals such as Broadcom and Marvell.
Companies in the US and China are walking a tightrope amid their tussle for a lead in the intense AI race, where semiconductor trade has become a flashpoint.
China has intensified its chip efforts to neutralize US sanctions that have made it hard to build cutting-edge chips.
Before US export curbs tightened, Nvidia commanded about 95 percent of China's advanced chip market.
The report said that so long as the Qualcomm chips fall within legally acceptable computing thresholds, the company's partners would not run afoul of existing US restrictions on the production of AI chips for Chinese firms like ByteDance.
Moreover, tech firms such as Google and Meta are investing heavily to reduce dependence on external chip suppliers by expanding their custom chip efforts. Clients are also seeking alternatives to Nvidia's pricey chips, driven by growing adoption of AI tools across industries.
