ByteDance is holding private discussions with Shanghai-based Iluvatar CoreX about purchasing AI chips optimized for inference tasks, and is also evaluating a separate arrangement with Baidu for Kunlunxin chips, two people familiar with the matter said. If Iluvatar becomes a supplier, it would be the third major domestic provider of graphics processing units to ByteDance after Huawei and Cambricon, the sources added.
The individuals declined to be identified because the negotiations are not public. They also said that Tencent already uses Baidu’s Kunlunxin processors. ByteDance, Iluvatar CoreX, Baidu and Tencent did not reply to requests for comment.
The discussions come as Chinese GPU and AI chip vendors gain momentum in the domestic market. Chinese makers captured nearly 41% of the country’s AI accelerator server market last year, cutting into Nvidia’s previously dominant position in a key overseas market, two sources noted. According to Nvidia’s CEO Jensen Huang, the company’s market share in China has effectively fallen to zero. Separately, Tencent’s Chief Strategy Officer James Mitchell has said Chinese AI chips will be available in large quantities in the second half of this year.
People close to the talks expect Iluvatar CoreX to ship at least 50,000 chips to ByteDance this year, with most units destined for inference workloads. Those chips would support ByteDance’s expansion of its AI chatbot Doubao by handling user queries and related inference tasks. The sources emphasized that inference - the process of answering queries from an existing model - is distinct from model training, which tends to require the most powerful accelerators. They also cautioned that the arrangements are not final and remain subject to change.
A commercial agreement with ByteDance would represent a significant milestone for Iluvatar CoreX. Until now, the Shanghai-based startup has primarily supplied hardware for government procurement projects, one source said. Iluvatar listed in Hong Kong in January and reported 1 billion yuan in revenue for 2025, roughly 90% of which came from GPU sales as demand for domestic AI hardware expanded.
Iluvatar markets its Tiangai series for AI training and the Zhikai line for inference applications, according to the company website. A Huatai Securities research note projects Iluvatar CoreX’s revenue to reach 3.04 billion yuan this year, and expects total shipments to climb 139% to more than 100,000 chips. Huatai estimated an average selling price for the Zhikai inference chips of about 12,000 yuan each, which equates to roughly $1,775 using an exchange rate of $1 = 6.7584 Chinese yuan renminbi.
Executives and industry observers characterize such supply deals as part of a broader push by Beijing to increase reliance on domestically developed semiconductors, amid U.S. export curbs on advanced chips. The potential ByteDance-Iluvatar relationship, if finalized, would add to a growing roster of Chinese suppliers vying to serve hyperscalers and large internet platforms with locally produced AI accelerators.
While the sources disclosed shipment expectations and company financials, they reiterated that the negotiations are ongoing and not yet public. That means planned volumes, timing and commercial terms could still change before any contract is signed or announced.
Summary of developments
- ByteDance is negotiating with Iluvatar CoreX to buy inference GPUs and is also considering Baidu’s Kunlunxin chips.
- Iluvatar could ship at least 50,000 chips to ByteDance this year, mainly for inference to support Doubao.
- Iluvatar reported 1 billion yuan in 2025 revenue and is projected to reach 3.04 billion yuan this year with shipments above 100,000 units, per Huatai Securities.