Qualcomm in Talks With ByteDance on Custom Chip Design, ByteDance Also Seeks $20 Billion Loan to Boost AI Infrastructure

TradingKey - On June 24, Eastern Time, according to four people familiar with the matter, Qualcomm ( QCOM) is in talks with ByteDance for custom chip design services. If the negotiations are successful, ByteDance will become an early customer of Qualcomm's chip design services business.

According to media reports, the chips discussed by the two parties will be partly based on high-speed connectivity technology from Alphawave Semi, which Qualcomm acquired last year, involving video processing unit (VPU) design, with a goal of starting mass production by the end of the year. People familiar with the matter emphasized that negotiations are still ongoing, and ByteDance may also seek other partners.

If the cooperation is finalized, it will mark a further step in Qualcomm's strategic expansion in the AI data center and custom chip (ASIC) market. Qualcomm's main revenue relies on smartphone chips, and it has expanded into PCs, automotive electronics, and data centers in recent years. The AI custom chip market is currently dominated by Broadcom ( AVGO) and Marvell Technology ( MRVL ), and Qualcomm's entry into the fray reflects the continuously expanding demand for customized chips among large tech companies.

On ByteDance's side, the company has continued to strengthen its independent AI infrastructure capabilities in recent years. ByteDance has previously been developing AI inference chips and custom CPUs. If the cooperation with Qualcomm is finalized, it will help accelerate the establishment of its own AI computing platform.

Meanwhile, ByteDance is also actively raising large-scale funds. According to Bloomberg, ByteDance is in talks with several banks for a loan of about $20 billion, which would be the company's largest offshore loan on record. People familiar with the matter said the loan term is initially set for three years, with an option to extend to five years. The discussions are currently in the early stages, and the specific terms are subject to change. The company last entered the global loan market in 2024, raising $10.8 billion.

According to Bloomberg, ByteDance's capital expenditure plan for this year is set to increase to $70 billion to expand its data centers and AI infrastructure, and is expected to rise to $100 billion next year if the business environment is favorable.

Analysts believe that from custom chip research and development to large-scale financing, ByteDance is advancing on two fronts to build up ammunition for its AI ambitions. For Qualcomm, if it can secure ByteDance as a major customer, it will open up new growth space in the AI ASIC market.