ByteDance Moves Into Semiconductors, Goes On Hiring Spree: Bloomberg

Chinese start-up ByteDance Ltd initiated a hiring drive to gain self-reliance in semiconductor production, Bloomberg reports.

What Happened: ByteDance’s initiative comes amidst the Chinese government’s pledge to boost spending and drive research into cutting-edge chips and artificial intelligence (AI).

This month, the National People’s Congress took measures to counter the trade crisis impacts, including the Huawei Technologies Co Ltd blacklisting and reduce dependence on Qualcomm Inc QCOM and NVIDIA Corp NVDA for chips.

Out of the $143 billion in chips sold in China in 2020, only chips worth $22.7 billion were produced in China. Chinese-headquartered companies produced chips worth just $8.3 billion.

The TikTok parent had posted at least a dozen semiconductor job openings, including hardware and software engineers in cities like Shanghai and Beijing. The company was exploring initiatives, including building server chips based on Arm Ltd designs. ByteDance has reportedly formed a team to explore the development of AI chips.

The success of TikTok and its domestic clone, Douyin, made ByteDance the most valuable global start-up.

The company was last valued at about $180 billion. It is contemplating an IPO for some of its businesses in Hong Kong, including Douyin.

Why It Matters: ByteDance rival Baidu Inc BIDU recently raised $230 million for its AI chip division ahead of a potential spin-off of the business. Baidu’s AI chip unit Kunlun’s recent fundraising valued the business at $2 billion. Baidu intends to make it a standalone company to monetize its chip design abilities.

Alibaba Group Holding Ltd BABA launched an AI chip for its cloud computing products in late 2019.

China’s AI unicorn SenseTime started developing homegrown AI chips after being added to a U.S. trade list in 2019.

Google, Amazon.Com Inc AMZN, and Apple Inc AAPL remain focused on silicon’s customized design as they forayed into newer fields. Gains in efficiency and security featured amongst the key advantages of crafting application-specific hardware.

ByteDance’s venture could produce customized chips for data processing and make AI recommendations for its social apps.

Price action: BIDU shares traded higher by 0.37% at $266.50 in the premarket session on the last check Tuesday.