ByteDance nears MediaTek deal for custom AI chips

ByteDance, the company behind TikTok, is close to a deal to buy custom AI chips from the Taiwanese chip designer MediaTek for its data centers. Bloomberg reported the talks on October 15, 2026, citing people familiar with the matter. The deal would make ByteDance MediaTek's second major custom-chip customer after Google, and it shows how Chinese tech firms are building around limits on Nvidia's best chips.

What is reported

The chips are ASICs, short for application-specific integrated circuits. These are chips designed for one customer's own workloads, unlike general-purpose graphics chips. According to BigGo Finance, which relays Bloomberg, the two companies are in advanced talks and nothing is final. The number of chips has not been disclosed. ByteDance did not respond to requests for comment, and MediaTek declined to comment.

Several basics are still unknown. TechBooky notes that the report does not say which company would own the chip design, where the chips would be made or when they would be used. It calls the deal "a reported negotiation, not a confirmed supply contract."

Why ByteDance wants more chip suppliers

US export controls keep ByteDance from buying Nvidia's most advanced AI chips. Alibaba and Tencent face the same limits, Gizmochina reports. BigGo adds that Huawei, China's main local supplier, cannot meet all of ByteDance's needs. ByteDance reportedly struck a similar deal with Qualcomm earlier this year for millions of AI chips.

Gizmochina says partnerships with chip designers like MediaTek are allowed under current US rules. That holds while ByteDance's AI computing power stays below a set threshold.

The spending behind the search is large:

Item	Figure, as reported
ByteDance data center and AI spend, 2026	Up to $70 billion, more than double 2025
Possible spend in 2027	$100 billion
Loan secured in September	$30 billion
MediaTek AI chip sales, 2026	About $2 billion

What MediaTek gets

Custom AI chips are a growing business for MediaTek. BigGo reports that MediaTek is aiming for a 10% to 15% share of a custom AI chip market it estimates at $70 billion to $80 billion in 2027. Gizmochina gives the target as 15% of an $80 billion market. The two reports differ slightly, and neither names MediaTek's own source for the market size.

Nvidia also has a stake in MediaTek's progress. BigGo says Nvidia agreed in late August to buy $3.5 billion of MediaTek convertible bonds. MediaTek is worth about $210 billion, which makes it Taiwan's second-largest company by market value after TSMC.

Other big tech firms are also designing their own chips. Microsoft announced its Maia 300 inference chip this week, and Chinese AI firms are leaning on Huawei, as with DeepSeek's plan to order 160,000 Huawei chips.

What this means for developers

A custom chip does not run every AI model out of the box. TechBooky points out that an ASIC does not automatically replace Nvidia's leading chips. Software has to be tuned for each new chip, which is costly work.

For teams that build on ByteDance's cloud and AI services, watch for changes in which models are offered and at what price. If more of ByteDance's computing moves to custom chips, its services may favor models tuned for that hardware.

For anyone tracking the AI chip market, the deal would give ByteDance a third route around Nvidia, beside Huawei and Qualcomm. It also shows that custom chip work is spreading beyond the few firms that did it first. If the talks lead to a signed contract, watch MediaTek's results for the first figures on volume and timing.