Qualcomm has struck a deal with TikTok’s parent company ByteDance to supply custom AI chips, Bloomberg News reported, marking the San Diego semiconductor company’s biggest win yet in its push beyond smartphone processors and into the AI infrastructure market.
Shares of Qualcomm rose nearly 5% on the news, closing at $248.82. ByteDance is expected to buy millions of Qualcomm chips known as application-specific integrated circuits, or ASICs, to support the social media company’s AI agent software. The deal would make ByteDance one of the first major customers for Qualcomm’s AI-focused custom chips.
The partnership is a significant milestone for Qualcomm, which has been working to diversify beyond its core mobile processor business. CEO Cristiano Amon told analysts last month that the company is working with customers on three types of chips: CPUs, inference accelerators, and custom ASICs. He hinted at a hyperscaler deal during the earnings call but declined to name the customer.
“We’re thinking about a multigenerational engagement. But that’s all we can say at this point,” Amon said at the time.
The deal will help ByteDance turn an already completed in-house chip design into a semiconductor ready for production, according to the report. Qualcomm currently operates a single 200-megawatt AI data center in Saudi Arabia, and the ByteDance partnership could accelerate the company’s expansion in AI infrastructure services.
For San Diego’s growing semiconductor and defense ecosystem, the deal reinforces the region’s position as a hub for advanced chip design. Qualcomm, the county’s largest publicly traded company, employs thousands of engineers at its Sorrento Valley headquarters, and the AI chip push is expected to drive further hiring in specialized design roles.
Global demand for AI chips continues to surge. Big tech companies spent $27 billion to $37 billion on AI chips in 2024, according to Hong Kong-based Aletheia Capital, a figure expected to reach $90 billion to $140 billion by 2026.
Source: San Diego Union-Tribune | Business of San Diego
