ByteDance in Talks With Iluvatar CoreX to Buy Inference AI Chips

ByteDance is in talks with Shanghai-based Iluvatar CoreX to purchase AI chips for inference work, and is weighing a parallel deal with Baidu’s Kunlunxin unit, according to two sources familiar with the matter. The discussions were reported in a Reuters exclusive on ByteDance’s Iluvatar CoreX talks published on June 15, 2026.

If a deal is agreed, Iluvatar CoreX would become ByteDance’s third major domestic supplier of graphics processing units, sitting behind Huawei and Cambricon. ByteDance, Iluvatar CoreX, Baidu, and Tencent all declined to comment when contacted by Reuters, and the two sources spoke on the condition of anonymity because the talks are not public. The details of the potential deals are not final and still subject to change, the sources said.

ByteDance and Iluvatar CoreX Open Talks on Inference Chips

Iluvatar CoreX is expected to ship at least 50,000 chips to ByteDance this year, with most of them used for inference workloads, the sources told Reuters. Inference is the everyday work of answering user queries, distinct from AI model training, which tends to run on the most powerful chips. The ByteDance order is tied to the growth of the company’s signature AI chatbot Doubao, and the chat product is one of the engines behind ByteDance’s broader AI infrastructure build, as outlined in the 300 ByteDance job postings that flagged an AI agent push.

A signed order would make Iluvatar CoreX ByteDance’s third major domestic supplier of GPUs, after Huawei and Cambricon, the sources added. That ordering matters because it places a startup listed only since January alongside two of China’s longest-running domestic accelerator suppliers, and it gives ByteDance a second domestic inference option to sit next to Cambricon.

The same sources said ByteDance is also considering a separate deal to use Baidu’s Kunlunxin chips. Tencent is already a Kunlunxin chip customer, according to one of the sources. None of the four companies named, ByteDance, Iluvatar CoreX, Baidu, and Tencent, responded to Reuters’ requests for comment. The Iluvatar CoreX and Kunlunxin tracks are being negotiated in parallel, and the choice between the two has not been publicly disclosed.

Iluvatar CoreX, From Government Wins to a Commercial Anchor

Until now, the Shanghai-based company has mainly supplied government procurement projects, one of the sources said. A deal with ByteDance, one of China’s biggest technology companies and a major spender on AI infrastructure, would be a significant commercial milestone for Iluvatar CoreX. The company reported 1 billion yuan ($148 million) in 2025 revenue, about 90% from selling GPUs, as it benefited from growing demand for domestic AI hardware.

Iluvatar CoreX’s product line splits into two families. Its Tiangai series, also called TG, is tailored for AI training. Its Zhikai series, or ZK, is geared toward inference tasks such as low-latency deployment and high-throughput chat serving, the company says on its website. The ByteDance demand lines up with Zhikai, and Huatai Securities projects Iluvatar CoreX’s revenue at 3.04 billion yuan ($449.8 million) this year, with total shipments expected to jump 139% to over 100,000 chips. The same research note estimated the Zhikai inference chips had an average selling price of 12,000 yuan, or about $1,775 each, on a yuan-to-dollar rate of $1 to 6.7584.

The company’s commercial history is short. Iluvatar CoreX was founded in December 2015 by Li Yunpeng, a former Oracle engineer. Its investors include Centurium Capital and HongShan. The company reached unicorn status, a valuation over US$1 billion, in 2024, and Iluvatar CoreX’s 31.54% Hong Kong trading debut on January 8, 2026 pushed its market capitalization past HK$48.37 billion on the first day of trading. As of June 2025, the company had cumulatively shipped over 52,000 GPGPU units, served over 290 cross-sector customers, and completed over 900 deployments in financial services, healthcare, and transportation, with a 2024 GPGPU gross margin of 56.6% and an overall gross margin of 50.1% in the first half of 2025.

The Reuters story, read alongside where China’s AI chip supply chain stands, frames the ByteDance talks as a step out of the government-only lane. The company still draws a large share of its orders from public-sector deployments, and a 50,000-unit consumer-internet commitment would be its first publicly reported anchor order from a private cloud-scale buyer.

Baidu’s Kunlunxin Sits in ByteDance’s Second Slot

The Kunlunxin side of the talks puts Baidu, through its chip unit, into direct competition with Iluvatar CoreX for ByteDance’s inference build-out. Baidu already sells Kunlunxin chips to external clients, and the company has signaled plans to list the chip unit. Tencent is already a Kunlunxin chip customer, according to one of the sources cited by Reuters, which means ByteDance would be joining a buyer base that already includes one of its largest Chinese peers.

Reuters did not publish a head-to-head comparison of pricing, delivery timing, or chip performance between Iluvatar CoreX and Kunlunxin, and ByteDance is treating the two tracks as parallel. The choice between them is the kind of decision that a single exclusive rarely settles, and ByteDance’s silence on which way it leans keeps both suppliers in the running.

Domestic Suppliers Now Hold 41% of China’s AI Accelerator Market

Chinese GPU and AI chipmakers captured nearly 41% of China’s AI accelerator server market last year, Reuters reported in April, a share that has eroded Nvidia’s once-dominant position in one of its most important overseas markets. The ceiling on what Nvidia can still sell into China is the H200, the most advanced chip the US currently allows into the country. As of May 2026, shipments of H200s to China cannot exceed 50% of the volume sold to US customers, carry a 25% export tariff, and require a buyer certification that the chips will not be used for military purposes.

Inside that 41%, Huawei, Cambricon, and Alibaba’s T-Head hold the largest shares, with Hygon, MetaX, and Iluvatar CoreX each accounting for single-digit percentages of the domestic AI accelerator market. The smaller players are growing fastest in proportional terms. HiSilicon’s recent chip price increases are one signal of the same shift, captured in HiSilicon’s price hike as AI chip pricing returns. ByteDance’s broader AI procurement budget for this year is over 160 billion yuan ($22 billion), with more than half allocated to purchasing Nvidia chips, including H200 models, and advancing its in-house chip.

Chinese AI chips would become available in large quantities in the second half of this year.

That forecast came from James Mitchell, Tencent’s chief strategy officer, in May. The Iluvatar CoreX and Kunlunxin talks sit inside that wider shift. Nvidia’s market share in China has effectively fallen to zero, according to its CEO Jensen Huang, and the ByteDance order is one of the data points the Chinese cloud customers are using to fill the gap.

• 50,000 chips – Iluvatar CoreX’s expected 2026 shipments to ByteDance (Reuters, June 15, 2026)
• 1 billion yuan – Iluvatar CoreX’s 2025 revenue, about 90% from GPUs
• 3.04 billion yuan – Huatai Securities’ projected 2026 revenue for Iluvatar CoreX
• 41% – share of China’s AI accelerator server market held by Chinese chipmakers in 2025
• 12,000 yuan – Huatai Securities’ estimated average selling price for Zhikai inference chips

What the Sources Did Not Say

None of the four companies named in the Reuters story responded to comment requests, and the two sources spoke on background because the talks are not public. Reuters did not publish a deal value, a delivery schedule, a chip performance comparison, or a clear statement of which supplier, Iluvatar CoreX or Kunlunxin, ByteDance is leaning toward. The 50,000-chip figure is a Reuters-source estimate, not a signed order quantity, and the company’s prior sourcing of Broadcom and Samsung partners for its own chip program is an unresolved side story.

ByteDance previously told Reuters that information about its in-house chip project, codenamed SeedChip, was “inaccurate,” without elaborating. The company has said it plans to produce at least 100,000 units of an in-house AI inference chip this year, with a possible ramp to 350,000, and the Iluvatar CoreX and Kunlunxin talks are taking place alongside that internal build-out. Any of the three tracks could still change, and the Reuters story closes on the same caveat it opened with: details are not final.

Frequently Asked Questions

The questions below are answered using only the sourced facts in the Reuters story, the Iluvatar CoreX IPO filing, and company disclosures. Where a fact rests on a single Reuters source, the answer says so.

What is Iluvatar CoreX?

Iluvatar CoreX, formally Shanghai Tianshu Zhixin Semiconductor Co. Ltd., is a Shanghai-based GPGPU chip designer founded in December 2015 by former Oracle engineer Li Yunpeng. The company develops general-purpose computing on graphics processing units for AI training and inference, with its Tiangai, or TG, series aimed at training and its Zhikai, or ZK, series aimed at inference. Iluvatar CoreX listed on the Hong Kong Stock Exchange on January 8, 2026 under the ticker 9903, and its market capitalization crossed HK$48.37 billion on the first day of trading.

What is Doubao and why does ByteDance need more inference chips?

Doubao is ByteDance’s signature AI chatbot, and Reuters reports that the ByteDance order for at least 50,000 Iluvatar CoreX chips is being driven by the need to expand Doubao’s customer base. Inference chips run the live queries that a chatbot serves to users, which is a different workload from training a model. Reuters describes the ByteDance order as inference-led, with most of the 50,000 units going to chat serving rather than model training.

Why is this deal happening now?

Reuters attributes the timing to two pressures. Chinese GPU and AI chipmakers captured nearly 41% of China’s AI accelerator server market in 2025, a share that has eroded Nvidia’s position in China. US export controls also cap what Nvidia can sell into China at the H200, with a 50% volume cap relative to US sales, a 25% export tariff, and a buyer certification that the chips will not be used for military purposes. Reuters reports that Nvidia’s market share in China has effectively fallen to zero, citing the chipmaker’s CEO Jensen Huang.

Has the deal been signed?

No. Reuters describes the ByteDance and Iluvatar CoreX talks, and the parallel ByteDance and Baidu Kunlunxin talks, as in progress and not final. The two sources cited by Reuters spoke on the condition of anonymity, ByteDance, Iluvatar CoreX, Baidu, and Tencent all declined to comment, and the 50,000-chip figure is the sources’ estimate of expected 2026 shipments, not a contracted order.