BEIJING, June 15 (Reuters) – Chinese technology company ByteDance is in talks with Shanghai-based Iluvatar CoreX to purchase AI chips for inference work and is also considering a similar deal with Baidu, according to ‌two sources familiar with the matter.

If a deal is agreed, Iluvatar CoreX would become ByteDance’s third major ‌domestic supplier of graphics processing units (GPUs) after Huawei and Cambricon, the sources added.

TikTok parent ByteDance is also considering using Baidu’s Kunlunxin chips, they ​said, declining to be named as the talks are not public. Tencent is already a Kunlunxin chip customer, according to one of the sources.

ByteDance, Iluvatar CoreX, Baidu and Tencent did not respond to requests for comment.

The potential deals demonstrate that efforts by Chinese chipmakers to offer alternatives to foreign AI chips are gaining traction as Beijing promotes the use of locally developed ‌chips to improve self-reliance amid U.S. export ⁠controls on advanced chips.

Chinese GPU and AI chipmakers captured nearly 41% of China’s AI accelerator server market last year, eroding Nvidia’s once-dominant position in one of its most important overseas ⁠markets, Reuters reported in April.

While Nvidia’s market share in China has effectively fallen to zero, according to its CEO Jensen Huang, Chinese AI chips would become available in large quantities in the second half of this year, Tencent’s Chief Strategy Officer James ​Mitchell ​said in May.

Iluvatar CoreX, one of China’s leading GPU startups, is ​expected to ship at least 50,000 chips to ‌ByteDance this year and most of them will be used for inference workloads, as ByteDance expands the customer base for its signature AI chatbot Doubao, the sources said.

Inference workloads involve answering queries and are different from AI model training, which tends to use the most powerful chips.

The details of the potential deals are not final and still subject to change, the sources said.

COMMERCIAL MILESTONE

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. ​Until now, the Shanghai-based company has mainly supplied government procurement projects, ​one of the sources said.

Iluvatar CoreX, which listed in ​Hong Kong in January, reported 1 billion yuan ($148 million) in 2025 revenue, about 90% from ‌selling GPUs, as it benefited from growing demand ​for domestic AI hardware.

Its Tiangai ​series chips are tailored for AI training, while its Zhikai series is geared toward inference tasks, according to its website.