June 24 - Qualcomm is in discussions to offer custom chip-design services to ByteDance, according to four people familiar with the matter, as the San Diego-based company works to lessen its reliance on revenue from smartphones.
If these negotiations reach a commercial agreement, ByteDance - the parent company of a prominent short-video platform - would be an early customer of Qualcomm's chip-design services operation. Qualcomm is the world’s leading supplier of smartphone modem chips, which handle cellular communications, and the company is exploring new areas of business beyond its traditional handset market.
Three of the sources said Qualcomm is discussing the design of custom chips for ByteDance. Two of those sources added that the chips would incorporate technology owned by AlphaWave Semi, a high-speed connectivity specialist that Qualcomm acquired last year.
One source described the discussions as involving the design of video processing units - VPUs - and said there is an eye toward starting mass production by the end of the year. The same person and others stressed that the talks are ongoing and that their outcome is not yet determined.
It is not clear from the conversations whether the negotiations would culminate in a completed chip design or a contract for manufacturing. The sources indicated ByteDance could pursue other partners as part of its chip efforts, and other details about the potential chip were not immediately available.
Earlier reporting indicated ByteDance is developing an AI chip for inference tasks along with custom central processing units (CPUs). The current discussions with Qualcomm would align with the broader effort by ByteDance to build or source specialized silicon for AI workloads and multimedia processing.
The talks also illustrate that U.S. technology companies continue to seek business with Chinese firms, even as rising tensions between Washington and Beijing over AI chips have affected players such as Nvidia, AMD, Applied Materials and Lam Research. Qualcomm's outreach to ByteDance is taking place against that backdrop of geopolitical friction and industry scrutiny.
Qualcomm and ByteDance did not respond to requests for comment. The four people who spoke about the discussions did so on condition of anonymity because the negotiations are private.
A deal with ByteDance would represent a notable commercial win for Qualcomm. The company faces uncertainty from smartphone manufacturers this year amid a surge in memory-chip prices and forecasts that global smartphone shipments will experience a record annual contraction. That environment has heightened the incentive for Qualcomm to expand into other markets.
Qualcomm is actively trying to penetrate the growing data center chip market. The company is working with customers on three categories of chips: CPUs, accelerators for inference tasks, and custom application-specific integrated circuits - ASICs - a segment where competitors such as Broadcom and Marvell have been expanding quickly.
While these negotiations could change Qualcomm's revenue mix if they lead to a commercial agreement, multiple sources emphasize that the discussions are ongoing and uncertain. Any concrete outcomes, including a finished chip design or production timetable, remain to be decided.