ByteDance, the parent company of TikTok, is reportedly investing heavily in the development of two AI GPUs, set to enter mass production by 2026. These GPUs, which are currently in the design phase, are expected to be manufactured by TSMC. The initiative is a strategic move to reduce dependence on Nvidia for AI hardware, while adhering to U.S. export regulations.

With an investment of over $2 billion in Nvidia AI GPUs this year alone, ByteDance's heavy investment in AI underscores its importance in the company's overall strategy. The development of in-house GPUs is a direct response to the GPU shortages and high prices of Nvidia GPUs, particularly in the context of the U.S. export controls imposed last year.

While ByteDance is unlikely to surpass Nvidia's GPU performance due to U.S. export control restrictions, the in-house GPUs are expected to be significantly cheaper for the company. Additionally, the move requires ByteDance to develop its own software platform and ensure compatibility with its hardware, potentially shifting the landscape of AI hardware and software development in the process.