ByteDance, the Chinese technology giant, is reportedly planning a massive $14 billion investment in Nvidia chips for 2026, according to a report published by the South China Morning Post (SCMP).

Investment Details

The substantial financial commitment represents a significant move by ByteDance to secure advanced semiconductor technology. The investment specifically targets Nvidia chips, which are widely recognized for their capabilities in artificial intelligence and high-performance computing applications.

Market Implications

This reported investment underscores the growing demand for advanced semiconductor technology among major technology companies. The substantial financial commitment reflects the strategic importance of securing access to high-performance computing capabilities.

The investment plan, if confirmed, would represent one of the largest single commitments to semiconductor procurement by a technology company, highlighting the critical role of advanced chips in supporting modern digital infrastructure and artificial intelligence applications.

ByteDance, the Chinese parent company of TikTok, is poised to maintain a significant financial interest in TikTok's US operations, despite plans to sell a majority stake to American investors. This development comes as part of a deal orchestrated during the Trump administration to address national security concerns.

Profit-Sharing Structure

According to recent reports, ByteDance is expected to receive approximately 50% of the profits from TikTok's US operations, even after selling a majority ownership to a US-backed consortium. This arrangement is structured through two main components:

1. Algorithm Licensing Fees: ByteDance will earn revenue by licensing its algorithm to the US entity, potentially charging around 20% on incremental revenue.

2. Equity-Based Profit Sharing: The company will also participate in profit sharing proportional to its remaining equity stake, estimated to be roughly 20%.

Ownership Structure

The US-backed consortium set to acquire the majority stake in TikTok's US operations includes:

• Oracle Corp.
• Silver Lake Management
• Abu Dhabi-based MGX

This group is expected to own approximately 80% of the business following the deal's completion.

Valuation and Deal Terms

Vice President JD Vance has indicated that the sale price for TikTok's US operations would be around $14.00 billion. This figure is significantly below previous analyst estimates, which ranged from $35.00 billion to $40.00 billion. The substantial difference in valuation has led some analysts to speculate that this could potentially be one of the most undervalued tech acquisitions of the decade.

The discrepancy between the sale price and earlier valuations may be explained by the profit-sharing structure, which allows ByteDance to retain a considerable portion of the financial benefits despite selling majority ownership.

Regulatory Background

The impetus for this deal stems from legislation passed during the Biden administration, which requires ByteDance to relinquish control of TikTok's US operations or face a potential shutdown in the country. This legislation was enacted due to ongoing concerns about data security and the potential for Chinese government influence over the popular social media platform.

Ongoing Negotiations

It's important to note that the final terms of the deal remain unconfirmed. The structure of the agreement, including the exact percentages of ownership and profit-sharing, may still be subject to negotiation and regulatory approval.

As this situation continues to develop, it will be crucial to monitor how the deal progresses and what implications it may have for TikTok's operations in the United States, as well as the broader landscape of international technology companies operating in the country.