Qualcomm in talks to provide chip-design services to ByteDance

Qualcomm was in talks to provide chip-design services to ByteDance, the Chinese parent of TikTok, in a move that would push the U.S. company further beyond its core smartphone-modem business and into a more valuable part of the semiconductor chain. Four people familiar with the matter said the discussions were still ongoing and had no guarantee of becoming a deal.

The arrangement would not mean Qualcomm necessarily manufactured chips for ByteDance. Instead, it would fit a fabless custom-design model in which Qualcomm helps define and optimize silicon before production, a business that can carry higher margins than selling standard components. If the talks advanced, ByteDance would become an early customer for Qualcomm’s chip-design services operation, and Qualcomm is trying to broaden its revenue base as smartphone sales remain its biggest source of income.

Washington and Beijing have been locked in escalating competition over artificial intelligence chips and advanced computing, and that friction has already touched Nvidia, AMD, Applied Materials and Lam Research.

ByteDance has been pushing deeper into artificial-intelligence infrastructure and related computing needs. That shift has increased demand for custom hardware, including chips that can be tuned for data-center workloads and other AI applications. The potential work could extend to video processing units and other custom chips aimed at ByteDance’s computing needs.

For Qualcomm, the discussions fit a wider effort to reduce dependence on handsets and sell more design services alongside, rather than only finished chips. The company has been seeking a larger role in AI infrastructure and custom silicon work.