ByteDance Controls One-Fifth of China's Data Centers for AI
ByteDance now controls approximately one-fifth of China's operational data centre capacity. The TikTok owner has emerged as the country's largest tenant in this sector, serving as a primary contributor to its expanding artificial intelligence infrastructure. These figures come from recent estimates by research firm SemiAnalysis.
SemiAnalysis arrived at this estimate through its monitoring of over 1,000 facilities across China, operated by more than 60 different companies. ByteDance reportedly rents nearly its entire data centre footprint. Its artificial intelligence offerings include Doubao, a digital assistant used by hundreds of millions, and Seedance, a model for video generation.
Despite ByteDance remaining a privately held company with undisclosed financials, its publicly traded counterparts have reported substantial increases in capital spending. Alibaba Group Holding, Tencent Holdings, and Baidu collectively invested US$20 billion in capital expenditure during a recent quarter, more than double the amount from the previous year. And for the first time on record, all three Big Tech firms recorded negative free cash flow in that same period.
China currently possesses more than 24 gigawatts of delivered data centre capacity, according to SemiAnalysis. The firm's analytical model separately tracks an additional 20 gigawatts in development and a further 30 gigawatts in announced projects. For context, the firm predicts 56 gigawatts of capacity in the United States by a future year, compared to approximately 15 gigawatts in the remainder of Asia Pacific and 14 gigawatts across Europe, the Middle East, and Africa.
This expansion coincides with elevated vacancy rates within older facilities. The report attributes this imbalance partly to the industry's historical connection with telecommunications; China's three state owned carriers still possess about a third of the national data centre capacity. Many of these older centres were constructed to lease small numbers of low power racks to individual clients and struggle to meet the significant power requirements of modern AI servers, the report indicated. Newer facilities, rented in bulk to cloud and AI companies, are filling up more swiftly.
SemiAnalysis commented on this disparity, stating that the AI era functions on a wholesale model, which excludes the existing retail inventory. But the supply of essential chips represents another limiting factor. Goldman Sachs noted in a research brief from a recent July that the rate at which Chinese customers were filling new data centre space had been slower than projected in a recent half year. This slowdown was likely due to tight supplies of both domestically produced and imported chips.
China incorporated 595 eflops of intelligent computing power during a recent first half. This figure was less than the 802 eflops added in the preceding second half of the prior year, based on figures provided by the bank. This increment brought China's total intelligent computing capacity to 2,185 eflops by the close of a recent June, marking an increase of 177 per cent from the previous year, as reported by the Ministry of Industry and Information Technology.
An eflop is a unit representing one quintillion floating point operations per second. Goldman Sachs estimated that the first half increase was equivalent to roughly 0.7 gigawatts of data centre capacity allocated to artificial intelligence. The bank continues to anticipate that China's overall data centre demand will experience a compound annual growth rate of 20 per cent over the coming years.
ByteDance holds approximately one-fifth of China's current data centre capacity.
The company is the largest tenant, driving artificial intelligence infrastructure growth.
Major tech firms face significant capital expenditure and negative free cash flow.
Older data centres struggle to meet the power demands of modern AI servers.
Chip supply constraints have slowed the occupation of new data centre space.
Source: SCMP
