ByteDance Denies Chip Team Split to Singapore, Cites Lark Tenant Migration

Reports surfaced recently alleging that ByteDance had dismantled its entire chip team, transferring operations to a new entity under a Singaporean shell company and terminating access to ByteDance’s internal systems without severance packages (N+1 compensation).

An anonymous source cited in media reports claimed the move affects the entire chip team, not just the AI chip division. The purported goal is to create a superficial separation from ByteDance while operating under a Singapore-based entity.

The source further suggested that although the business would operate under a Singaporean company, employees’ contracts would remain with ByteDance, not affecting existing stock options and not involving layoffs or N+1 compensation.

ByteDance has vehemently denied these reports. “The reports are false,” a ByteDance spokesperson stated. “The entity housing ByteDance’s chip business remains unchanged. The current action involves a routine migration of data to a new Lark tenant. External interpretations regarding layoffs, spin-offs, or changes in business entity are inaccurate.”

Lark, developed by Beijing Douyin Information Service Co., Ltd. in 2016, is ByteDance’s proprietary all-in-one collaboration platform. Version 1.0 was released in July 2017. A Lark tenant refers to an organization or enterprise registered and using Lark services on the platform.

CNBC Analysis: While ByteDance denies a structural change to its chip division, the swirling rumors highlight the growing strategic importance of in-house chip development, especially in the context of escalating geopolitical tensions and semiconductor supply chain vulnerabilities. Owning chip design capabilities could be a significant competitive advantage for a company like ByteDance, enabling greater control over performance optimization for AI models and customized silicon for its vast user base. The move to a new Lark tenant, while seemingly insignificant, could be a preparatory step towards a future separation or a more defined internal firewall, providing ByteDance with strategic flexibility to navigate complex regulatory environments and ensure business continuity under various scenarios. The company’s investment in AI remains substantial, and customized hardware, or the appearance of it, could be crucial for long-term viability. Such in-house chip development would allow ByteDance to optimize silicon specifically to run its proprietary algorithms, increase efficiency and reduce operational costs in the long term. Furthermore, if it ever considers an IPO for certain business units, proving technological independece is essential for valuation justifications.