A logo of ByteDance is seen at the company's headquarters in Singapore, Sept. 7, 2023. AFP-Yonhap

ByteDance, the parent company of TikTok and Douyin, is set to invest 4.5 billion yuan (US$614 million) in a new computing center in the city of Datong, in northern Shanxi province, as China's most valuable unicorn boosts computing power to accommodate its popular artificial intelligence (AI) services.

The technology giant, known for its popular short video apps, has been aggressively expanding in the AI sector. Its ChatGPT-like service Doubao has become one of China's leading AI platforms, and the company last month unveiled updates for a range of AI models and products.

A document published on the Shanxi government website confirmed the approval of the Volcano Cloud Taihang Computing Centre II Phase project. Operated by ByteDance-controlled Volcano Cloud (Datong) Technology, the project will cover 205,013 square meters (2,206,742 sq ft), equivalent to the area of nearly 30 football pitches.

The development will include six two- story data center buildings, one six- story integrated facility, as well as other supporting infrastructure. The center is expected to house 15,604 12-kilowatt server cabinets and 510 network cabinets. The provincial government first released a detailed blueprint for the project in July.

High-performance computing centers are crucial for training large language models (LLMs), managing extensive data processing, and ensuring the scalability and efficiency of AI-driven services. Despite US export restrictions that have limited access to the world's advanced semiconductors, China's Big Tech firms are leveraging local chips to enhance computing capacity.

Even as Doubao's popularity as surged, with 51 million active users, ByteDance has not yet announced any plans to monetize the AI service, even though it is costly to train LLMs.

ByteDance's computing center project is located in Guangling county's Economic Development Zone Big Data Park in eastern Datong. Although not among the province's most economically developed areas, the region has been actively promoting its big data industry in recent years.

According to local government documents, the first phase of the computing center involves an investment of about 2.8 billion yuan. This phase includes four data center buildings and supporting facilities. Construction began in May 2023 and is nearing completion.

ByteDance established Volcano Cloud (Datong) Technology in December 2022, and it currently has registered capital of 2.36 billion yuan, according to Tianyancha, a Chinese corporate data tracker. Data from China's Ministry of Natural Resources shows that the company in December acquired more than 13 hectares of land in Guangling for 59.12 million yuan.

Shanxi, traditionally known for its coal industry, has recently focused on building up its big data sector. According to the China Academy of Information and Communications Technology's Computing Power Index, Datong ranked third in the country last year for computing power, following Langfang and Zhangjiakou in Hebei province.

A local media report in October revealed that by 2024, the Volcano Taihang Computing Centre had reported cumulative investments of 1.4 billion yuan, accounting for 89.4 percent of the industrial investment in the Guangling Economic Development Zone.

Read the full story at SCMP.