China's data center capacity
ByteDance, the parent company of TikTok, has emerged as the largest customer in China's race to expand artificial intelligence (AI) infrastructure. The company was found to lease about 20% of the power capacity of data centers built across China.
SemiAnalysis, a research firm specializing in semiconductors and AI infrastructure, tracked more than 1,000 data centers operated by around 60 developers in China and found that the country's completed data center power capacity exceeded 24GW in 2026.
This exceeds both the roughly 15GW in the Asia-Pacific region excluding China, including South Korea, Japan and Australia, and the roughly 14GW in Europe, the Middle East and Africa. China's data center supply capacity is expected to grow further with 20GW currently under construction and another 30GW in newly announced projects.
ByteDance demand and technology investment
ByteDance is the largest source of demand in China's data center market. Rather than directly building its own facilities, the company pursues a strategy of large-scale, long-term leasing of data center space and server racks from specialist data center developers such as GDS and VNET and state-owned infrastructure developers. SemiAnalysis estimates that ByteDance leases about one-fifth of China's total data center supply capacity.
The infrastructure secured by ByteDance provides a foundation for expanding its AI services. Operating Doubao, an AI chatbot rapidly gaining users in China, and Seedance, a video generation model, requires substantial computing resources. Serving hundreds of millions of AI users requires reliable access not only to data center space but also to high-performance servers, semiconductors and cooling equipment.
As ByteDance aggressively secures infrastructure, other Chinese technology companies, including Alibaba, Tencent and Baidu, are also increasing investment. These three companies' combined capital expenditure in the second quarter of 2026 was $20 billion, more than double the amount a year earlier. This reflected substantial spending on generative AI model development and cloud business expansion.
According to SemiAnalysis, Alibaba, Tencent and Baidu all recorded negative free cash flow (FCF) in the second quarter of 2026. Free cash flow is the cash generated by operating activities minus capital expenditure and other outlays. It is unusual for all three companies to record negative figures in the same quarter. The article interprets this as an effort to secure infrastructure ahead of competitors to avoid falling behind in AI, even at the expense of their immediate cash resources.
Computing capacity growth slows
Meanwhile, according to China's Ministry of Industry and Information Technology (MIIT), the country's total intelligent computing capacity stood at 2,185 exaflops (EFlops) at the end of June 2026, up 177% from a year earlier. However, the net increase in the first half of 2026 was 595 exaflops, less than the 802 exaflops added in the second half of 2025. Actual computing capacity growth has slowed even as data center construction and investment continue to expand.
Commenting on China's AI competition, semiconductor industry experts said, "The outcome is no longer determined solely by how many data centers are built," adding, "Alongside the ability to secure electricity and space, procuring advanced semiconductors and translating them into actual services and revenue will determine success or failure."
Original Korean article: dailycar.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
