Tencent plans to ramp up AI spending as China's chip supply allegedly improves

Chinese tech giant Tencent plans to significantly boost AI infrastructure spending as China's chip shortage starts to ease. Chief Strategy Officer James Mitchell said on an earnings call that the company expects to invest much more in the second half of 2026, since Chinese chipmakers can now ship more domestically produced AI chips "month by month through the year."

Tencent posted 9 percent revenue growth in the first quarter, hitting 196.5 billion yuan, with net profit up 21 percent. The company is also in talks for a stake in Deepseek. Bytedance is making a similar push, planning to spend more than $30 billion on AI infrastructure.

Mitchell's optimism doesn't quite square with a Bloomberg report out today that flags major shortages of key components like chips, circuit boards, and optical parts, bottlenecks that aren't likely to clear up anytime soon.