TikTok owner ByteDance acquires stake in memory chip firm InnoStar to bolster VR unit Pico as it takes on Apple’s Vision Pro

Picoheart, a Singapore -based affiliate of ByteDance, invested an undisclosed amount to acquire a 9.5 per cent stake in InnoStar
That marked the latest semiconductor-related investment by ByteDance after deals with Silicon Integrated and Moore Threads Intelligent Technology

Semiconductors

Coco Fengin Beijing

Published: 7:00pm, 14 Mar 2024

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Social media giant ByteDance, owner of popular short video apps TikTok and Douyin, has bought a stake in memory chip developer InnoStar Semiconductor to bolster production at virtual reality (VR) unit Pico, in a move to overcome US tech restrictions and take on Apple’s mixed-reality Vision Pro headset.

Picoheart, a Singapore-based affiliate of ByteDance, earlier this month invested an undisclosed amount to acquire a 9.5 per cent shareholding in state-backed InnoStar, which is headquartered in Shanghai, according to data from company registry information provider Qichacha.

That investment was made “in hopes of utilising the memory chips produced by InnoStar in Pico’s VR headsets”, a representative of Beijing-based ByteDance said on Thursday.

The deal has made ByteDance the third-largest shareholder of InnoStar, behind the 28.8 per cent stake of Hong Kong-incorporated Memris Asia Pacific and 26.3 per cent interest of Shanghai Alliance Investment, owned by the Shanghai municipal government, according to company records.

A sample of InnoStar Semiconductor’s resistive random access memory chip. Photo: InnoStar

Founded in 2019, InnoStar is a domestic leader in the development and production of resistive random access memory (ReRAM) chips, which provide lower power consumption and faster storage retention capability. The company was first in the country to produce ReRAM chips using 28-nanometre process technology.

ByteDance’s latest semiconductor-related investment shows the lengths being taken by the company to overcome the impact of tighter US tech sanctions on mainland China, including restricted access to advanced chip technologies, as its Pico unit goes up against Apple’s Vision Pro headset.

Previous ByteDance investments included chip designer Silicon Integrated in 2022 and US-sanctioned Moore Threads Intelligent Technology, a designer of graphics processing units founded by former Nvidia executive Jams Zhang Jianzhong, in 2021.

ByteDance has also established an in-house semiconductor design team. A ByteDance representative said in 2021 that the company was exploring [business opportunities] in the artificial intelligence chip arena.

InnoStar Semiconductor’s headquarters in Shanghai. Photo: InnoStar

ByteDance’s self-developed chips, however, are not for sale, Yang Zhenyuan, the company’s tech lead on algorithms and data, said in 2022. Its chips are used in video compression and decompression, as well as cloud computing applications.

The social media giant expanded into the VR market with its acquisition of Pico in 2021 at the height of the metaverse frenzy. In the third quarter last year, Pico was ranked by research firm IDC as the world’s third-biggest augmented reality (AR) and VR headset vendor, behind Meta Platforms and Sony Interactive Entertainment.

ByteDance, however, last year initiated a restructuring at Pico that was said to have resulted in hundreds of job cuts amid falling global demand for AR and VR headsets.

IDC said global AR and VR headset shipments declined 8.3 per cent year on year to 8.1 million units in 2023. It projected demand to recover this year, with growth of 46.4 per cent, thanks primarily to the introduction of new products like Apple’s Vision Pro.