Key facts
- ByteDance is China's largest data center tenant, occupying about one-fifth of delivered capacity.
- China's data center capacity stands at 24GW, second only to North America.
- Wholesale AI building deals are increasingly replacing retail colocation in China.
- Alibaba, Tencent and Baidu's combined capital expenditure reached $20 billion in Q2 2026, with all three reporting negative free cash flow.
ByteDance, the owner of TikTok, is the largest tenant of data center capacity in China, occupying approximately one-fifth of the country's delivered space, according to new estimates by research firm SemiAnalysis. This positions ByteDance as a primary driver of China's burgeoning artificial intelligence infrastructure buildout.
SemiAnalysis's report, published September 25, tracks over 1,000 facilities operated by more than 60 companies in China. The firm estimates China's total delivered data center capacity at 24GW, surpassing Europe, the Middle East, Africa, and the Asia-Pacific region outside China, and ranking second globally behind North America's estimated 56GW by the end of 2026. The report also notes an additional 20GW of capacity is scheduled for delivery and another 30GW is in the announced stage.
The market structure is shifting from carrier-led retail colocation, where single customers lease a few racks, to wholesale deals for entire buildings or campuses, driven by AI demand. Wholesale AI buildings show over 70% utilization, compared to around 55% for legacy retail racks. In the first half of 2026, GDS and VNET collectively signed 1.3GW in wholesale orders, with retail orders below 10MW.
ByteDance leases nearly all of its data center footprint. The report estimates that ByteDance and Alibaba's combined orders from 2024 through the current year have largely gone to GDS and VNET. Construction speed has also accelerated, with a standard 100MW data center now taking about 12 months from groundbreaking to delivery. China's "East Data, West Computing" initiative is directing new capacity towards inland regions, with Inner Mongolia emerging as a key AI compute hub.
In terms of financial impact, the combined capital expenditure of Alibaba, Tencent, and Baidu reached approximately $20 billion in the second quarter of 2026, doubling from the previous year. All three companies reported negative free cash flow for the first time on record during this period. While ByteDance's AI budget is reported to be around $30 billion for 2026, it was not included in the $20 billion capex figure for the other three tech giants.