Baidu eyes Hong Kong IPO of AI chip unit Kunlunxin in spin-off

Chinese tech giant Baidu announced plans to spin off its artificial intelligence chip subsidiary, Kunlunxin, and list it in Hong Kong, as more domestic chipmakers seek funds amid Beijing’s push for semiconductor self-sufficiency.

The company said in a announcement On Friday, it confidentially filed for listing on the Hong Kong Stock Exchange, although details of the offering, including size and structure, remain undecided.

The move would still require regulatory approvals, including from China’s securities watchdog. Baidu stressed that there is no guarantee that the spin-off will continue. The company would have owns approximately 59% of Kunlunxin.

Baidu, a major player in China’s growing AI field, is both a buyer of specialized AI chips for data centers and cloud computing, as well as a designer of them through Kunlunxin.

The company said the split would align with its strategy to showcase Kunlunxin’s standalone potential, attract sector-specific investors and expand financing options. Kunlunxin would remain a subsidiary of Baidu, he adds.

This decision comes against a backdrop of intensifying technological tensions between the United States and China. Washington and Beijing have imposed various restrictions on Chinese AI companies’ access to cutting-edge AI chips from the California company. Nvidia.

Meanwhile, Beijing is increasingly encouraging domestic purchases of chips and mobilizing billions in public funds for development.

In recent months, several Chinese chipmakers have announced consider listingincluding Son Moore and Biren technology.

Founded in 2012, Kunlunxin is at the heart of Baidu’s ambition to become a “full stack” AI company, covering hardware, servers and data centers, as well as AI models and applications.

While Baidu still relies heavily on Nvidia’s chips for AI computing power, Kunlunxin has allowed the company to increasingly use a combination of its self-developed chips in the data centers running its business. Ernie A.I. models.

Kunlunxin has also evolved to operate as a separate entity, expanding its sales to third-party customers outside of Baidu.

“In the market, Kunlunxin is considered one of the most practical and widely used AI chips in China,” Brady Wang, associate director of Counterpoint Research, told CNBC.

He added that one of the chipmaker’s biggest strengths is software. “Instead of forcing users to adopt a closed system, Kunlunxin works well with popular AI frameworks and makes it easy to move workloads from [Nvidia]”.

Reuters previously reported that Kunlunxin’s revenue is expected to exceed 3.5 billion yuan ($500 million) last year, breaking even. External sales are expected to account for more than half of its revenue in 2025, the report adds.

Another sign of strength last year, Kunlunxin won orders worth over 1 billion yuan from suppliers China Mobileone of the largest mobile operators in the country.

China Mobile also participated in the entity’s latest financing, which raised more than 2 billion yuan and valued the unit at around 21 billion yuan, according to Reuters.

In its announcement, Baidu said its plans to spin off and list Kunlunxin would better link management incentives to performance and increase the unit’s market presence.

Late last year, JPMorgan analysts predicted that Kunlunxin’s chip sales would increase sixfold to 8 billion Chinese yuan in 2026.

However, while Kunlunxin can help reduce China’s reliance on Nvidia’s chips, it cannot completely replace them, Counterpoint’s Wang said, citing Beijing’s current constraints in manufacturing advanced chips.

“[Kunlunxin’s chips] work best for inference and other easier-to-move workloads, especially for government, telecom and public cloud users, where stable supply and lower costs matter more than optimal performance,” he said.

“For this reason, Beijing does not rely on a single company. Instead, Kunlunxin works in collaboration with Huawei Ascend, Cambricon, Alibabaand others to build a national AI computing ecosystem.