Baidu Eyes Hong Kong IPO for $3 Billion AI Chip Unit, Kunlunxin, Amid China's Push for Domestic Tech Dominance

Baidu Inc. is reportedly exploring the possibility of listing its artificial intelligence (AI) chip division, Kunlunxin, on the Hong Kong stock exchange. This strategic move aims to capitalize on investor enthusiasm surrounding China's initiatives to develop domestic chip technology capable of competing with global leaders like Nvidia Corp. According to sources with knowledge of the matter, Kunlunxin, which manufactures server chips utilized in data centers, currently holds a valuation of at least $3 billion. However, the discussions are still in the preliminary phases, and specifics concerning the timing and scale of a potential Initial Public Offering (IPO) have not been finalized. Following the initial reports of these considerations, Baidu's shares in Hong Kong saw a notable surge, climbing by up to 7.8%, marking the largest single-day gain since mid-September.

Kunlunxin is recognized as one of the few domestic Chinese entities possessing the capability to design the high-performance accelerator chips that are crucial for advancing AI development. This capability is central to the Chinese government’s broader objective of reducing the nation's reliance on American technology, particularly chips supplied by Nvidia. Along with leaders like Huawei Technologies Co. and Cambricon Technologies Corp., these homegrown firms are strategically positioned to fill the market gap created by Nvidia's curtailed presence in the world’s largest semiconductor market. The strong investor confidence in domestic players was further underscored by the performance of smaller companies such as Moore Threads Technology Co., which experienced an over 500% spike during its Shanghai debut, reflecting aggressive market expectations for local technological advancement despite persistent U.S. sanctions. Both Huawei and Cambricon are planning significant production increases in 2026, anticipating accelerated demand from key AI service providers like Alibaba Group Holding Ltd. and DeepSeek.

The establishment of Kunlunxin was partially motivated by the necessity to fulfill Baidu's substantial internal demand for computing power to support its extensive online operations. Financial analysts at JPMorgan recently identified the division, alongside Baidu's expansive cloud computing business, as a primary driver for the company's future growth. In a research note upgrading Baidu shares, analysts including Alex Yao commented that the market is "underestimating this transformation."