Baidu's AI Chip Unit Eyes Hong Kong IPO

Baidu Inc. (NASDAQ:BIDU) is moving closer to taking its artificial-intelligence chip unit public, as its Kunlunxin division hires banks to prepare for a Hong Kong IPO that could raise up to $2 billion.

Kunlunxin selected China International Capital Corp, Citic Securities, and Huatai Securities as lead underwriters, with China Securities International also involved in the potential offering.

The final deal size remains under discussion and could ultimately land closer to $1 billion, Bloomberg reported on Wednesday, citing sources familiar with the matter.

Baidu shares rose on January 2 after the company said it plans to separate Kunlunxin into a standalone public company, a move aimed at spotlighting the unit's AI chip business, broadening its funding options, and improving management accountability.

Baidu currently owns about 59% of Kunlunxin and expects it to remain a subsidiary after the listing.

Baidu confirmed that Kunlunxin confidentially filed for a Hong Kong listing last week.

China's Push for Homegrown AI Chips

Baidu is increasingly positioning itself as one of China's most important homegrown artificial-intelligence chip developers, emerging as a domestic alternative alongside Huawei as U.S. export controls continue to limit access to advanced processors from Nvidia Corp. (NASDAQ:NVDA).

With Nvidia's most powerful AI chips effectively shut out of the Chinese market, Baidu's Kunlunxin unit has moved from an internal infrastructure project to a strategic national asset, aimed at filling a growing supply gap in data-center and large-model computing.

The shift highlights how China's leading technology companies are racing to establish domestic AI hardware ecosystems as geopolitical pressures reshape the global chip supply chain.

Analyst Outlook

Baidu has outlined a five-year chip roadmap, with the Kunlun M100 expected to be released in 2026 and the more advanced M300 in 2027.

The chips already support data centers and telecom workloads, and Kunlunxin has begun winning orders from partners tied to China Mobile.

Analysts say Baidu's chip push is both a necessity and a growth opportunity, as China faces a shortage of advanced AI processors.

JPMorgan expects Baidu's chip revenue to jump sixfold by 2026, while others value Kunlunxin as a major standalone AI hardware business.

At the same time, Baidu is restructuring internally, cutting costs, reshaping AI leadership, and doubling down on AI cloud and self-driving, to accelerate execution as it works to become a core supplier in China's homegrown AI ecosystem.

BIDU Price Action: Baidu shares were up 0.67% at $147.40 during premarket trading on Wednesday. The stock is approaching its 52-week high of $151.42, according to Benzinga Pro data.

Image via Shutterstock