Baidu shares jump 7% as AI chip arm Kunlunxin said to target $50 billion Hong Kong IPO

Baidu's shares experienced a remarkable increase of over 7% on Monday following reports that its AI chip division, Kunlunxin, is planning an initial public offering (IPO) in Hong Kong, potentially valuing the subsidiary at a staggering $50 billion. According to sources cited by The Information, potential investors are being encouraged to purchase semiconductors valued at three to seven times their planned investment in Kunlunxin's upcoming listing. Earlier this year, Baidu submitted a confidential application for Kunlunxin's IPO to the Hong Kong Stock Exchange, although specifics regarding the offering's size and structure are yet to be finalized. Kunlunxin, established in 2011, primarily manufactures chips for Baidu, which maintains a controlling interest in the company. However, Kunlunxin has been operating independently and has expanded its market reach to include external sales over the last two years. Notably, the chipmaker has attracted attention from ByteDance, the parent company of TikTok, as reported by Reuters. This development coincides with China's intensified efforts to bolster its presence in the competitive AI landscape. A report from the Brussels-based economic think tank Bruegel indicates that while the U.S. currently leads in the race for dominance in AI hardware, including semiconductors, there are clear signs that China is catching up. The report highlights China's open-source toolkit and robust domestic market as contributing factors to this progress.