Tech giant Baidu is emerging as one of China’s key artificial intelligence chip players, positioning itself as a challenger to Huawei as both look to fill the void left by industry leader Nvidia being kept out of the country. Best-known as China’s biggest search business, Baidu has in recent years refocused its business around driverless cars and AI, including a majority-owned subsidiary, Kunlunxin, which designs chips.
Several analysts have upgraded their outlook on Baidu’s stock over the past few weeks, citing the semiconductor business and forecasting the unit will gain more domestic orders. This month, Baidu laid out a five-year roadmap for its Kunlun AI chips, beginning with the M100 in 2026 and the M300 in 2027. The company already uses a mix of its self-developed chips in its data centers to run its ERNIE AI models, as well as Nvidia products.
Baidu makes money by selling its chips to third parties building data centers as well as renting out computing capacity via its cloud. It has sought to position itself as a so-called “full stack” AI offering with infrastructure made up of chips, servers and data centers, as well as AI models and applications. And the chip business appears to be gaining traction. Earlier this year, Kunlunxin won orders from suppliers to China Mobile, one of the country’s biggest mobile carriers.
While Nvidia’s graphics processing units (GPUs) are widely regarded as the most advanced chips for training and running AI, the company has been blocked by the U.S. government from selling its top-end product to China. Beijing has also reportedly been persuading local tech companies not to buy the H20, a less powerful Nvidia chip designed for the Chinese market and greenlit for export.
With Huawei, the leading player through its massive clusters of chips, out of the picture, analysts are suggesting Baidu will fill the void and its chip business is set for explosive growth. The investment bank analysts forecast Baidu chips sales to increase six-fold to reach 8 billion Chinese yuan ($1.1 billion) in 2026. Analysts at Macquarie estimate that Baidu’s Kunlun chip unit could be valued at about $28 billion. Baidu is not alone among China’s tech giants when it comes to self-developed semiconductors. CNBC reported in August that Alibaba is also developing its next-generation AI chip.
