Baidu Inc.'s Hong Kong and U.S. shares jumped on Friday after reports emerged that its artificial intelligence (AI) chip unit Kunlunxin, valued at nearly $3 billion, is preparing for a public listing in Hong Kong. The planned IPO signals a shift from an earlier domestic listing plan and comes as Chinese AI chip makers race to reduce reliance on U.S. technology.
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Baidu's American depositary receipts (ADRs) surged approximately 5.9% in U.S. trading. The Hong Kong-listed stock climbed as much as 7.8% during Friday's session, logging its biggest intraday gain since September 17, before closing 5% higher.
Kunlunxin aims to file a listing application with the Hong Kong Stock Exchange as early as the first quarter of 2026, targeting an IPO by early 2027, Reuters cited people familiar with the matter. The company recently completed a fundraising round that valued it at RMB21 billion ($2.97 billion), up from RMB18 billion in its previous round, the people said.
The potential listing comes amid heightened investor appetite for domestic AI chip makers, with competitor Moore Threads Technology Co. surging more than 500% at one stage in its Shanghai debut on the same day.
From Domestic to Hong Kong Listing
Kunlunxin had previously planned to list on the Shanghai Stock Exchange's STAR Market but switched to Hong Kong after consulting with several securities firms in the second half of this year, according to a source close to Kunlunxin's investors cited by Tencent News. A pre-money valuation had previously exceeded 25 billion yuan, Tencent News reported.
The company raised over RMB2 billion in its latest funding round completed within the past six months, with investors including a China Mobile fund and other private backers, Reuters learned from two people. Deliberations are at an early stage and details such as timing and size remain uncertain, Bloomberg reported. Baidu didn't immediately respond to requests for comment.
Growth Beyond Baidu
Founded in 2012 as an internal unit developing AI chips for Baidu, Kunlunxin has since become independently operated, though Baidu retains a controlling stake. The company primarily supplied chips to its parent but has gradually expanded external sales over the past two years.
Kunlunxin expects revenue to exceed RMB3.5 billion this year and achieve break-even, according to investment materials reviewed by Reuters. In 2024, the company recorded a net loss of about RMB200 million on revenue of around RMB2 billion. Over half of its 2025 revenue is expected to come from external sales, sources told Reuters.
External customers, accounting for approximately 40% of Kunlunxin’s business, include internet giants, mobile phone manufacturers, telecom operators and state-owned enterprises, Tencent News reported. The 2024 revenue exceeded RMB1 billion, surpassing companies like Moore Threads and Cambricon Technologies Corp., according to Tencent News.
Its most advanced product, the P800 chip, has gained traction this year, primarily supplying data center projects built by state-owned firms and governments. In November, Kunlunxin unveiled the M100 inference chip, set for early 2026 launch, and the M300, capable of both training and inference, slated for early 2027.
JPMorgan last month singled out Kunlunxin — along with Baidu's cloud computing business — as among the company's biggest growth engines. "The market is underestimating this transformation,” analysts including Alex Yao wrote, upgrading Baidu shares to overweight from neutral.
China's AI Chip Push
Kunlunxin is among few Chinese companies capable of designing powerful accelerators essential for AI development, central to Beijing's effort to reduce dependence on U.S. technology such as Nvidia Corp. chips. The push has intensified as Washington tightened restrictions on exports of advanced semiconductors to China, including barring sales of Nvidia Corp.'s latest chips.
Led by Huawei Technologies Co. and Cambricon, these firms hope to fill a void created by Nvidia's forced departure from the world's largest semiconductor arena. Huawei and Cambricon are sharply ramping up output in 2026, anticipating accelerating demand from Alibaba Group Holding Ltd., DeepSeek and other companies running AI services.
Kunlunxin joins a wave of Chinese chip companies planning public listings. Following Moore Threads' debut, MetaX is expected to list in coming weeks. Biren Technology, blacklisted by the U.S., is also planning a Hong Kong listing, Reuters reported in June.
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