Analysis of the Reflection of Baidu's Long-Term Technology Investment in Kunlun Chip's Valuation

Kunlun Chip’s valuation changes directly reflect the results of Baidu’s over ten years of technical accumulation. From a valuation of 13 billion yuan during its independent financing in 2021 to the latest 21 billion yuan currently, Kunlun Chip’s value growth trajectory clearly demonstrates the returns of Baidu’s technology investment [1].

Kunlun Chip’s development history can be divided into three key stages:

：Baidu’s Intelligent Chip and Architecture Department launched its self-developed chip project in 2011, marking Baidu’s systematic layout in the AI chip field [1]. During this period, Baidu continued to invest in AI basic technologies such as deep learning and natural language processing, laying the technical foundation for Kunlun Chip’s birth.

：Baidu publicly released the Kunlun Chip brand for the first time in 2018, and the first-generation Kunlun Chip was mass-produced in early 2020. Notably, Kunlun Chip has been deployed on a large scale with over 20,000 units, proving its technology has passed internal application verification [2].

：It completed independent financing in April 2021 with an initial valuation of 13 billion yuan. In 2024, it finished the latest round of financing, raising over 2 billion yuan from investors including China Mobile, pushing its valuation to 21 billion yuan [3].

Baidu’s technical investment in Kunlun Chip is mainly reflected in the following four dimensions, which directly support Kunlun Chip’s high valuation:

Kunlun Chip is led by Ouyang Jian, Baidu’s Chief Chip Architect, as CEO, reflecting Baidu’s strategic decision to inject core technical talents into the new company [1]. As the main responsible person for Baidu’s chip technology, Ouyang Jian’s leadership ensures Kunlun Chip can continuously obtain Baidu’s technical accumulation in chip architecture design.

Kunlun Chip has shown strong product iteration capability, which is an important support for high valuation:

• 2021
  : Launched the first-generation Kunlun Chip
• 2023
  : Launched the second-generation Kunlun Chip, and based on it, released the K100 accelerator card and RH800 server
• 2024
  : Launched the third-generation chip P800 [1]

This iteration speed of three generations of products in three years is leading in the domestic AI chip field, reflecting the depth of Baidu’s long-term technical accumulation.

According to IDC’s “2024 Mainland China Data Center AI Accelerator Card Market Ranking”, Kunlun Chip ranks second in the Chinese market with nearly 70,000 GPUs deployed, second only to global giant Nvidia [1]. This market position directly supports its 21 billion yuan valuation.

Kunlun Chip’s financial performance and growth expectation are also important supports for its valuation:

• 2023 Revenue
  : 2 billion yuan, net loss of 200 million yuan
• 2024 Forecast
  : Revenue to grow to 3.5 billion yuan, achieving break-even
• 2025 Forecast
  : Revenue to reach 5 billion yuan
• 2026 Forecast
  : Revenue to exceed 10 billion yuan [1]

Guosen Securities’ forecast shows that Kunlun Chip is expected to double its revenue in the next two years, and this high growth expectation is the core logic supporting its high valuation.

Baidu’s technical investment in Kunlun Chip is not an isolated act but forms deep synergy with its core business:

Kunlun Chip was first deployed on a large scale within Baidu, including core businesses such as search, recommendation, and intelligent cloud. This “internal first use” strategy not only reduces the market verification cost of the product but also provides valuable practical application scenarios and data support for technical iteration.

Kunlun Chip’s revenue source has expanded from a single internal supporting to the external market. In August 2024, Kunlun Chip received a 1 billion yuan order from China Mobile [1], marking its technology has been recognized by external professional customers. The growth of external revenue will further enhance Kunlun Chip’s independent valuation capability.

The U.S. chip technology blockade and sanctions against China have prompted the Chinese government to strongly support domestic chip R&D. As an important representative of domestic AI chips, Kunlun Chip fully benefits from this policy environment. This policy support is reflected not only in market opportunities but also in valuation premiums in the capital market.

The current capital market’s enthusiasm for chip concept stocks provides a favorable valuation environment for Kunlun Chip:

: Cambricon, which has similar business to Kunlun Chip, has a market value exceeding 500 billion yuan, and Moore Threads’ market value reached 300 billion yuan on its first day of listing [1]. The high valuation levels of these peer companies provide a valuation reference for Kunlun Chip.

: As Baidu’s AI chip company, Kunlun Chip has both the technical endorsement of an Internet giant and the flexibility of independent operation. This “dual identity” is scarce in the capital market and may obtain a certain valuation premium.

: The growth expectation from 2 billion yuan to 10 billion yuan in revenue means Kunlun Chip will maintain a compound annual growth rate of over 50% in the next few years. High-growth enterprises usually obtain higher valuation multiples.

The Kunlun Chip case shows that Baidu’s long-term AI technology investment is releasing value through the chip business. For investors:

• Kunlun Chip’s valuation increase reflects the strategic value of Baidu’s “AI full-stack layout”
• Spin-off listing will allow investors to more clearly evaluate Kunlun Chip’s independent value
• The domestic substitution trend provides long-term growth momentum for Kunlun Chip

Despite the optimistic valuation prospects, investors still need to pay attention to the following risks:

• Technological Iteration Risk
  : AI chip technology evolves rapidly. If Kunlun Chip cannot continuously maintain technical leadership, it may face market share loss
• Intensified Competition Risk
  : Competitors such as Huawei and Cambricon are also actively布局, and Kunlun Chip faces fierce competition
• Policy Uncertainty
  : The chip industry is greatly affected by the international political and economic environment, and policy changes may affect valuation

Baidu’s continuous investment in AI and chip technology over more than ten years is being reflected through Kunlun Chip’s valuation increase. The valuation growth from 13 billion yuan to 21 billion yuan not only reflects the rapid development of Kunlun Chip’s own business but also is the monetization of the value of Baidu’s long-term technical accumulation. With the advancement of Kunlun Chip’s independent listing process, the market will have the opportunity to directly participate in the returns of Baidu’s technology investment.

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[1] Yahoo Hong Kong Finance - Ten Years of Grinding a Sword: Baidu’s Future: Kunlun Chip (https://hk.finance.yahoo.com/news/十年磨一剑-百度的未来：昆仑芯-001933557.html)

[2] Wall Street Journal Chinese Edition - China Concept Stock Briefing: Baidu Kunlun Chip Business Independent, Valuation 13 Billion Yuan (https://cn.wsj.com/articles/中概股简报：百度昆仑芯片业务独立，估值人民币130亿元-11624673770)

[3] Yahoo Hong Kong Finance - Finance | Baidu (09888): Kunlun Chip Has Submitted Listing Application to the Stock Exchange (https://hk.finance.yahoo.com/news/百度09888：昆仑芯已向联交所提交上市申请-024333797.html)