Analysis of Gross Margin for Baidu's AI Chip Business (Kunlun Chip)

Based on the information I have collected, the analysis of the gross margin of Baidu’s AI chip business is as follows:

##1. Overview of Baidu’s AI Chip Business

The main entity of Baidu’s AI chip business is

, which is one of the leading AI chip companies in China. Baidu is considering listing Kunlun Chip in Hong Kong [1]. Based on Baidu’s independently developed “Kunlun”, China’s first cloud-based full-function AI chip, Kunlun Chip has been officially launched in Baidu Smart Cloud servers [2].

##2. Comparative Analysis of Industry Gross Margins

Company/Type	Gross Margin Level	Remarks
NVIDIA (AI chip leader)	70-75%	Data center business has high gross margin
Industry average level	40-60%	Mature AI chip companies
Baidu’s overall business	13.27% (Operating profit margin)	Includes multiple businesses

1. Data Limitations
   : Currently,
   specific gross margin data for Kunlun Chip alone cannot be obtained
   [0]. Baidu has not separately disclosed the financial details of the Kunlun Chip business.

2. Baidu’s Overall Profitability
   : According to the latest data, Baidu’s overall operating profit margin is 13.27% and net profit margin is 20.97% [0]. However, this includes multiple businesses such as search, cloud computing, and intelligent driving, so it cannot directly reflect the gross margin of the AI chip business.

3. Industry Reference Comparison
   :
   • The AI chip industry is a high-tech barrier field; leading companies like NVIDIA can have a gross margin of over 70% [1]
   • The overall gross margin of China’s AI chip industry is usually in the range of 40-60% [1]
   • Early-stage AI chip companies may have lower gross margins than the industry average due to high R&D costs and unformed scale effects.

##3. Conclusions and Judgments

, mainly due to:

1. As an independent business unit, Kunlun Chip’s financial data has not been separately disclosed to the public
2. Kunlun Chip is in a period of rapid development and may still be in the investment stage, so its profitability has not been fully reflected
3. Baidu’s overall low operating profit margin (13.27%) may reflect that the new business is still in the cultivation period.

• If Kunlun Chip has achieved large-scale mass production and obtained external customers, its gross margin may approach or exceed the industry average (40-60%)
• As an AI chip independently developed by Baidu and already deployed in Baidu Smart Cloud, Kunlun Chip may have certain advantages in cost control and scale.

• The latest progress of Kunlun Chip’s plan to list in Hong Kong (expected to disclose detailed financial data)
• Descriptions of the AI chip business in Baidu’s quarterly financial reports
• The status of Kunlun Chip obtaining external customer orders.

---

[1] Bloomberg - “Baidu Reportedly Considers Hong Kong Listing for AI Chip Unit Kunlun Chip” (https://hk.finance.yahoo.com/news/百度據悉考慮讓ai晶片子公司昆侖芯赴香港上市.html)
[2] Wall Street Journal/TMTPost - “Baidu Kunlun Cloud Server Officially Launched”

[0] Jinling API - Baidu Company Financial Data