AI Chip Startup Kunlun, Owned by Baidu, Now Valued at $2 Billion

By Avi Ben Ezra Tuesday, March 16, 2021

Baidu, a China-based tech company, announced today that its artificial intelligence (AI), semiconductor business division Kunlun raised capital in a new round and reached a valuation of around $2 billion.

Closeup of a circuit board.

Commercializing Kunlun and Its Capabilities

The latest funding round was reportedly headed by the Chinese private equity firm CITIC Private Equity Funds Management (CPE). Other backers in the fundraising include IDG Capital, Legend Capital, and an industry fund Oriza Hua.

“Kunlun chip business has recently completed a round of financing. We will release more information in due course,” Baidu told Reuters on Monday.

The AI unit manufactures semiconductor products that are mostly used in Baidu’s smart electric vehicles (EVs) and cloud computing. Reuters cited a source saying that Baidu is looking to commercialize Kunlun’s capabilities and make it a standalone company. The Chinese tech company also owns an additional chip business named “Honghu.”

Last month, reports emerged noting that Baidu was in discussions to raise capital for a standalone AI semiconductor company. The company is currently looking to raise $3 billion for its upcoming secondary listing in Hong Kong.

The move underscored the Chinese tech companies’ appetite to improve their capabilities in the semiconductor industry. But for Baidu, it also allows the company to diversify its business portfolio beyond just advertising.

Most of Baidu’s revenue comes from advertising; however, other areas of the business are increasingly contributing to its sales. In 2018, 80% of the company’s revenue came from its ad business, while in 2020, that proportion declined to 71%.

The new AI chip unit would be Baidu’s subsidiary, and the company would likely be the majority owner. Venture capital (VC) companies, including GGV and IDG Capital, were reportedly in talks with Baidu to invest in the new company.

Baidu already has an in-house chip business that it uses to develop the Kunlun semiconductors, which serve to handle huge amounts of data for AI apps. However, by setting up a new standalone company, Baidu believes it will be able to better commercialize its AI products.

The new chip business unit would target customers across a number of industries, including the auto market, which is plagued by a global semiconductor shortage. The business would also connect well with other Baidu’s businesses, including its driverless car software unit.

Summary

Chinese internet giant Baidu said that its AI chip unit Kunlun closed a new funding round and reportedly hit a valuation of about $2 billion.

About the Author


Headshot of Avi Ben Ezra

Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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