Baidu's artificial-intelligence chip unit, Kunlunxin Technology, is planning to go public in Hong Kong at a target valuation of $50 billion, according to The Information, which broke the story on Sunday citing two sources. Reuters, reporting on June 28, relayed the same figures, attributing them to The Information.
The most unusual detail is how Kunlunxin is courting backers. According to the report, investors have been asked to buy chips worth three to seven times the value of their planned IPO subscription. In other words, putting money into the share offering comes paired with an obligation to purchase the company's actual semiconductors.
As Techmeme summarized the reporting by Qianer Liu of The Information, Chinese chip companies "may have found a new clientele for their semiconductors: IPO investors." The arrangement effectively turns prospective shareholders into customers, helping the chipmaker show demand for its products as it pitches itself to the public market.
Kunlunxin designs AI processors, the kind of hardware used to train and run artificial-intelligence systems. A $50 billion target would mark a substantial valuation for a unit of search giant Baidu, which has been building out its own AI ambitions.
The details so far rest on unnamed sources, and the figures and structure described could shift before any listing is finalized. Baidu's own confirmation of the terms was not included in the source items.
Why it matters: as the United States restricts China's access to advanced AI chips, the financing tactics of homegrown chipmakers like Kunlunxin offer a window into how China is racing to build a domestic alternative to Nvidia.