Baidu officially announced the "Kunlun Core Hong Kong Stock IPO," reporting that "shipment volume ranks among the top three in domestic production." Goldman Sachs believes Baidu's equity value is "3-11 billion USD."

Baidu officially launched the Hong Kong stock listing process for its AI chip subsidiary Kunlun Core.

On January 2nd, Baidu announced on the Hong Kong Stock Exchange that Kunlun Core submitted a listing application form to the Hong Kong Stock Exchange on January 1st through its joint sponsors in a confidential manner, applying for a listing and trading on the main board.

The announcement stated that the Hong Kong Stock Exchange has confirmed that Baidu can proceed with the proposed spin-off. After the listing of Kunlun Core, it will still be a subsidiary of Baidu. Specific details have yet to be determined, including the scale and structure of the global offering and the extent of Baidu's shareholding reduction.

However, the announcement emphasized that the spin-off still requires approval from the Hong Kong Stock Exchange Listing Committee, completion of filing with the China Securities Regulatory Commission, and final decisions from Baidu and Kunlun Core.

Kunlun Core is currently a non-wholly-owned subsidiary of Baidu, positioned as an industry-leading supplier of AI computing chips and related integrated software and hardware systems. This marks another domestic AI chip company striving for listing after Moore Threads and Muxi Co., Ltd. landed on the STAR Market.

Wall Street Journal previously mentioned that Goldman Sachs pointed out in its December research report that, based on the valuations of similar companies, the value range of Baidu's 59% stake in Kunlun Core is between $3 billion and $11 billion. Macquarie Securities estimates this equity value at approximately $16.5 billion, accounting for 30% of its target valuation for Baidu.

Spin-off plan implemented, still a subsidiary of Baidu after completion

Baidu outlined three main reasons for the spin-off in the announcement.

First, the spin-off can more comprehensively reflect the value of Kunlun Core based on its own advantages and enhance its operational and financial transparency, allowing investors to clearly distinguish Kunlun Core from the retained group and independently assess and measure Kunlun Core's performance and potential.

Second, Kunlun Core's business will attract a group of investors focused on general AI computing chips and related software and hardware systems, distinct from the relatively diversified business model of the retained group.

Third, the spin-off will enhance Kunlun Core's image among customers, suppliers, and potential strategic partners, improving its position in negotiations and securing more business. The spin-off will also enable Kunlun Core to directly and independently enter the equity and debt capital markets when needed in the future, allowing the retained group to allocate financial resources more effectively.

Performance scale ranks among domestic leaders, with 2024 shipment volume second

As a shareholder, Baidu's large-scale cluster deployment has provided key support for Kunlun Core, while Kunlun Core has also made substantial progress in expanding external orders.

According to data disclosed by Kunlun Core, it has achieved large-scale deployment in key industries such as the internet, finance, energy and power, and telecommunications operators, currently establishing a 32,000-card domestic computing power cluster.

Kunlun Core has also won a nearly 1 billion yuan server procurement order from China Mobile, with China Merchants Bank being one of its major clients According to Tencent Technology, a research report previously stated that Kunlun Core's total revenue for 2025 is expected to be around 5 billion yuan, a significant increase from 2 billion yuan in 2024.

In comparison, leading domestic AI chip manufacturer Cambricon is expected to generate 2.881 billion yuan in revenue in the first half of 2025, with an annual forecast of 5 to 7 billion yuan. Newly listed companies Moore Threads and Muxi are projected to have annual revenues of 1.218 billion to 1.498 billion yuan and 1.5 billion to 1.98 billion yuan, respectively, for 2025.

However, the report cites data obtained from the industry indicating that the final annual revenue may fall short of this expectation, although it will still far exceed the 2 billion yuan in 2024. The report quotes an insider close to Kunlun Core as saying:

It should not be a problem to rank among the top three in domestic market share.

IDC data shows that Kunlun Core's shipment volume will rank second in the industry in 2024.

Wall Street Optimistic About Chip Strategy, Valuation Logic Shifts to Hard Technology

Wall Street investment banks are raising Baidu's valuation.

Arete Research Asia analyst Shawn Yang believes that non-advertising businesses, including chips and autonomous driving, are expected to become the dominant factors determining Baidu's valuation level.

Macquarie analyst Ellie Jiang stated in a report on December 5 that investors had largely overlooked Baidu's progress in vertical integration from chips and cloud architecture to models and applications.

She expects Kunlun Core's revenue to double next year to about $1.4 billion, placing it in the same tier as Cambricon. Macquarie estimates that Baidu's 59% stake in Kunlun Core is valued at approximately $16.5 billion.

Goldman Sachs' team pointed out that if we refer to Cambricon's current price-to-sales ratio, the valuation range for Baidu's 59% stake in Kunlun Core could be between $3 billion and $11 billion.

Goldman Sachs analyst Lincoln Kong and his team emphasized that Baidu Cloud can provide highly competitively priced AI model inference alternatives.

Kunlun Core's current main product is the P800. The company plans to launch the M100 chip optimized for large-scale inference in early 2026 and the M300 chip for inference and training in 2027, aiming to build a million-chip cluster by 2030