Original Title: Li Yanhong's Largest IPO is Here
Original Author: Wu Qiong, Touzi Jie
"Shares are hard to get."
This scene is now playing out with Kunlun Chip. Since submitting a confidential listing application to the Hong Kong Stock Exchange (HKEX) earlier this year, Kunlun Chip's IPO is drawing nearer. It is currently in the stage of competing for cornerstone investor allocations.
Thus, Li Yanhong's largest IPO emerges. According to foreign media reports, Kunlun Chip is targeting a valuation of approximately $50 billion (around RMB 340 billion). If listed, its market capitalization would exceed that of Baidu. Given such scale, it's no wonder Kunlun Chip is often viewed by outsiders as the most valuable asset in Baidu's AI story.
The outcome of Baidu's turnaround battle will soon be clear.
Li Yanhong's Largest IPO: To Exceed Baidu
At this very moment, emotions are running high.
Going back to the beginning of this year, Baidu announced via an announcement that Kunlun Chip, through its joint sponsors, had submitted a confidential listing application (Form A1) to the HKEX, applying for approval for the listing and trading of Kunlun Chip shares on the Main Board of the HKEX.
Since then, Kunlun Chip's Hong Kong IPO preparations have proceeded underwater. Now, six months later, with IPO preparations advancing, Kunlun Chip has reached a critical pre-listing stage. According to The Information, the company has already started engaging with potential investment institutions.
This is the last window for investors to enter Kunlun Chip through the primary market, but the threshold is not low: the report states that Kunlun Chip prioritizes investors who commit to purchasing chips during the placement, requiring the value of chips purchased to be 3 to 7 times the subscription amount.
This means that if investors want to secure cornerstone shares in Kunlun Chip, they must first "qualify" by making purchases. Consequently, purely financial investors might be excluded. Kunlun Chip prefers industrial investors who inherently possess continuous purchasing capabilities.
In the end, only a minority make it to the table. One investor told Touzi Jie that "competition for cornerstone shares is fierce," with many finding it "difficult to secure a single seat."
Undoubtedly, high expectations are placed on Kunlun Chip. It is reported that Kunlun Chip is targeting a valuation of approximately $50 billion (around RMB 340 billion). This is not unfounded. According to IDC data, in China's AI accelerator server market in 2025, Kunlun Chip and Cambricon tied for third place among domestic manufacturers, each shipping about 116,000 cards.
Earlier, a Goldman Sachs research report pointed out that if the market granted Kunlun Chip a valuation multiple similar to Cambricon's, the value of Baidu's stake could be as high as $22 billion. With the surge in demand for AI computing power, Cambricon's market cap broke through the trillion-yuan mark this week.
Hence, the fierce competition for Kunlun Chip's cornerstone shares.
Of course, Baidu will be the biggest winner. Recalling Li Yanhong's explanation in the announcement at the beginning of the year regarding the benefits of spinning off Kunlun Chip for listing, one key point was to enhance Kunlun Chip's image among its customers, suppliers, and potential strategic partners to secure more business, and Baidu would benefit from its growth through its shareholding.
The effect has been immediate. After this news emerged, Baidu's stock rose for four consecutive trading days, with its latest Hong Kong market cap exceeding HK$300 billion. If Kunlun Chip achieves its $50 billion target valuation, the value of Baidu's stake, as its controlling shareholder, would exceed hundreds of billions. Thus, Li Yanhong is about to experience another highlight moment—Kunlun Chip's market cap would surpass that of Baidu.
Investors Gather: Awaiting a Super Return
Low-key and discreet, yet it has become Li Yanhong's proud creation.
The story of Kunlun Chip dates back to 2011, with its predecessor being Baidu's Intelligent Chip and Architecture Department. A team from top companies like Baidu, Qualcomm, Marvell, and Tesla embarked on Baidu's chip-making journey.
It wasn't until 2021 that Baidu formally spun off its Kunlun chip business and established a new company—Kunlun Chip (Beijing) Technology Co., Ltd. Along with the spin-off came a major financing round, led by CPE Yuanfeng, with investors including IDG Capital, Legend Capital, Yuanhe Puhua, etc., valuing the company at around RMB 13 billion at the time.
Since then, Kunlun Chip began to gain recognition.
However, this was also the only publicly announced financing for Kunlun Chip. But according to Qichacha, over the past five years, Kunlun Chip has undergone multiple equity changes, with many well-known investment institutions joining the table one after another. In July 2022, new shareholders such as General Technology Venture Capital, China-Belgium Fund, and Qianshan Capital were added; just half a month later, CITIC Securities and Linxin Investment also became shareholders of Kunlun Chip.
In 2023, BYD, Zhongguancun Science City Company, Sanya Yuhai Fund, China Internet Investment Fund, and others appeared one by one; subsequently, faces such as the Zhongguancun Independent Innovation Special Fund of the National Social Security Fund, Beijing Artificial Intelligence Industry Investment Fund, Shunxi Fund, and CITIC Jiantou Capital also emerged, making the lineup increasingly impressive.
Perhaps listing plans were already brewing. In July last year, Kunlun Chip added 15 new shareholders at once, including funds under China Mobile, Beijing government-guided funds, Beijing Shangaо Juntai Fund, Guohai Innovation Capital, CICC Capital, etc., fueling speculation about the competition.
To date, Kunlun Chip has gathered a total of 57 shareholders behind it. It is foreseeable that with Kunlun Chip's listing, it will create another wave of collective wealth creation in the Hong Kong stock market.
Backed by big company resources, Kunlun Chip is already a force to be reckoned with. Currently, Kunlun Chip's main product is the P800, launched in 2024, which benchmarks against NVIDIA's A800, uses Samsung's 7nm process, and is mainly aimed at data center inference scenarios. Additionally, the Kunlun Chip M100, primarily optimized for large-scale inference scenarios, is set for launch in early 2026. The Kunlun Chip M300 is mainly targeted at ultra-large-scale multimodal model training and inference scenarios and is planned for launch in 2027.
Compared to peers, Kunlun Chip not only has order support from internal business lines within the group such as search, cloud computing, and autonomous driving but also major state-owned enterprise clients like China Mobile, China Southern Power Grid, and China Merchants Bank. The most critical deal among these was in August last year when Kunlun Chip ranked first in all three packages of China Mobile's centralized procurement project, securing an order worth billions.
"The child has grown up." Kunlun Chip is stepping out from under Baidu's wing. At the recent Zhiyuan Conference, Qi Wei, R&D Vice President of Kunlun Chip, revealed that besides providing chips for Baidu, the company's commercial scale for external customers continues to expand, and the proportion of external business has now surpassed the supply to Baidu's internal needs.
"Started Early but Arrived Late": The Turnaround Battle
Li Yanhong has waited a long time for this day.
To put it in perspective, Baidu was the first internet company to proclaim "All in AI." During the "hundred-model war," Baidu's ERNIE Bot was among the first domestic ChatGPT-like products to debut, enjoying a period of glory.
However, reality is harsh.
After several years of intense competition, the landscape of domestic large language models has largely been set. On one side, products from other major companies like Doubao and Tongyi Qianwen have gradually captured user mindshare; on the other side, new AI players have also caught up from behind. Last week, Zhipu AI's market cap once broke through the trillion-yuan mark. Although it has since retreated, it is still nearly three times that of Baidu.
Not to mention, DeepSeek's post-money valuation in its first financing round is close to RMB 400 billion; Kimi's valuation also rose to $31.5 billion (approximately RMB 210 billion) in a new funding round. In contrast, Baidu has repeatedly left the impression of having "started early but arrived late."
Faced with this situation, it's hard for Baidu not to feel anxious.
Now is the opportunity Baidu cannot afford to miss. Moore Thread and MetaX have already set examples in the secondary market; Cambricon also once reached new market cap highs; even more anticipated is Changxin Technology, which has already successfully passed its STAR Market IPO review... It's evident that the explosive growth in AI computing power is being transmitted throughout the entire semiconductor industry chain.
And in Baidu's AI narrative, Kunlun Chip is precisely seen as the most valuable underlying asset. In early May, Kunlun Chip officially initiated its STAR Market listing tutoring, concurrently advancing its "A+H" dual-track IPO. Facing a fleeting window of opportunity, Baidu is desperately racing against time.
This inevitably reminds one of Li Yanhong's judgment a decade ago that the era of artificial intelligence was imminent and would bring endless possibilities. "For Baidu, if we can seize the opportunity in artificial intelligence, in five to ten years, Baidu can become a completely different company."
If they miss it this time, they will truly fall behind completely.
