Woofun AI reports that Kunlun Core has initiated a confidential listing application with the Hong Kong Stock Exchange, positioning Li Yanhong's chip venture to potentially eclipse the market capitalization of its parent company, Baidu. This strategic move marks the culmination of a secretive preparation phase where the entity is now aggressively courting cornerstone investors to validate a target valuation of approximately $50 billion. The stakes extend beyond mere financial metrics, as this IPO represents the critical inflection point for Baidu's broader artificial intelligence narrative, aiming to transform a subsidiary into a standalone market leader.

The valuation ambition of $50 billion, equivalent to roughly 340 billion RMB, is underpinned by aggressive market positioning against established competitors like Cambricon. In the 2025 Chinese AI accelerator server market, Kunlun Core and Cambricon currently rank third among domestic manufacturers, with each entity shipping approximately 116,000 cards. A Goldman Sachs research report previously highlighted that if Kunlun Core commands a valuation multiple comparable to Cambricon, the equity value held by Baidu could reach as high as $22 billion. This projection gains significant weight given that Cambricon's market value recently surpassed one trillion RMB amid exploding demand for AI computing power. The disparity between the current market reality and the projected $50 billion target drives the intense competition for entry into the primary market, where the threshold for participation is exceptionally high.

Access to these cornerstone shares is not merely a function of capital availability but is strictly tied to industrial commitment, creating a barrier that excludes purely financial investors. Reports from The Information indicate that Kunlun Core prioritizes institutions willing to commit to purchasing chips, with the required purchase value set at 3 to 7 times the subscription amount.

Woofun AI notes that this 'allocate goods' requirement means investors must demonstrate sustained purchasing capabilities before securing a seat at the table. Consequently, the competition for these shares has become fierce, with many potential entrants finding it nearly impossible to secure a position. This mechanism ensures that the shareholder base remains aligned with the company's long-term manufacturing and sales objectives rather than short-term speculative gains.

The evolution of Kunlun Core's shareholder structure reveals a deliberate and expansive strategy to gather institutional backing over the last decade. Originating in 2011 as part of Baidu's Intelligent Chip and Architecture Department, the business was officially spun off in 2021 to form Kunlun Core (Beijing) Technology Co., Ltd., securing a valuation of about 13 billion in a round led by CPE Yuanfeng with participation from IDG Capital, Junlian Capital, and Yuanhe Puhua. While public financing announcements ceased after that initial round, data from Qichacha shows a steady influx of new capital. In July 2022, General Technology Venture Capital, the China-Belarus Fund, and Qianshan Capital joined the roster, followed shortly by CITIC Securities and Linxin Investment. The momentum accelerated in 2023 with the arrival of BYD, Zhongguancun Science City Company, Sanya Yuhai Fund, and the China Internet Investment Fund, alongside social security funds, the Zhongguancun Independent Innovation Special Fund, the Beijing Artificial Intelligence Industry Investment Fund, Shunxi Fund, and CITIC Jin Investment Capital. By July last year, the list expanded further to include funds under China Mobile, Beijing government guidance funds, Beijing Shanggou Juntai Fund, Guohai Innovation Capital, and CICC Capital, bringing the total count to 57 shareholders.

Woofun AI data shows this diverse coalition now includes a mix of strategic industrial partners and state-backed funds, signaling a robust foundation for the upcoming public debut.

The commercial viability of Kunlun Core is anchored in a clear product roadmap designed to compete directly with global leaders like NVIDIA. The current flagship, the P800, is scheduled for launch in 2024 and utilizes Samsung's 7nm process to target data center inference scenarios, positioning itself as a direct alternative to NVIDIA's A800. Looking ahead, the Kunlun Core M100, optimized for large-scale inference, is set to debut in early 2026, while the M300, aimed at ultra-large-scale multimodal model training and inference, is planned for a 2027 release. This staggered deployment strategy ensures continuous technological relevance across different stages of AI model development. The manufacturing specifications and timing are calibrated to capture market share as the demand for domestic AI chips intensifies, leveraging internal support from Baidu's search, cloud computing, and autonomous driving divisions.

Beyond internal consumption, Kunlun Core has successfully pivoted toward a broader commercial scale, securing major contracts with state-owned enterprises and financial institutions. Key clients now include China Mobile, Southern Power Grid, and China Merchants Bank, diversifying the revenue stream significantly. A pivotal moment occurred last August when Kunlun Core secured the top ranking in all three bidding packages of a China Mobile procurement project, resulting in orders worth billions. At the recent Zhiyuan Conference, Qi Wei, the Vice President of R&D, revealed that the proportion of external business has now exceeded the volume of chips supplied internally to Baidu.

This shift indicates that the company is no longer merely a cost center for its parent but a standalone commercial entity capable of competing in the open market. The ability to win such large-scale government and enterprise contracts validates the technical maturity of their silicon.

The broader competitive landscape underscores the urgency of this IPO, as Baidu faces mounting pressure from both legacy peers and agile new entrants. While Baidu was an early proponent of 'All in AI' with Wenxin Yiyan, the market has since been fragmented by competitors like Doubao and Qianwen, which have captured significant user mindshare. New contenders have also disrupted the valuation hierarchy; Zhizhu's market value recently surpassed one trillion, remaining nearly three times that of Baidu despite a subsequent decline.

Furthermore, DeepSeek's post-investment valuation in its first round is close to 400 billion, and Kimi's valuation rose to $31.5 billion, or approximately 210 billion RMB, in its latest financing. In contrast, the semiconductor sector is witnessing explosive growth, with companies like Moore Threads and Muxi setting precedents in the secondary market, and Changxin Technology successfully passing the IPO review on the Sci-Tech Innovation Board in early May. These developments highlight a sector-wide boom that Baidu risks missing if it fails to capitalize on Kunlun Core's potential.

This IPO represents the final test of Li Yanhong's strategic foresight, echoing his judgment ten years ago that the AI era would bring endless possibilities. This strategic move marks the culmination of a secretive preparation phase where the entity is now aggressively courting cornerstone investors to validate a target valuation of approximately $50 billion. With Kunlun Core's market value potentially surpassing Baidu's, the spin-off offers a tangible path to realizing this vision. The convergence of a $50 billion valuation target, a robust shareholder base of 57 entities, and a proven product roadmap suggests that the turnaround is not just a possibility but an imminent reality. If executed successfully, this move will redefine Baidu's standing in the global AI hierarchy; failure to capitalize on this window would confirm the narrative of waking up early but arriving late.