Author: Wu Qiong, PEdaily

“Cannot grab shares.”

This scene is unfolding for Kunlun Core. Since submitting a confidential application to the Hong Kong Stock Exchange at the beginning of the year, Kunlun Core's IPO is getting closer. We are now in the stage of competing for cornerstone shares.

Thus, Li Yanhong's biggest IPO is emerging - according to foreign media reports, Kunlun Core's target valuation is about $50 billion (approximately 340 billion yuan). If successful in going public, its market capitalization will exceed that of Baidu. With such scale, it's no wonder that Kunlun Core is often seen as the most valuable asset in Baidu's AI story.

This critical moment in Baidu's turnaround will soon be revealed.

Li Yanhong's biggest IPO will surpass Baidu

At this moment, the emotions are running high.

Rewind to the beginning of this year, when Baidu announced - that Kunlun Core has submitted an IPO application form (A1 form) to the Hong Kong Stock Exchange through its joint sponsors in a confidential manner, seeking approval for the listing and trading of Kunlun Core shares on the main board of the Hong Kong Stock Exchange.

Since then, Kunlun Core's IPO activities have been quietly underway. Now, six months later, as the IPO preparation work continues, Kunlun Core has reached a critical stage before listing. According to The Information, the company has currently engaged with potential investment institutions.

This is the last window for investors to enter Kunlun Core through the primary market, but the threshold is not low: reports indicate that Kunlun Core gives priority to investors who commit to purchasing chips during allocation, requiring the value of chips purchased to reach 3 to 7 times the subscription amount.

This means that if investors want to secure cornerstone shares of Kunlun Core, they must first “distribute goods.” As a result, purely financial investors may be kept out. Kunlun Core prefers industry investors who already possess sustained purchasing power.

In the end, only a few will make it to the table. One investor told the investment community, “The competition for cornerstone shares is fierce,” with many finding it “hard to get a seat.”

Undoubtedly, the outside world has high expectations for Kunlun Core. It is reported that Kunlun Core's target valuation is about $50 billion (approximately 340 billion yuan). This is not baseless; according to IDC data, in the 2025 Chinese AI accelerator server market, Kunlun Core and Cambricon are tied for third among domestic manufacturers, each shipping about 116,000 cards.

Earlier, a Goldman Sachs research report pointed out that if the market gives Kunlun Core a valuation multiple similar to that of Cambricon, the value of Baidu's equity stake would reach as high as $22 billion. With the explosion in demand for AI computing power, Cambricon's market capitalization briefly exceeded one trillion this week.

Hence, the fierce competition for cornerstone shares of Kunlun Core.

Of course, Baidu will be the biggest winner. It is recalled that at the beginning of the year, Li Yanhong explained in an announcement that one of the benefits of Kunlun Core's spinoff listing would be to enhance Kunlun Core's image among its customers, suppliers, and potential strategic partners, in order to secure more business; Baidu will also benefit from its growth through its shareholding.

The effects are immediate. After the news broke, Baidu saw its stock rise for four consecutive trading days, with its latest market capitalization exceeding 300 billion Hong Kong dollars. If Kunlun Core's target valuation of $50 billion is achieved, as its controlling shareholder, Baidu's equity value will exceed 100 billion. In this way, Li Yanhong is also welcoming another highlight moment - Kunlun Core's market value will surpass Baidu.

Investors gather waiting for a super return

Secretive, low-profile, yet already Li Yanhong's proud achievement.

The story of Kunlun Core can be traced back to 2011, when it was originally the Baidu Smart Chip and Architecture Department. A team from leading companies like Baidu, Qualcomm, Marvell, and Tesla initiated Baidu's chip-making journey.

By 2021, Baidu officially spun off its Kunlun chip business, establishing a new company - Kunlun Core (Beijing) Technology Co., Ltd. Along with the independence came a lavish financing round, led by CPE Yuanfeng, with investors including IDG Capital, Shunwei Capital, and Yuanhe Puhua, with a valuation of about 13 billion yuan at that time.

Since then, Kunlun Core has become known to the outside world.

However, this was the only public financing announcement by Kunlun Core. But according to Qichacha, Kunlun Core has undergone multiple equity changes over the past five years, with many well-known investment institutions coming to the table - in July 2022, General Technology Venture Capital, China-Belarus Fund, Qianshan Capital, and others became shareholders; just half a month later, CITIC Securities and Linsin Investment also became shareholders of Kunlun Core.

In 2023, BYD, Zhongguancun Science City Company, Sanya Yuhai Fund, and the China Internet Investment Fund appeared one after another; later, prominent names such as the social security fund’s Zhongguancun Independent Innovation Special Fund, Beijing Artificial Intelligence Industry Investment Fund, Shunxi Fund, and CITIC Jin Investment Capital joined the ranks, making the roster increasingly luxurious.

The listing movement may have been brewing early; last July, Kunlun Core added 15 new shareholders, including funds under China Mobile, Beijing government guidance funds, Beijing Shanggou JunTian Fund, Guohai Innovation Capital, and China International Capital Corporation, creating a sense of competition.

To date, Kunlun Core has gathered a total of 57 shareholders behind it. It can be anticipated that as Kunlun Core goes public, it will create another wave of collective wealth in the Hong Kong stock market.

Leveraging the resources of major manufacturers, Kunlun Core can no longer be underestimated. Currently, Kunlun Core's main product is the P800, scheduled for launch in 2024, competing with Nvidia's A800, utilizing Samsung's 7nm process, primarily targeting data center inference scenarios. Additionally, the Kunlun Core M100, optimized for large-scale inference scenarios, is set to launch in early 2026. The Kunlun Core M300 is mainly aimed at ultra-large-scale multimodal model training and inference scenarios, planned for release in 2027.

Compared to its peers, Kunlun Core not only has order support from internal business lines like search, cloud computing, and autonomous driving; it also has large state-owned enterprise clients such as China Mobile, Southern Power Grid, and China Merchants Bank. Among these, the most important order was last August, when Kunlun Core ranked first in all three packages of the China Mobile procurement project, securing a billion-level order.

Our child has just grown up, Kunlun Core is stepping out from Baidu’s protection. At the recent Zhihui Conference, Kunlun Core's Vice President of R&D, Qi Wei, revealed that besides providing chips for Baidu, the company’s commercialization capacity towards external clients has been continuously expanding, with the proportion of external business now exceeding that of supplying Baidu internally.

“Got up early and missed the market” - the turnaround battle

This day, Li Yanhong has waited a long time.

It must be said that Baidu was one of the first Internet companies to shout “All in AI.” During the battle of large models, Baidu's Wenxin Yiyan made its first appearance, becoming one of the earliest ChatGPT-like products in the country, once enjoying great fame.

But reality is very stark.

After several years of cleansing, the landscape of domestic large models has been determined - on one side, large companies like Doubao and Qianwen have gradually captured user sentiment; on the other side, new AI players have also risen. Last week, Zhizhu's market value briefly exceeded one trillion. Although it has since retreated, it still approaches three times Baidu's valuation.

Not to mention, DeepSeek's first-round post-financing valuation is close to 400 billion; Kimi's valuation has also risen to $31.5 billion (approximately 210 billion yuan) in the new financing round. In contrast, Baidu has repeatedly given the outside world the impression of “getting up early and missing the market.”

In this situation, it’s hard for Baidu not to feel anxious.

Right now, it is a crucial opportunity that Baidu cannot miss. Moore Threads, Muxi, and others have already demonstrated on the secondary market; Cambricon also once set a new market value high; even more attention-grabbing is Changxin Technology, which has successfully passed the IPO review on the Sci-Tech Innovation Board... The explosive growth of AI computing power is visibly transmitting through the entire semiconductor industry chain.

And in Baidu's AI story, Kunlun Core is precisely seen as the most valuable underlying asset. In early May, Kunlun Core officially launched its IPO guidance for the Sci-Tech Innovation Board, simultaneously advancing the “A+H” dual-line IPO. Faced with the fleeting window period, Baidu is scrambling for time.

This inevitably brings to mind that a decade ago, Li Yanhong had predicted that the era of artificial intelligence was about to arrive, bringing endless possibilities. “For Baidu, if we can seize the opportunity of artificial intelligence, in five to ten years, Baidu could become a completely different company.”

If missed again, it would truly fall behind.