China's Baidu raises funding for chip unit at $2b valuation
CPE has led a funding round for Kunlun, the semiconductor unit of Chinese search giant Baidu, at a post-deal valuation of approximately RMB13 billion ($2 billion).
IDG Capital, Legend Capital, and Oriza Hua - the integrated circuit industry investment arm of Oriza Holding - also participated.
Launched in 2018, Kunlun focuses on cloud-based general-purpose artificial intelligence (AI) chips. These are computing chips that can be used in different industries from industrial manufacturing to smart cities and transport to scientific research.
Baidu is the major customer, putting the chips to work in search engines and cloud computing. The first generation Kunlun chips were taped out in 2019 and entered mass production the following year. Output exceeds 20,000 units. A second generation - with three times the performance speed of its predecessor - was released this year.
“At present, China’s cloud AI chip market is dominated by overseas companies. Product prices are high and users have no second choice. Kunlun cloud AI chips are both cost-effectiveness and meet localization criteria, so market demand is very strong,” said Hui Shao, a managing director at IDG.
Xiaoli Ruan, head of hard technology investment at China Renaissance, noted that domestic companies have a better chance of achieving global leadership positions in cloud AI compared to CPU and GPU, the other major chip fields. “Kunlun has an advantage because it integrates chip architecture, software, and engineering. It will continue to work with Baidu, while expanding its external customer base," he said.
There has been a spate of recent funding in the AI GPU space, with Iluvatar CoreX raising RMB1.2 billion and Moore Threads closing two rounds amounting to several billion renminbi. Other VC-backed AI chip designers include Biren Technology, Enflame Technology, and Horizon Robotics. Meanwhile, last July, VC-backed Cambricon Technology became the first Chinese AI chip manufacturer to list on Shanghai's Star Market.
China Renaissance was the exclusive financial advisor for Kunlun's funding round.
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