Baidu's semiconductor division, Kunlunxin, is aiming for a $50 billion IPO in Hong Kong and has requested investors to purchase its chips.

      TL;DR: Baidu's Kunlunxin aims for a $50 billion IPO in Hong Kong and has requested that investors commit to buying its chips, creating a mix of shareholder and customer roles.

      According to a report by The Information on Sunday, Baidu's AI chip division, Kunlunxin, is planning to go public in Hong Kong with a valuation target of $50 billion. In a unique move, the company has asked potential IPO investors to also commit to purchasing its semiconductors. Reuters has not independently confirmed this information. The proposed $50 billion valuation marks a significant increase from the $14.7 billion valuation reported by the South China Morning Post earlier this month and from the HK$100 billion (approximately $12.8 billion) figure mentioned by TrendForce in May.

      If this practice of linking chip buying commitments to IPO offerings is verified, it could blur the lines between investors and customers, reminiscent of the "circular financing" situations that the Bank for International Settlements highlighted recently. The BIS pointed out scenarios where chip manufacturers invest in AI labs, which then agree to purchase their products, criticizing these terms as “typically poorly disclosed.”

      Kunlunxin submitted a confidential filing for a Hong Kong listing in January and is also seeking a dual listing on Shanghai’s STAR Market. It has brought on CICC, Citic Securities, and Huatai Securities as lead underwriters. Established in 2012 as Baidu’s internal chip division, Kunlunxin plays a crucial role in the tech giant’s goal to become a comprehensive AI company. Hong Kong has turned into the main listing destination for Chinese AI firms, raising nearly $44 billion in capital markets in the first half of 2026, the highest amount in five years.

      This listing comes amidst a larger fundraising surge driven by AI in Hong Kong. CATL successfully completed a multibillion-dollar offering, AI developer Zhipu is gearing up for another funding round after its IPO in January, and optical transceiver maker Zhongji Innolight is also looking to go public. Additionally, SK Hynix has applied for a US listing that could generate $29 billion.

      Kunlunxin has been transitioning from being a supplier for Baidu to becoming a third-party chip vendor, with external customers making up over 50% of its revenue in 2025. The company is anticipated to break even that year. The BIS cautioned over the weekend that the financial structures associated with the AI investment surge carry systemic risks, and a chip company asking its IPO investors to also act as its customers exemplifies the type of entanglements that regulators are warning about.