Baidu AI chip unit valued at $2 billion after funding

A woman walks past the Baidu booth at the China International Technology Fair in Shanghai.

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GUANGZHOU, China – Baidu has raised $ 2 billion worth of funds for its artificial intelligence (AI) semiconductor business, a person familiar with the matter told CNBC.

The Chinese search giant is trying to diversify its sources of income.

The financing round was led by CPE, a Chinese wealth management and private equity firm. The venture capital companies IDG and Legend Capital were also involved. A fund of the Chinese investment company Oriza Holdings also took part in the round.

“Baidu’s Kunlun chip business recently closed a round of funding. We will release more information in due course,” a Baidu spokesman said without giving details.

Kunlun is the name of Baidu’s AI chip business. It wasn’t immediately clear how much money Baidu had raised, but the source said the valuation of the chip business after the funding was $ 2 billion.

Reuters reported for the first time on the financing.

CNBC reported last month that Baidu was looking to raise funds for a standalone AI chip company.

After the Kunlun business raises money, it could pave the way for the unit’s split, but no final decision has been made, the source said.

AI chips are designed to process large amounts of data that can be used in artificial intelligence applications. An injection of cash to Baidu’s business can help the company commercialize the technology.

This is part of a broader diversification push from Baidu, where the company started a standalone electric vehicle company with Geely and raised money for a biotech company. Known as the Chinese search giant, Baidu is still heavily dependent on advertising revenue.

Semiconductors and artificial intelligence are two key technologies that China hopes to increase its expertise and strength.

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