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China's Baidu Raises $2bn With Investors for AI Chipmaker Kunlun Amid Global Semiconductor Shortage

© AP Photo / Alexander F. Yuan, FileFILE - In this Sept. 2, 2011 file photo, a photographer walks past the logo of Baidu Inc., which operates China's dominant search engine, during a technology innovation conference held by the company at China's National Convention Center in Beijing, China. China issued new regulations on Saturday, June 25, 2016 demanding search engines clearly identify paid search results, months after a terminally-ill cancer patient complained that he was misled by the giant search engine Baidu.
FILE - In this Sept. 2, 2011 file photo, a photographer walks past the logo of Baidu Inc., which operates China's dominant search engine, during a technology innovation conference held by the company at China's National Convention Center in Beijing, China. China issued new regulations on Saturday, June 25, 2016 demanding search engines clearly identify paid search results, months after a terminally-ill cancer patient complained that he was misled by the giant search engine Baidu. - Sputnik International, 1920, 15.03.2021
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The news comes the Chinese firm seeks to commercialise its chipmaking design capabilities with the hopes Kunlun will become a separate business, sources familiar with the matter said on Monday.

Chinese search engine giant Baidu announced on Monday it had completed a round of fundraising for the firm's artificial intelligence (AI) chip wing Kunlun.

Baidu's chipmaking unit has been valued at $2bn, according to a source with knowledge of the matter speaking to Reuters.

Chinese private equity firm Citic Private Equity Funds Management (CPE) led the fundraising round, according to the source, who added IDG, Legend Capital and integrated circuit industry fund Oriza Hua were also investors.

“Kunlun chip business has recently completed a round of financing. We will release more information in due course," Baidu said in a statement on Monday as cited by Reuters.

The Chinese tech giant and its investors declined to comment on the matter.

U.S. President Joe Biden listens to a question after delivering remarks and prior to signing an executive order, aimed at addressing a global semiconductor chip shortage, in the State Dining Room at the White House in Washington, U.S., February 24, 2021 - Sputnik International, 1920, 25.02.2021
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According to the Reuters, Kunlun chips are mainly used in smart vehicles and cloud computing products along with an additional chipmaking unit, Honghu.

Baidu is listed on the Nasdaq and set a target of $3bn USD to launch a second listing on the Hong Kong Stock Exchange, the report added.

The firm entered talks to raise money with investors in February, according to sources speaking to CNBC. Venture capital firms GGV and IDG Capital had been initially named as investors for the talks.

Beijing has launched numerous investment initiatives in recent months, namely amid the ongoing US trade war with China. The nation's State Council launched a $1.4tn initiative along with a $788bn private equity firm in May last year

The China Electronics Standardisation Institute (CESI) also launched an initiative in January, joined by Huawei Technologies, its chipmaking arm, HiSilicon, and Shanghai-based semiconductor giant SMIC to outline standards in China's chipmaking and integrated circuit industry amid the ongoing trade war.

Chinese President Xi Jinping waves as he arrives for the opening session of the Chinese People's Political Consultative Conference (CPPCC) - Sputnik International, 1920, 04.03.2021
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China has begun mobilising big tech firms and raising capital in a bid to move away from key US technologies and build the country's domestic industry, namely in AI, green tech, infrastructure, 5G and others.

An ongoing semiconductor shortage caused by the trade war and spiking demand for electronics has sparked further measures to boost capacity.

China launched the measures after numerous mainland firms were blacklisted in May 2019 by the former Trump administration, who blocked the tech companies from doing business with the US and restricted their access to semiconductors, software and other components.

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