Baidu Expects 'Limited' Impact from US Chip Curbs

Baidu's Chief Financial Officer Jennifer Li said on Tuesday that she expects the impact of U.S. chip sanctions on the company's businesses to be "limited." She made the comments during a Q&A session of Baidu's third quarter earnings call.

In October, the United States imposed export controls limiting American businesses from selling semiconductors and chipmaking equipment to Chinese chip manufacturers. This move was seen as an attempt to slow down China's rapidly growing semiconductor industry.

"We believe the impact will be quite limited in the near future," said Dou Shen, executive vice president and head of the AI Cloud group, when asked about how the restrictions will affect Baidu's ability to grow its artificial intelligence cloud computing and autonomous driving businesses, which rely on advanced AI chips.

Shen said that a large portion of Baidu's AI Cloud business and even wider AI business does not rely too much on highly advanced chips. Baidu also runs a robotaxi business, Apollo Go, which has secured permits in Beijing, Wuhan and Chongqing's Yongchuan District to run a fully driverless commercial robotaxi service in those places.

"We have enough advanced chips in stock to support our business in the near term," he said.

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Shen stated that Baidu has created its own AI chip, called Kunlun. He mentioned that Baidu has already begun to use Kunlun chip to support some large-scale AI-computing tasks internally and to serve external customers.

Shen said that because they have a full stack of AI capabilities, from chips to frameworks to foundation models and to application software, they can achieve much higher efficiency by optimizing AI tasks from end to end.

He noted that automotive chips are not currently on the list of prohibited items. This means that in-vehicle computing is not currently affected, he said.

"Kunlun is diversifying its manufacturing into its own facility and starting to use its own chips for advanced applications," said James Lee, a U.S. and China internet analyst from Mizuho Securities.

Baidu reported yesterday that its revenue rose more than expected after cost-cutting measures boosted its bottom line. Online advertising also performed better than expected despite challenging economic conditions such as Covid restrictions and inflation.

Baidu's stock rose by 2.61% on Wednesday, though it is still down by 35.7% since the beginning of the year.