China’s Baidu expects ‘limited’ impact from US chip restrictions

“We believe the impact will be fairly limited in the near future,” said Dou Shen, executive vice president and head of Baidu AI Cloud, of US chip export controls.

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Chinese technology company baidu expects the impact of U.S. chip sanctions on its businesses to be “limited,” a company executive said Tuesday during a Q&A session on its earnings call for the third quarter.

In October, the United States imposed export controls that prevented American companies from selling semiconductors and chip-making equipment to Chinese chipmakers.

“We believe the impact will be fairly limited in the near future,” Dou Shen, executive vice president and head of AI Cloud Group, responded to a listener’s question about how the restrictions will affect Baidu’s ability to do its cloud computing to expand with artificial intelligence arm and autonomous driving that rely on advanced AI chips.

“A large part of our AI cloud business, and even a broader AI business, doesn’t rely too much on the advanced chips,” Shen said.

Baidu also operates a robotaxi company, Apollo Go, which has received permits in Beijing, Wuhan and Chongqing’s Yongchuan District to operate a fully driverless commercial robotaxi service in those locations.

“And for the part of our businesses that need advanced chips, we already have enough in stock to support our business in the short term,” he said.

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Shen added that Baidu is developing its own AI chip called Kunlun. He said Baidu has already started using the Kunlun chip to support some large-scale AI computing tasks internally and serve external customers.

“Because we have a full stack of AI capabilities, from chips to frameworks to base models and application software, we can achieve much higher efficiencies by optimizing the AI ​​tasks end-to-end,” said Shen.

He added that autochips are not on the banned list. “So this means that vehicle data processing will not be affected in the near future,” he said.

An analyst told CNBC’s Squawk Box Asia on Wednesday that Baidu is “absolutely” a top pick, citing chip resilience as one of the reasons.

James Lee on the resilience of Baidu's chips

“They are diversifying manufacturing into their own facilities and starting to use their own chips, Kunlun, for advanced applications,” said James Lee, a US and China internet analyst with Mizuho Securities.

Baidu posted better-than-expected revenue growth yesterday after cost-cutting bolstered its bottom line. Online advertising also performed better than expected despite difficult economic conditions such as Covid restrictions and inflation.

Baidu shares are up 2.61% on Wednesday and are down 35.7% year-to-date.

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