Baidu Is Spinning Off Its AI Chip Unit. Should You Buy BIDU Stock First?

Company Overview - Baidu plans to spin off its AI chip subsidiary Kunlunxin through a Hong Kong IPO, with shares rising following the announcement [1] - The company aims to maintain majority ownership of Kunlunxin post-spinoff, pending regulatory approvals [1] Industry Context - The spinoff aligns with Beijing's initiative for semiconductor self-sufficiency amid increasing U.S.-China tech tensions, particularly restrictions on advanced Nvidia chips for Chinese AI firms [2] - The Chinese government has mobilized billions in public funding for domestic chip development and is encouraging state-owned enterprises to purchase locally [2] Financial Performance - Baidu reported Q3 2025 revenue of $4.4 billion, a decrease of 7% year-over-year, alongside a $2.3 billion impairment charge on outdated computing infrastructure [5] - The impairment was aimed at aligning the asset portfolio with current AI efficiency requirements, as stated by CEO Robin Li [5] Growth Drivers - Baidu's AI cloud infrastructure sales increased by 33% to $588 million, with subscription-based AI accelerator infrastructure revenue surging by 128% [6] - External sales of Kunlunxin chips are projected to account for over half of the unit's revenue by 2025, indicating a shift towards third-party sales [4]