Baidu unfazed by US chip curbs, reveals chip stockpile amid Q3 revenue triumph

Chinese tech giant Baidu remains resistant to US chip export restrictions, revealing a substantial stockpile of artificial intelligence chips that will shield its business from immediate impacts.

According to Reuters, despite US sanctions on advanced AI chip exports to China, Baidu's CEO Robin Li hasassured analysts that the company's chip reserve and alternative options would sustain its AI developments, including upgrading its Ernie large language model (LLM) for up to two years.

"The restrictions on chip exports to China actually have limited impact on Baidu in the near term," Reuters quoted Li as saying.

Baidu's third-quarter results showcased strong performance, with revenue reaching 34.45 billion yuan ($4.7 billion), surpassing analyst estimates and marking a 6 per cent year-on-year increase. The company's US listed shares also experienced a 1.8 per cent rise in morning trading following the positive financial report.

Baidu's adjusted net income for the third quarter stood at 7.27 billion yuan, a notable 23 per cent increase from the same period last year. The adjusted profit per American Depositary Share (ADS) reached 20.4 yuan, surpassing analysts' average estimates and demonstrating the company's financial strength amidst global uncertainties.

Baidu's revenue grew due to increased spending on consumer advertising online, driven by China's forecasted economic growth of 5.4 per cent for the year, as reported by the International Monetary Fund. Online marketing revenue for the third quarter rose by 5 per cent to 19.7 billion yuan, reinforcing Baidu's position in the advertising sector.

While Baidu's AI cloud revenue faced a 2 per cent year-over-year decline in the third quarter due to weak demand in smart transportation projects, Li expressed confidence in a positive fourth quarter, anticipating increased demand for the company's generative AI services.

Li did not disclose specific alternative chips Baidu is exploring but highlighted the company's "unique AI architecture and strengths in algorithm" as factors that wouldenhance efficiency despite the limitations of alternative options compared to advanced US chips.

Reuters previously reported Baidu's order for domestically-made AI chips from Huawei in August, signalling the company's strategic move in anticipation of the chip curbs.

(With inputs from Reuters)

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