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Baidu (NASDAQ: BIDU) is reportedly in talks to raise funds to start a new semiconductor company powered by artificial intelligence (AI), according to CNBC. Shares are surging 6% amid the news.
The online search giant is trying to diversify its business that is mostly driven by revenue generated through ads. A new company would be a subsidiary, controlled by the majority shareholder Baidu.
CNBC adds that venture capital (VC) firms GGV and IDG Capital are currently having talks with Baidu to invest in the new chip firm. The aim is that the new chip company is seen helping Baidu to better commercialize its technology.
Baidu already operates a chip factory which develops its Kunlun semiconductors, which are used to process high amounts of data for apps powered by artificial intelligence.
This way, Baidu is following the footsteps of Tencent and Alibaba. The former participated in a funding round for Enflame Technology, the Chinese company that produces chips to process huge amounts of data to train artificial intelligence systems.
In 2019, Alibaba presented its first chip to power AI processes called the “Hanguang 800.”
“In the near future, we plan to empower our clients by providing access through our cloud business to the advanced computing that is made possible by the chip, anytime and anywhere,” Jeff Zhang, Alibaba’s chief technology officer, said in a press release back then.
BIDU stock is up over 36% since the beginning of the year.