Baidu has enough artificial intelligence chips stockpiled to soften the impact of U.S. technology export curbs on its business for now, the Chinese tech giant said on Tuesday after reporting forecast-beating quarterly revenue.
Robin Li, CEO of the group whose businesses span from China’s largest search engine to generative AI, told analysts after the company earnings that its stockpile would allow it to keep upgrading its Ernie large language model (LLM) for up to two years although it will still proactively seek alternatives.
“The restrictions on chip exports to China actually have limited impact on Baidu in the near term,” he said.
“We believe our chip reserve as well as other alternatives will be sufficient to support a lot of AI native apps for our end users.”
However, Li said the U.S. sanctions on exports of advanced AI chips to China made by the likes of Nvidia would impact overall AI development in China and predicted that the shortage could prompt a consolidation of LLMs in the country. Li said last week China had over 230 LLMs.
Chinese rivals Alibaba and Tencent said last week that the U.S. curbs would affect their cloud computing businesses, with Alibaba shelviing its plan to independently list its cloud unit citing uncertainties.
Baidu’s third-quarter AI cloud revenue declined by 2% year-over-year which it said was due to weak demand in smart transportation projects. But Li said he believed it would post positive growth in the fourth quarter due to increased demand for its generative AI services.
‘UNIQUE AI ARCHITECTURE’
Li did not mention what alternative chips Baidu was seeking but said that while these options were not as advanced as those in the United States, Baidu’s “unique AI architecture and strengths in algorithm will continue to help us improve efficiency”.
Reuters reported earlier this month that Baidu placed an order for domestically-made AI chips from Huawei in August in anticipation of the curbs and as an alternative to Nvidia. Baidu did not respond to a request for comment on the report.
Baidu, which derives most of its revenue from advertising, reported revenue for the quarter ended Sept. 30 of 34.45 billion yuan ($4.7 billion), up 6% year-on-year and above analysts’ estimates of 34.33 billion yuan, according to LSEG data.
Its U.S.-listed shares rose 1.8% in morning trading.
China’s economy is set to grow 5.4% this year, the International Monetary Fund said earlier this month, making an upward revision to its earlier forecast of 5% growth. This has prompted companies to spend more on consumer advertising online.
Baidu’s third-quarter online marketing revenue rose 5% to 19.7 billion yuan.
It reported adjusted net income of 7.27 billion yuan, up 23% from 5.89 billion yuan for the same period last year.
The company reported an adjusted profit of 20.4 yuan per American Depositary Share (ADS), compared with a profit of 16.87 yuan per share a year earlier. This also exceeded analysts’ average estimate of 16.55 yuan per ADS, according to LSEG.
($1 = 7.21 Chinese yuan renminbi)
