Chinese tech giant Baidu on Wednesday expressed confidence that U.S. semiconductor export restrictions would not derail its artificial intelligence ambitions, even as the country’s tech sector grapples with a tightening blockade on access to advanced American chips.
The company’s statement came alongside strong first-quarter financial results, boosted by surging revenue from its AI cloud business and supported by a broader nationalistic push for technological self-reliance.
Vice President Shen Dou told analysts during a post-earnings call that Baidu’s AI development would continue on the back of “domestically developed chips and increasingly efficient homegrown software,” which he described as the foundation of long-term innovation in China’s AI ecosystem. The comments marked a direct response to the latest round of U.S. export controls, which came into effect last month and effectively blocked Nvidia’s H20 chips—an advanced AI chip tailored for the Chinese market.
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Baidu’s confidence is widely seen as part of a broader nationalistic tech narrative being championed by Beijing, which has in recent years doubled down on homegrown innovation amid escalating geopolitical tension with Washington. This “tech self-reliance” drive has intensified since 2019, when Chinese telecom and electronics giant Huawei was placed on a U.S. trade blacklist that cut off its access to American technology.
While many expected the move would cripple Huawei’s operations, the company responded with surprising resilience, developing its own HarmonyOS operating system and launching 5G-capable smartphones powered by its in-house Kirin chips—despite Washington’s curbs on chipmaking tools.
That resilience appears to have served as a model for other Chinese firms, including Baidu, as they navigate similar restrictions. The sense of urgency to innovate without reliance on foreign technology has led to aggressive investments in AI, semiconductors, and cloud infrastructure.
Adding to this momentum, many Chinese companies seem to have drawn renewed confidence from the recent breakthroughs of DeepSeek, a homegrown AI startup that stunned industry observers earlier this year with the performance of its large language model, DeepSeek-R1. The model reportedly surpassed several U.S.-backed models in key benchmarks, signaling that China’s AI sector could potentially close the gap with Western counterparts.
The DeepSeek breakthrough—achieved without access to Nvidia’s most advanced chips—has reinforced the belief that with sufficient talent, computational infrastructure, and focused policy support, Chinese firms can innovate around U.S. sanctions. It’s this belief that now underpins Baidu’s messaging, as the company aggressively expands its AI offerings and reduces dependence on its traditional advertising business.
In the first quarter of 2025, Baidu reported total revenue of 32.45 billion yuan ($4.50 billion), a 3% year-on-year increase that exceeded the average analyst estimate of 30.9 billion yuan, according to data from LSEG. While revenue from its online marketing segment—the company’s former core—fell 6% to 17.31 billion yuan, non-marketing revenue surged 40% to 9.4 billion yuan, driven primarily by growth in its AI-powered cloud services.
Net profit came in at 21.59 yuan per American Depositary Share (ADS), up from 14.91 yuan a year earlier, demonstrating stronger operational efficiency despite regulatory and competitive pressures.
Baidu’s strategic shift toward AI has been in motion since early 2023, when the company was among the first in China to launch a chatbot following OpenAI’s release of ChatGPT. Its Ernie large language model has undergone multiple iterations—most recently the rollout of Ernie X1 and Ernie 4.5 in March 2025, both of which were upgraded to “Turbo” versions the following month.
Despite being an early mover, Baidu now faces stiff competition from firms like DeepSeek, which has challenged the dominance of established players. In response, Baidu eliminated subscription fees for its premium chatbot services in April, an aggressive move that analysts see as part of a broader strategy to retain market share in a fast-evolving AI landscape.
On the hardware side, Baidu has leaned heavily on its own Kunlun chip line to reduce exposure to Western supply chains. CEO Robin Li recently revealed that the company has deployed a cluster of 30,000 third-generation P800 Kunlun chips—developed entirely in-house—to support the training of models comparable in scale and complexity to those developed by DeepSeek.
Even so, the market reaction was subdued. Baidu’s U.S.-listed shares edged down 0.3% in morning trading, reflecting lingering investor concerns about geopolitical uncertainty and rising competition within China’s AI sector.
However, Baidu’s optimism appears deeply rooted in the shifting dynamics of China’s tech industry, where U.S. pressure has catalyzed a wave of domestic innovation. With government support, growing semiconductor capabilities, and an expanding pool of AI talent, China’s tech giants are increasingly signaling that they are prepared to weather—and possibly thrive—under the shadow of U.S. sanctions.