Baidu joins Tencent in downplaying impact of US chip bans on AI ambitions
Stockpiled silicon, improving efficiency, and looking for alternative suppliers – while maybe taking a dig at Microsoft and OpenAI
Chinese web giant Baidu, which emphasized AI services long before they were cool, has revealed it is largely untroubled by the United States' chip tech export bans, can do just fine with silicon that is allowed to be sold in China, and has a workaround plan for when sanctions bite.
Speaking on the firm's Q3 earnings call, co-founder and CEO Robin Li said the chips already resident in Baidu datacenters allowed it to create and launch its ErnieBot 4.0 (EB4) foundation model in mid-October. Li praised the foundation model for being on par with GPT4 and generating "structured and clearer responses" than rival large language models. He added that EB4 "excels in coding."
"We have a substantial reserve of AI chips, which can help us keep improving ErnieBot for the next year or two," Li told investors. Inferencing, he added, requires less powerful chips and Baidu's reserves of silicon – plus "other alternatives" – are deemed "sufficient to support lots of AI-native apps for the end users."
Li admitted that chip export ban "inevitably impacts the pace of AI development in China."
Baidu is seeking alternatives from elsewhere and backing its homebrew AI architecture allowing it to continue improvement.
"While these options are not as advanced as the best chips in the US, our unique four-layer AI architecture and the strength in AI algorithm will continue to help us improve efficiency and mitigate some of these challenges," Li said. Baidu has also started modifying its PaddlePaddle deep learning framework, and EB4, "to allow them to be better compatible with different types of AI chips, both model training and inference tasks."
Li suggested Baidu's foundational work on both models and the infrastructure needed to create and productize them makes it stand out in the Chinese market.
"As you probably know, in the past, some of our peers, they try to ride on the gen AI wave by investing in those startups to train foundation models, and they basically just sell the computing power to those startups," he added, without mentioning if those peers are domestic or local – an omission we mention because relying on an AI startup describes Microsoft's entanglement with OpenAI to a tee!
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Dou Shen, the executive veep who runs the Baidu AI Cloud Group, admitted that revenue from generative AI and large language models "is still very small, but it's growing very fast."
Nonetheless, customers are "proactively adopting these new technologies for productivity and efficiency gain." And after engaging with Baidu for AI, their spend on the company's cloud increases.
"Ernie has already helped us attract new customers and additional IT spending from existing customers," Shen added.
Baidu said some of those customers are enterprises using its ErnieBot model, and its recently introduced API, to develop their own-AI enabled apps. Execs predicted that business has a strong chance of doing very well.
Baidu posted $4.7 billion revenue for Q3 – six percent year on year growth but just one percent better than Q2. Net income for Q3 of $916 million was a big bounce from the $540 million loss in the same quarter of 2022.
Li described the results as "solid … demonstrating resilience in a challenging economic climate" – a reference to China's economy being in a spot of bother due to debt worries at property developers and a slow post-COVID recovery.
Unlike its cloudy Chinese peers Alibaba and Tencent, Baidu hardly has a presence outside China – Hong Kong and Singapore host its only non-PRC operations. ®