BIDU-SW (09888): It is recommended to spin off Kunlun Semiconductor and independently list it on the main board of the Hong Kong Stock Exchange.

BIDU-SW (09888) has announced that on January 1, 2026, Kunlun Silicon has submitted an application form (Form A1) for listing approval on the Main Board of the Hong Kong Stock Exchange through its joint sponsor in confidentiality. The current proposal suggests that the spin-off will be carried out through a global offering of Kunlun Silicon shares, including: (i) a public offering in Hong Kong for subscription by the Hong Kong public; and (ii) placement of Kunlun Silicon shares to institutions and professional investors. As of the date of this announcement, Kunlun Silicon is a subsidiary of the company. After the proposed spin-off is completed, Kunlun Silicon is expected to remain a subsidiary of the company. The company believes that the proposed spin-off would be beneficial for both the company and Kunlun Silicon from a business perspective, and would be in the best interest of shareholders, for reasons including: a) the proposed spin-off would more comprehensively reflect the value of the Kunlun Silicon group based on its strengths, and enhance its operational and financial transparency, allowing investors to clearly differentiate the Kunlun Silicon group from the remaining group, independently evaluate and measure the performance and potential of the Kunlun Silicon group; b) Kunlun Silicon's business (unlike the relatively diversified business model of the remaining group) will attract investors focused on general AI computing chips and related hardware and software systems; and c) the Kunlun Silicon group's operations are already of a scale sufficient to seek a listing status, and the company believes that this status would benefit both the company and Kunlun Silicon, as the proposed spin-off would: (i) enhance Kunlun Silicon's image among its customers, suppliers, and potential strategic partners, and improve its negotiating position and ability to secure more business, thus allowing the remaining group to benefit from Kunlun Silicon's growth through its shareholding in Kunlun Silicon; (ii) enable Kunlun Silicon to directly and independently access the equity and debt capital markets in the future when needed, allowing the remaining group to allocate financial resources more effectively; and (iii) more directly link the responsibilities and accountabilities of the management teams of both the company and Kunlun Silicon to their respective operational and financial performance, thereby enhancing management focus and corporate governance.