Shanghai Science and Technology Report, November 26th (Reporter Wu Xuguang) On November 26th, Kangxi Communications rose in early trading before falling back, reaching 15.28 yuan per share at midday, an increase of 5.96%.

On the evening of November 25th, Kangxi Communications announced that it had signed a 'Acquisition Framework Agreement' with Lu Lin, Chen Jingjing, and others regarding Shenzhen Chip In Chip Technology Co., Ltd. (referred to as the 'target company' or 'Chip In Chip'). Kangxi Communications plans to acquire part of the target company's equity in cash, increasing its shareholding to 51%. Following the completion of this transaction, the company will achieve a controlling stake in the target company.

Public information shows that Chip In Chip mainly targets the smart internet of things market, providing intelligent control modules and solutions based on technologies such as Wi-Fi, audio DSP, Bluetooth, and AIoT. Its products are widely used in various intelligent terminal devices related to smart home, smart clothing, and smart health in the smart internet of things industry chain. Terminal customers include well-known brands such as Midea, Haier, Harman, and LG.

Regarding the synergy between the two parties, a staff member from Kangxi Communications Securities Department stated today (November 26th) that the acquisition of the target company would help Kangxi Communications enhance its abilities in the internet of things technology, revenue, and other aspects on top of its existing Wi-Fi RF front-end chip product base.

The head of a chip investment institution in Shanghai, in an interview with Shanghai Science and Technology Report, mentioned that after the collaboration, in terms of smart control modules, Chip In Chip can save the intermediate price difference of external procurement by purchasing Kangxi Communications Wi-Fi chip products, thus reducing the costs of related products. Kangxi Communications' existing main products such as RF front-end modules, RF switches, RF power amplifiers, duplexers, etc., applied to Chip In Chip's intelligent control module solutions based on Wi-Fi, audio DSP, Bluetooth, AIoT technologies, and they promptly meet customer requirements, achieving research and development synergy.

According to the announcement, Chip In Chip has an estimated value of 0.35 billion yuan to 0.4 billion yuan.

This transaction includes performance commitments, with the performance commitment period from 2025 to 2027. During the performance commitment period, the target company is expected to achieve a net income of approximately 0.105 billion yuan over three years. This transaction is expected to constitute a major asset restructuring situation.

Kangxi Communication's main business is the research, design, and sales of Wi-Fi RF front-end chips and modules. The company's products mainly include Wi-Fi FEM products such as the Wi-Fi 5 series, Wi-Fi 6/6E series, and Wi-Fi 7 series, as well as IoT FEM products. The company's Wi-Fi 5 and Wi-Fi 6 product lines have achieved mass sales, with Wi-Fi 6 still being the company's main product.

Kangxi Communication achieved revenue of 0.378 billion yuan in the first three quarters of this year, an increase of 34.04% year-on-year. However, the company's net loss attributable to shareholders in the first three quarters was 33.8646 million yuan.

Regarding the reasons for the decline in net income, on November 11, the company's **** PENG, stated at its third-quarter earnings conference: "The main reason for the decline in net income is the company's emphasis on enhancing core competitiveness and increasing research and development investment."

Another RF front-end chip industry insider told the 'Star Daily' reporter, "Domestic RF industry chain product prices are under pressure, which is also part of the reason. Enterprises have to offer discounts at this stage in order to win a larger market share."