Core Viewpoint - Kangxi Communication has terminated its major asset restructuring plan and opted for a strategic investment of 135 million yuan in Chip Zhongxin Technology, increasing its stake to 37.77% [1][2] Group 1: Company Actions - The initial plan was to acquire a 51% stake in Chip Zhongxin to gain control, but it was halted due to "unfavorable conditions for implementation in the short term" [1] - The new investment plan values Chip Zhongxin at 385 million yuan, with a price-to-earnings ratio of approximately 23.9 times based on its 2024 net profit of 16.1 million yuan [1][2] - Kangxi Communication's investment is seen as a shift towards technology collaboration, enhancing its chip capabilities with Chip Zhongxin's audio DSP and low-power Bluetooth technologies [2] Group 2: Financial Performance - In 2024, Kangxi Communication reported revenue of 523 million yuan, a year-on-year increase of 25.98%, but faced a net loss of 76.13 million yuan, which expanded by 867.3% due to increased R&D expenses and intensified market competition [2] - Chip Zhongxin achieved revenue of 395 million yuan in 2024 with a net profit of 16.1 million yuan, and in Q1 2025, it reported revenue of 118 million yuan and a net profit of 12.9 million yuan [2] Group 3: Strategic Implications - The investment allows Kangxi Communication to transition from a single RF front-end chip supplier to a provider of "chips + modules + solutions," reducing reliance on a single product line [2] - This strategic shift is viewed as a way to mitigate risks associated with the major asset restructuring and to bet on the long-term value of the IoT sector, which is poised for significant growth [2]