Core Viewpoint - Chip Origin Co., Ltd. has disclosed two significant merger and acquisition developments, including the termination of the acquisition of 97% equity in Xinlai Zhihong and the initiation of a new acquisition of control over Zhudian Semiconductor [1][3]. Group 1: Termination of Acquisition - The termination of the acquisition of Xinlai Zhihong was due to discrepancies between the core demands of the target company's management and the market environment, policy requirements, and the interests of the company and all shareholders [1][3]. - Chip Origin emphasized that this termination will not adversely affect the company's normal business operations and will not harm the interests of shareholders, particularly minority shareholders [1][3]. Group 2: New Acquisition of Zhudian Semiconductor - Chip Origin has signed agreements with five co-investors, including Huaxin Dingxin and Guotou Xiandao, to proceed with the acquisition of Zhudian Semiconductor, which is a wholly-owned subsidiary of Nasdaq-listed Pixelworks [1][4]. - Upon completion of this transaction, Chip Origin will become the sole largest shareholder of the acquisition entity, Tiansui Xinyuan, and Zhudian Semiconductor will be included in Chip Origin's consolidated financial statements [1][4]. Group 3: Impact of the Acquisition - The acquisition is expected to strengthen the company's technological advantages in the visual processing field and enhance its competitiveness in the edge AI ASIC market [2][4]. - Zhudian Semiconductor is recognized as a leading manufacturer of 3LCD projector SOCs, with its mobile visual processing chips achieving over 80% market share among mainstream mobile manufacturers [2][4]. - Despite its technological advancements, Zhudian Semiconductor has not yet achieved profitability, with projected revenues of 363 million yuan and 286 million yuan for 2024 and the first half of 2025, respectively, alongside net losses of 121 million yuan and 64.06 million yuan [2][4]. Group 4: Industry Context - The semiconductor industry is undergoing deep integration, with Chip Origin leveraging technological acquisitions to penetrate the visual processing market [5]. - The ongoing acquisition process may provide a new paradigm for the restructuring of the global semiconductor industry chain through vertical integration exploration within China's semiconductor sector [5].

Core Viewpoint - The article discusses the trend of semiconductor companies facing significant valuation corrections, as evidenced by recent acquisitions at prices much lower than previous valuations, indicating a shift in the investment landscape within the semiconductor industry [4][5][6]. Group 1: Acquisition Trends - Semiconductor companies are increasingly engaging in mergers and acquisitions, with 90 related transactions disclosed in the A-share market since January 1, 2025 [4]. - The acquisition of ZD Semiconductor by Chip Origin is highlighted, where the company was valued at $500 million (approximately 3.56 billion RMB) but was acquired for only 950 million RMB, representing 26.7% of its previous valuation [5][10]. - Another example includes the acquisition of Ruicheng Semiconductor by Gelaun Electronics, where the highest valuation was 4.878 billion RMB, but the transaction price was only 1.9 billion RMB, reflecting a significant discount [6]. Group 2: Transaction Structure - Chip Origin's acquisition of ZD Semiconductor involved the establishment of a Special Purpose Vehicle (SPV) called Tian Sui Xin Yuan, where Chip Origin holds 40% of the shares, allowing it to control the acquisition while minimizing cash outlay [9][19]. - The acquisition price of 950 million RMB includes 930 million RMB in cash and transaction fees, with the deal structured to ensure that external investors could still participate and benefit from the transaction [9][19]. - The transaction structure allowed external investors to increase their ownership stakes, with Pixelworks reducing its stake from 78.14% to 49.49%, thereby compensating external investors and ensuring they would not incur significant losses [14][17]. Group 3: Financial Performance and Strategic Decisions - ZD Semiconductor's financial performance has been poor, with projected revenues of 385 million RMB and a net loss of 120 million RMB for 2024, raising concerns about its future viability [20]. - Pixelworks, the parent company, is also facing declining revenues and increasing losses, prompting a need to liquidate assets to stabilize its financial situation [20][22]. - The urgency for Pixelworks to divest its Chinese operations is compounded by geopolitical risks and the need for cash flow, making the sale of ZD Semiconductor a strategic necessity [22].

Core Viewpoint - Company plans to optimize its industrial layout and enhance competitiveness by acquiring control of Zhudian Semiconductor through a special purpose company, Tiansui Xinyuan Technology [1][2] Group 1: Investment Details - The acquisition involves a total equity value of 950 million yuan for 100% of Zhudian Semiconductor [1][4] - Company will invest approximately 40% in Tiansui Xinyuan, with 20% coming from its own funds and 80% from self-raised funds [2] - After the investment, the company is expected to become the largest single shareholder of Tiansui Xinyuan and gain control over its board [2] Group 2: Company Background - Zhudian Semiconductor specializes in visual processing chips and has over 160 patents, being a leader in mobile device AI display chips [3][4] - The company has established stable partnerships with major global smartphone brands and has successfully entered their supply chains [5] Group 3: Financial Performance - Zhudian Semiconductor's projected revenue for 2024 is approximately 385 million yuan, with a net loss of 121 million yuan [4] - In the first half of 2025, the expected revenue is around 110 million yuan, with a net loss of about 64.06 million yuan [4] Group 4: Strategic Implications - The acquisition will enhance the company's competitiveness in image processing IP and expand its capabilities in AI-related projects across various devices [5] - The integration of technologies from both companies is expected to strengthen the company's position in the AI ASIC market [5] Group 5: Stock Incentive Plan - Company announced a stock incentive plan to grant up to 8.11625 million restricted shares, representing approximately 1.54% of the total share capital [6] Group 6: Market Position - As of October 15, the company's stock price was 170.83 yuan per share, with a total market capitalization of 89.8 billion yuan [7]