(Yicai) Aug. 11 -- Shares in Vantone Neo Development Group surged by the exchange-imposed limit today after the Chinese property developer said that it plans to purchase a majority stake in Sudo Information Technology, which produces high-speed interconnect chips for artificial intelligence servers, in Vantone’s latest attempt to diversify its business amid a prolonged downturn in China’s real estate market.

Vantone’s share price [SHA:600246] closed up 10 percent at CNY8.39 (USD1.17).

Vantone will pay CNY854 million (USD118 million) in cash for a 63 percent stake in Sudo Information, which specializes in Peripheral Component Interconnect express high-speed switch chips, through a mix of capital injections and equity transfers, the Beijing-based firm said yesterday.

Sudo Information’s PCIe high-speed switch chips are in high demand, as not only does every AI server use between two and four of these chips, but China still relies heavily on imports of the mid- to high-end versions of these chips, Vantone said.

Despite this, Sudo Information continues to lose money. The Beijing-based firm posted a net loss of CNY35.9 million (USD5 million) in the first six months on revenue of CNY16.2 million (USD2.2 million), according to its audited financial data. And last year it racked up a net loss of CNY138 million (USD19.2 million) on revenue of CNY32.3 million (USD4.5 million). As of June 30, the company had net assets of CNY64.6 million (USD9 million).

This is Vantone’s second attempt to branch into the tech sector in recent years. A previous bid to take over Source Photonics Holdings, a US developer of optical communication devices, for USD324 million collapsed in January after the then third-largest shareholder GLP Capital publicly opposed the move and Vantone failed to agree on terms with the seller.

Editor: Kim Taylor