(Yicai) Dec. 2 -- Shares in Toread Holdings Group plunged today after the Chinese outdoor apparel and accessories giant, which has been steadily ramping up its investment in the semiconductor industry in recent years, said it plans to spend CNY678 million (USD95.8 million) to acquire controlling stakes in two chip companies.

Toread’s share price [SHE:300005] closed down 12.1 percent at CNY10.42 (USD1.51), although the stock has still gained about 50 percent in value this year.

Toread plans to pay CNY321 million (USD45.4 million) for a 51 percent stake in Betterlife Science and Technology, which makes fingerprint recognition and touch-control chips, and CNY357 million for 51 percent equity in Tongtu Semiconductor Technology, an image and video processing chip developer, the Beijing-based company said yesterday.

Shenzhen-based Betterlife, which was founded in 2011, posted net profit of CNY17.7 million (USD2.5 million) in the first eight months on revenue of CNY165.8 million (USD23.4 million), Toread said. While Shanghai-based Tongtu, set up in 2012, reported CNY18.9 million (USD2.6 million) in net profit and CNY104.6 million in revenue over the same period, it added.

Through these acquisitions, Toread will gain access to more than 80 mature, mass-produced products, over 230 intellectual property assets, and more than 70 research and development staff. This will complement and strengthen its existing chip business and significantly boost its overall competitiveness in the semiconductor sector, it said.

Toread, one of China’s top outdoor sports brands, has been making a strong push into semiconductors as a second pillar of growth in recent years. In 2021, it paid CNY260 million (USD36.8 million) to buy Mini LED chip maker Beijing Xinneng Electronic Technology, and in 2023 it acquired South Korean touch-chip maker G2 Touch for USD38.5 million.

In the first half, Toread’s chip business logged a 7 percent jump in revenue from a year earlier to CNY114.6 million (USD 16.2 million), accounting for 18 percent of total revenue, according to the firm’s interim results.

But its core outdoor goods business has struggled amid shifting market conditions this year. This dragged down net profit by 68 percent in the first three quarters year on year to CNY33 million (USD4.7 million), while total revenue plunged 14 percent to CNY953 million (USD134.8 million), according to the company's latest earnings report.

Editor: Kim Taylor