Kaiweit plans to acquire downstream clients

Jingjing News reporter Qin Xiao, Beijing report

The consolidation wave in the power semiconductor industry continues to gain momentum, and China A-share markets have added another major peer M&A deal. On the evening of March 28, power semiconductor company Kiwite (688693.SH), listed on the STAR Market, released a preliminary plan for a major asset restructuring. The company plans to acquire 100% of the equity of Jingyi Semiconductor, its core downstream customer, through a combination of issuing shares and paying cash, while simultaneously raising supporting funds.

It is worth noting that, as a Fabless company specializing in power device and power IC design, Kiwite achieved revenue of 255 million yuan in 2025, while in the same year Jingyi Semiconductor generated revenue of 515 million yuan. Market expectations for this “small bet for big upside” acquisition deal ran high, and after the restructuring plan was released, Kiwite’s stock hit its 20% daily limit on the day it resumed trading on March 30.

Several industry insiders, in interviews with Jingjing Business Daily reporter, said that from the perspective of industrial synergy, Kiwite focuses on power devices and power IC design, while Jingyi Semiconductor is its core downstream customer. The two have a natural complementarity in their businesses, aligning with the direction regulators have long advocated.

However, some industry insiders believe this acquisition also faces certain challenges. For example, the two companies may differ in corporate culture, management models, and other aspects, which would require some time to integrate.

Loss-making company acquiring profit-generating target

It is reported that Jingyi Semiconductor adopts a Fabless (no wafer fabrication plant) operating model, focusing on the power semiconductor sector. Its core business concentrates on two main areas: motor driver chips and power management devices. Its products are widely used in multiple mainstream application scenarios such as high-end consumer electronics, home appliances, smart electric meters, optical modules, and solid-state drives (SSDs), and it is also one of Kiwite’s core downstream customers with a long-term cooperation.

What deserves attention is that behind this acquisition is Kiwite’s pressure stemming from two consecutive years of performance losses. According to the company’s previously released 2025 annual performance quick report, total operating revenue for the full year reached 254.57M yuan, up 95.62% year over year. Although revenue rebounded significantly, profitability still did not improve. The net profit attributable to shareholders was a loss of 91.26M yuan, and the net profit after deducting non-recurring items was a loss of 102.4M yuan. By this point, the company had fallen into losses for two consecutive years, with cumulative losses in net profit attributable to shareholders and net profit after deducting non-recurring items totaling 188 million yuan and 210 million yuan, respectively.

Kiwite explained that its performance losses were mainly driven by the combined impact of multiple factors. The company has continued to increase R&D investment and efforts to bring in talent to consolidate its technological advantages. At the same time, it actively expands the market by expanding its sales and marketing team and strengthening brand promotion to improve its sales channels. In addition, based on the principle of prudence, the company has made impairment provisions for related assets that show signs of impairment at period end. When combined with factors such as intensifying industry competition and ongoing adjustments to product mix, the company’s results still failed to turn profitable during the period. Looking back at historical data, from 2022 to 2024, Kiwite’s revenue gradually declined from 235 million yuan to 130 million yuan. Net profit attributable to shareholders shifted from a profit of 61.1233 million yuan to a loss of 97.1893 million yuan, with performance pressure remaining prominent.

In contrast, Jingyi Semiconductor’s core profitability performance is outstanding. The restructuring plan shows that due to share-based payment expenses, Jingyi Semiconductor recorded a loss in net profit of 27.7176 million yuan in 2025. However, after excluding this non-recurring factor, its net profit reached 90.1054 million yuan—far above Kiwite’s profit level for the same period. In 2024, Jingyi Semiconductor achieved operating revenue of 401 million yuan and net profit of 46.9186 million yuan. After excluding share-based payment expenses, its net profit was 64.3512 million yuan.

Moreover, as a national-level “specialized, refined, distinctive, and innovative” “little giant” key enterprise, Jingyi Semiconductor’s technical strength is also worth attention. According to the disclosure, the size of the company’s R&D team exceeded 70 people, accounting for more than half of all employees. Its core R&D personnel all come from leading semiconductor companies at home and abroad, with average industry experience of more than 15 years, reflecting deep industry experience. At present, the company has cumulatively obtained 50 authorized invention patents.

Zhang Xinyuan, head of the Ke Fang De Think Tank research, said that Kiwite’s “big fish swallowing small fish” acquisition of Jingyi Semiconductor, from an industrial logic standpoint, is a typical integration-type M&A that aims to shore up weak links, expand into new tracks, and vertically lock in downstream operations. Strategically, it is highly reasonable. Kiwite itself has continued losses, its scale is relatively small, and its market is concentrated in high-reliability industrial and communications fields, limiting its growth space. Jingyi Semiconductor, as its downstream major customer, has a larger revenue scale and more stable profitability, and it also has mature channels and customer resources in the home appliances and consumer civilian sectors. Through the acquisition, Kiwite can quickly expand its revenue scale, enter the civilian end-market, lock in core downstream customers, and reduce the risk of concentrated customers. It can also fill the gaps in consumer power chip and driver chip capabilities. However, because it is a loss-making party acquiring a profit-making party, capital pressure, integration difficulty, and goodwill risk are all significantly higher, making it a high-elasticity and high-risk strategic choice.

That said, in the view of Yin Zhongyu, chief M&A expert at Lianchu Securities, the industrial rationale behind this acquisition and restructuring is clear and aligns with the direction regulators have long advocated. As long as the target company’s financials are compliant and the transaction price is fair, the time required for regulatory approvals will not be too long.

Seeking to escape both profit and market predicaments

This acquisition of Jingyi Semiconductor is seen by industry insiders as a key strategic move for Kiwite to break through its performance difficulties and improve its industrial-chain layout. Regarding this acquisition, Kiwite also stated that it is a key measure the company is taking to fill gaps and strengthen the power semiconductor industrial chain. It will effectively fill in blanks in its layout for related product areas and promote an upgrade in business synergy.

Kiwite focuses on high-reliability power devices and power ICs, with products mainly covering high-end high-reliability areas such as industrial and communications. Jingyi Semiconductor, meanwhile, delves into motor driver and power management chips and focuses on mainstream civilian consumer tracks.

Zhang Xinyuan believes Kiwite and Jingyi Semiconductor are highly complementary in products and markets, with low overlap, and the real and substantial synergy potential is evident. They have the foundation to produce an effect of 1+1>2. In terms of products, Kiwite emphasizes industrial and communications high-reliability power devices, while Jingyi Semiconductor emphasizes driver and power management chips for consumer and home appliances. Together, they can form a more complete “power devices + driver IC + system solutions,” enhancing the competitiveness of the overall solution. In terms of the market, industrial high-reliability and civilian consumer segments do not conflict and can achieve two-way complementarity in customer bases, application areas, and sales channels. But whether 1+1>2 can truly be realized hinges on whether product solutions can be connected quickly, whether sales channels can truly be shared, and whether the supply chain can be unified to reduce costs—rather than simply consolidating statements while operating independently.

“Performance reversal” is the most direct value reflection of this acquisition. After Jingyi Semiconductor’s high-quality profit-generating assets are consolidated, they will become the core driving force for Kiwite’s turnaround to profitability. Once consolidation is completed, it will directly increase Kiwite’s revenue and profits and significantly improve the company’s financial situation.

Zhang Xinyuan said that after consolidation, there is relatively high certainty on turning profitability on the books. However, the quality and sustainability of earnings should be treated cautiously. Excluding share-based payment, Jingyi Semiconductor’s net profit is large enough to cover Kiwite’s losses for the period. From an accounting consolidation perspective, turning profitable in the short term is a high-probability event. But there are certain short-term “window-dressing” risks within it: first, the profits mainly come from the acquired party, and improvements in the acquired company’s own core business profitability are not particularly obvious; second, goodwill, amortization, and integration expenses brought by the acquisition will continue to affect future profits; third, if the target’s performance falls short of expectations, it will directly trigger goodwill impairment and lead back to losses. Therefore, although the certainty of turning profitable on paper is high, the quality of earnings is ordinary and sustainability is weak, creating suspicion of short-term earnings beautification.

In the view of Yuan Shuai, an expert at Jingjing Media Think Tank, in 2025 Jingyi Semiconductor’s net profit after excluding share-based payments exceeded 90 million yuan, which almost offsets the amount of Kiwite’s losses. Judging from paper figures, achieving a turnaround through consolidation seems inevitable. But the actual quality of profits still needs to be considered, especially Jingyi Semiconductor’s earnings stability. Demand in the civilian consumer and home-appliance segments fluctuates significantly. If industry conditions deteriorate later, Jingyi Semiconductor’s profits may shrink, while Kiwite’s own losses—if driven by sustained high R&D spending—can accumulate strength for future development, but they will also affect the long-term performance after consolidation. If the losses are due to insufficient market expansion, then Kiwite will need to rapidly adjust with the resources of Jingyi Semiconductor; otherwise, the certainty of turning profitable will be greatly reduced. Meanwhile, profit-management risks during the acquisition cannot be overlooked. In order to achieve a turnaround through consolidation, it is not ruled out that both parties may “beautify” short-term performance by adjusting the pricing of related-party transactions, delaying expense recognition, and other methods—especially given that the two companies’ profitability conditions differ significantly. The integration of their financial accounting systems requires time. In the short term, the turnaround through consolidation may involve more changes in accounting numbers rather than a substantive improvement in the companies’ underlying earning capacity.

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