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Shares in Toread Holdings Group plummeted today after the major Chinese outdoor apparel and accessories company announced plans to invest heavily in the semiconductor industry. Recently, Toread has been increasing its investments in chip manufacturing and technology, and now it revealed a plan to spend approximately 678 million RMB (about 95.8 million USD) to acquire controlling stakes in two chip firms.
Following the announcement, Toread’s stock closed down by 12.1%, at 10.42 RMB (around 1.51 USD), although it has still appreciated about 50% over the course of this year.
The company intends to allocate 321 million RMB (roughly 45.4 million USD) to buy a 51% stake in Betterlife Science and Technology, a firm specializing in fingerprint recognition and touch-control chips. Additionally, Toread plans to spend 357 million RMB (approximately 50.5 million USD) for a 51% controlling interest in Tongtu Semiconductor Technology, which develops image and video processing chips, according to the company’s statement yesterday.
Betterlife, based in Shenzhen and established in 2011, reported a net profit of 17.7 million RMB (around 2.5 million USD) during the first eight months of the year, on revenue of 165.8 million RMB (about 23.4 million USD). Meanwhile, Tongtu, headquartered in Shanghai and founded in 2012, posted net profits of 18.9 million RMB (approximately 2.6 million USD) with revenues of 104.6 million RMB (roughly 14.8 million USD) over the same period.
Through these acquisitions, Toread will gain access to more than 80 mature, mass-produced products, over 230 intellectual property rights, and a team of over 70 research and development professionals. The company believes these moves will complement its existing chip operations, strengthen its technological capabilities, and significantly enhance its competitiveness in the semiconductor market.
Known primarily for its outdoor sports apparel, Toread has been actively expanding into the chip industry as a new pillar of growth. In 2021, the company invested 260 million RMB (about 36.8 million USD) to acquire Beijing Xinneng Electronic Technology, a maker of Mini LED chips. More recently, in 2023, Toread acquired South Korea’s G2 Touch, a touch-chip manufacturer, for 38.5 million USD.
In the first half of the year, Toread’s chip division saw a 7% increase in revenue compared to the previous year, reaching 114.6 million RMB (around 16.2 million USD), which accounted for roughly 18% of total revenue, according to the company’s interim financial report.
However, its core outdoor gear business faced challenges this year due to changing market conditions. As a result, net profit declined sharply by 68% during the first three quarters, down to 33 million RMB (about 4.7 million USD). Meanwhile, total revenue dropped 14%, to 953 million RMB (roughly 134.8 million USD).
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