Why Would a Ham Company Spend 274 Million on Optical Communication Chips?
Summary of Key Points:
In simple terms, Jinzi Ham, a publicly traded company that started with the ham business, is experiencing a severe sense of "identity anxiety" and the pain of transformation. Its traditional business (selling ham and cured meat) is struggling, with declining sales and accumulating inventory, to the point where it is relying on bank interest to maintain its profits. In search of new opportunities, it has turned its attention to the currently hot topic of AI computing infrastructure—optical communication chips.
Through its subsidiary, Jinzi Ham has made an additional investment of 174 million yuan, bringing the total investment to 274 million yuan, making it the largest shareholder in the chip company. Although the chip company is still in the red, it is positioned at the heart of the AI data center trend, and its technology has been validated, so Jinzi Ham is willing to bet on its future.
This is not Jinzi Ham's first attempt at riding the wave of innovation. Over the past decade, it has ventured into coal, banking, healthcare, artificial meat, and AI computing, but most of these attempts have not led to stable new growth. The company's management has changed twice, and this investment in chips is both a desperate attempt and a desire for new growth. However, with the main business's profitability weakening and the new business having a long payback period and high risks, the success of this "bold gamble" remains uncertain.
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I. The Main Business Is Losing Ground: Hard to Sell Ham, Profits Are Maintained by Interest
First, let's clarify Jinzi Ham's current situation: its traditional business is bleeding, and its profit structure is very fragile.
1. Flagship Products Are Not Selling Well:
In the first half of 2026, Jinzi Ham's revenue decreased by 9.26%, and its net profit fell by 8.13 million yuan. The revenue from its core ham products plummeted by 26.35%, and sales also decreased by 25.72%. The reason is that consumer habits have changed. In the past, ham and cured meat were popular for gifts during the New Year and as staple dishes on dining tables; now, young people prefer low-fat, low-salt, and convenience foods. Traditional cured meat products, if still viewed as kitchen ingredients, will struggle to attract consumers.
2. Severe Inventory Accumulation, Cash Is Locked Up:
Slow sales lead to high inventory. By the end of the first half of 2026, ham inventory had increased by 13.29%, and special meat products by 19.46%. The inventory turnover period was as high as 459 days, meaning the goods were sitting in warehouses for up to 15 months before being sold. This means a large amount of cash has turned into inventory that is not flowing.
3. Interest Income Is the “Cover” for Profits:
This is the most concerning aspect. In 2025, Jinzi Ham's operating profit was 31 million yuan, but its “core profit” after deducting all costs and expenses was only 7 million yuan. The remaining 23 million yuan in profit was entirely supported by interest income (money earned from depositing idle funds in banks or investing in financial products).
In the first half of 2026, the core business lost 9 million yuan, and only the interest income of 9 million yuan made up for part of the loss.
In other words, Jinzi Ham is not making money from selling ham; it is relying on “money making money” to keep its financials looking good. However, with new factory construction and external investments, the cash on the balance sheet is decreasing, and future interest income may shrink, making this model unsustainable.
4. Limited Success of Transformation Attempts:
The company has also tried to modernize its products, such as making ham ice cream and small cakes, and even built the largest ham processing base in Asia. However, data shows that although the sales of branded meats (such as fresh-frozen meats) have increased, this was achieved through price cuts, resulting in a low gross margin of 4.04%, which is not enough to offset the decline in the ham business.
Conclusion: The main business's profitability is weakening, inventory is high, and profits depend on interest. Jinzi Ham urgently needs a new, high-margin business to replace its ham business; otherwise, the days of relying on interest income will end soon.
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II. The Logic Behind the Cross-Business Move: Why a Ham Company Would Buy Chips?
Since the main business is struggling, why choose optical communication chips? There is a clear business logic behind this move, but it also involves a significant amount of risk.
1. Positioned at the Heart of the AI Trend:
Zhongshengwei specializes in electronic chips for optical modules (Driver and TIA).
- Driver: These chips provide signals to lasers, ensuring the accuracy of the optical module's transmission.
- TIA: These chips convert weak light signals into electrical signals, ensuring the module can receive data clearly.
With the explosion of AI models, data centers require massive data transmission, leading to a surge in demand for optical modules. Global sales of optical transceivers increased by 74% in 2025 and are expected to grow by another 73% in 2026. This is a market with high growth potential.
2. A Huge Disparity Between Valuation and Reality:
Zhongshengwei's revenue in the first half of 2026 was only 20.5 million yuan, with a loss of 20.89 million yuan, yet its valuation is as high as 1.4223 billion yuan.
The reason for this high valuation is the market's recognition of its technical barriers and future orders.
- Technological Success: Zhongshengwei's 100G products have been mass-produced and have passed tests from leading domestic customers.
- Progression: In July 2026, the company confirmed that its 200G products had passed chip manufacturing tests, meeting the technical requirements for higher speeds (800G, 1.6T).
3. Jinzi Ham's Strategy:
By investing 274 million yuan, Jinzi Ham holds 19% of Zhongshengwei's shares, becoming the largest shareholder.
- Short Term: This is a financial investment, betting on the future performance of Zhongshengwei for equity appreciation.
- Long Term: If Zhongshengwei succeeds, Jinzi Ham will gain a high-margin, high-growth technology asset, potentially lifting its low valuation as a ham company and reevaluating its market value.
Risks: The chip industry is highly competitive, with competitors like Semtech overseas and domestic players like Youxun Shares. Although Zhongshengwei's technology is impressive, “passing tests” does not guarantee stable orders. Customers will look at long-term stability, cost, and supply capabilities. If Zhongshengwei cannot convert its technical advantages into sustained orders, the 1.4 billion yuan valuation could be illusory.
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III. The Financial Implications: 274 Million Yuan—Equivalent to Four Years' Profits, How Big Is the Bet?
This investment is significant for Jinzi Ham; it could be described as a “gamble all in.”
1. Amazing Investment Amount:
From 2022 to 2025, Jinzi Ham's cumulative net profit was only about 177 million yuan.
This investment of 174 million yuan for the second round of capitalization represents all the money it has made in those four years, plus any cash on hand.
2. Pressure from the Investment Agreement:
The investment agreement includes clear performance targets:
- Net profit of at least 18.8 million yuan in 2027;
- Net profit of at least 100.25 million yuan in 2028.
Zhongshengwei needs to achieve a significant turnaround in two years to meet these targets. For a startup chip company, this is extremely challenging. If it fails, Jinzi Ham may face impairment risks or need to renegotiate the investment.
3. Financial Tightness:
Although Jinzi Ham has 1.341 billion yuan in cash, it is already committed to other projects:
- A 1 billion yuan “Digital Intelligence Industry Base” project is under construction (599 million yuan already invested);
- The main business's inventory is occupying a lot of capital;
- It also needs to support Zhongshengwei's research and development and market expansion.
If the main business's profitability continues to decline and the chip business does not generate cash flow, Jinzi Ham may face financial difficulties.
Conclusion: This is a high-risk, high-return investment. If successful, Jinzi Ham could transform significantly; if not, the 274 million yuan will be lost, and the main business could be dragged down, putting the company in trouble.
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IV. A History of Frequent Cross-Business Moves: Two Changes in Management, Multiple Ventures
This is not Jinzi Ham's first attempt at cross-business expansion; it is part of a history of frequent moves.
1. List of Cross-Business Ventures:
- 2013: Investment in coal (acquisition of Zhejiang Chuangyi).
- 2015-2016: Investment in banking (shareholder of Wangshang Bank) and new energy (Dongrun New Energy).
- 2016-2018: Heavy investment in healthcare (acquisition of Zhongyu Capital, 593 million yuan invested). Result: The cooperation failed, and the shares were repurchased at a discount, resulting in a loss of 300 million yuan.
- 2019-2023: Investment in artificial meat and prepared meals. Result: No significant growth was achieved.
- 2023-2024: Investment in AI computing (Yindun Cloud). Result: withdrew 428 million yuan due to the company's loss; although the principal was recovered with some profit, no sustainable business was established.
- 2025-Present: Investment in optical communication chips (Zhongshengwei).
2. Frequent Changes in Control:
- First Generation: The Shi Yanjun family.
- Second Generation: Ren Guilong took over in 2021.
- Third Generation: Zheng Qingsheng took over in 2025, with his son Zheng Hu becoming the president.
With two changes in management, the company's strategic direction has also changed. Each new management team tried to create a new growth driver but often ended up with failed attempts or only short-term gains.
3. Reflection on the Model:
Jinzi Ham seems to be trapped in a cycle of “main business decline → searching for new opportunities → large investments → short-term exits or no results → searching for the next opportunity.” The problem is the lack of synergy between different industries (ham, chips, healthcare, coal) and the lack of patience. These ventures require long-term investment and nurturing, but Jinzi Ham often exits or changes direction too quickly.
Conclusion: Jinzi Ham's history of cross-business moves is one of chasing trends. This investment in chips is directionally correct (AI is a long-term trend), but whether it can break the cycle of failed ventures depends on whether the new management has the industry understanding and commitment needed.
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V. Future Prospects: Can They Catch the “Light?”
The success of Jinzi Ham's investment in optical communication chips depends on three key factors:
1. Zhongshengwei's Ability to Secure Orders:
Technological validation is just the beginning; the real test will be mass production and sustained profitability. Zhongshengwei needs to secure stable orders from major customers (such as Huawei, ZTE, and optical module manufacturers) and maintain a decent gross margin in the competitive market. If orders fall short of expectations, Jinzi Ham's investment will be at risk.
2. Stabilization and Recovery of the Main Ham Business:
If the ham business continues to lose money and inventory accumulates, Jinzi Ham will not have enough resources to support the chip business. The company must address ham sales issues, such as repositioning products as snacks or using digital technology to reduce costs and improve profitability. Only a stable main business can provide the foundation for the chip business.
3. The New Management's Commitment:
Does the new management, led by Zheng Qingsheng and his son Zheng Hu, truly believe in the chip industry and is willing to invest for the long term? Or is this just a short-term financial investment with the intention of selling shares for a profit? If it's just for quick gains, Jinzi Ham may fall into the same cycle of chasing trends and then exiting.
For investors, the focus should not just be on the “chip concept” but on Zhongshengwei’s quarterly revenue and order announcements and **Jinzi Ham’s inventory turnover and cash flow changes. This “ham and chips” venture is just beginning.