it does sound like the audio chip.
if it has no modulation on TX then this is where i would start looking.
im not sure which IC number it is in that chassis, but im pretty sure it will be the only multi-pin IC chip that is mounted to a heat sink or the side of the chassis.
if you have experience in changing out IC chips, then this should be a pretty easy repair.
if however, you have never done it before, its probably not the best first repair project. all depends on your electronics experience and comfortability.
the thing is, this is a pretty cheap radio, and really isnt worth paying a shop 30-40 bucks to fix.
good luck with it,
LC