Zhang Zhongmou said with a smile,
"Director Wang, I hope Xingyi Technology's mobile phone chips can be successfully developed as soon as possible. When it's time for tape-out and mass production, leave it all to TSMC, and we'll give you the maximum discount!"
Wang Yi smiled slightly,
"The R&D of mobile phone chips is not that simple. The industry generally believes it will take at least two to three years for our mobile phone chips to succeed."
Zhang Zhongmou, however, didn't believe it at all,
"Director Wang, you are too modest. In my opinion, if all goes well, your 28nm mobile phone chips will be taped out by the end of this year or early next year!"
Wang Yi was dumbfounded and laughed, thinking,
'An old fox is indeed an old fox.'
He really knows how to judge people!
"If that's the case, then I'll take your auspicious words. But if it truly goes so smoothly, then the 28nm capacity will still trouble Director Zhang..."
Wang Yi said meaningfully.
Frankly, he didn't want to cooperate with TSMC, but he had no choice.
28nm mobile phone chips are one of the most advanced manufacturing processes currently available, and only three companies can achieve it: TSMC, Samsung, and Intel.
Intel mainly focuses on PC chips, produces few mobile chips, and as an empire's enterprise, it's unreliable.
Samsung Semiconductor is even less reliable; if Xingyi's phone sales are high, they will be throttled.
Samsung can restrict HTC's screen supply and can directly restrict Xingyi Technology's chip supply.
Wang Yi would never cooperate with such an unscrupulous company.
As for SMIC, it is currently only mass-producing the 55nm process, and cannot even produce the 40nm smart home chip H1.
Originally, Wang Yi had thought about investing in SMIC, but currently, with Old Zhang being forced out by TSMC, the remaining high-level executives at SMIC are only focused on power struggles and not on proper business.
As a result, even though Intel has mass-produced 22nm, SMIC is still at the 2009 level — 55nm.
As for 40nm, trial production will start at the earliest in the second half of this year, and large-scale mass production won't be until 2013.
Wang Yi's 40nm chips need to be mass-produced now; waiting for SMIC until next year is impossible.
Wang Yi couldn't be bothered to invest in such an unreliable company, and even plans not to cooperate with SMIC next year.
Nothing else, rather than waiting for SMIC's 40nm large-scale mass production next year, it's better to push Old Hu to develop Xingyi Semiconductor's own 40nm process next year!
By then, self-R&D, self-production, and self-sales of 40nm chips, as well as self-R&D of 28nm chips, can be achieved.
Intel, Samsung, and SMIC are all unreliable; the only remaining option is TSMC.
Xingyi Semiconductor still needs several years of development to mass-produce 28nm; before that, high-end chips can only rely on TSMC.
This is a solution out of necessity.
Zhang Zhongmou laughed heartily,
"Director Wang, don't worry, you just focus on R&D. When the time comes, I will arrange as much 28nm capacity as you need!"
"Then I thank Director Zhang."
"Heh heh, it's all as it should be."
After ending the call, Zhang Zhongmou was in a great mood.
The vice president, however, was somewhat puzzled,
"Chairman, Xingyi Technology has only just started developing chips. Do we need to be so good to them? We even promised to provide as much 28nm capacity as they need? After all, their 28nm chips are nowhere in sight yet!"
Zhang Zhongmou frowned displeasedly,
"What do you know?"
Businessmen all have keen insight.
Originally, Zhang Zhongmou didn't think much of Xingyi Technology.
But with the rapid rise of Xingyi mobile phones, Old Zhang began to closely follow all of Xingyi Technology's movements.
Now Xingyi Technology has started to self-develop chips again, and although they are only low-end chips, Old Zhang still saw terrifying potential!
Naturally, he had to pay attention in advance.
Old Zhang said meaningfully,
"Don't look at Xingyi Semiconductor as just starting; its future potential is limitless. It might very well become the next super major client comparable to Apple!"
"What? A super major client comparable to Apple?"
The vice president's mouth twitched. He really wanted to say,
"Chairman, are you crazy? What does Xingyi Technology have to compare with Apple?"
Zhang Zhongmou saw through his subordinate's thoughts and wasn't angry,
"It's hard to give charcoal in snowy weather, but it's always better than adding flowers to embroidery. By the time Xingyi Semiconductor grows big, it will be too late for TSMC to pay attention."
"This..."
The subordinate fell silent.
Zhang Zhongmou continued,
"Samsung Semiconductor snatched the large foundry order for Apple's A5 chip. Our TSMC secured the large foundry order for Qualcomm 8064. But it's still not as good as Apple. To overturn Samsung, Xingyi Technology's large chip orders might just be an opportunity."
"I see."
The subordinate was half-convinced, merely thinking that the chairman was making multiple preparations.
Better to try your luck now than regret later.
Zhang Zhongmou smiled slightly,
"Wang Yi is someone who loves to create miracles and accomplish things that even giants cannot. I estimate Xingyi Semiconductor can also succeed. Give the order that from now on, Xingyi Technology is to be treated as an S-class major client. Whether it's tape-out or additional orders, all will be prioritized. All treatments will be given at the highest level."
"Yes!"
Zhang Zhongmou looked out the window and said faintly,
"Director Wang, don't disappoint me. Whether we can overturn Samsung Semiconductor depends on your big orders!"
On the other side, Wang Yi was also lost in thought, contemplating Xingyi Semiconductor's next development strategy.
Chip R&D is a major money-burner.
Low-end chip R&D doesn't cost much; even if five or six models are developed simultaneously, it's only a few hundred million.
However, high-end chip R&D costs a lot, and with expenses like tape-out, a single chip is hard to manage without several billion.
It can be said that for the entire year 2012, chip R&D investment alone would be several billion.
Years later, with currency depreciation and skyrocketing salaries, chip R&D could cost tens of billions per year.
The construction of wafer fabs and the introduction of equipment are also major money-burners.
Currently, a 12-inch wafer fab costs at least 20 billion!
Is that all?
No, it's just the beginning.
With a wafer fab, funds must also be invested in R&D for chip manufacturing processes, costing tens of billions annually.
It can be said that in the future, chip R&D and wafer fab process R&D will have a fixed annual cost of 20 billion RMB!
Plus the 20 billion for wafer fab construction and equipment introduction.
For the entire year 2012, Wang Yi would have to invest 35-40 billion!
And subsequent annual R&D costs starting at 20 billion!
Truly a money pit.
If expenditures continuously outpace income, such frantic money-burning would put immense pressure even on Wang Yi.
To this end, Wang Yi formulated a sustainable development path of "investing while producing, burning money while earning money."
To sustain Xingyi Semiconductor and Xingyi Wafer Fab by producing and selling 40nm low-end chips.
To use the profits earned from selling smart home chip H1, fast-charging chip C1, and power management chip P1 for wafer fab process R&D and subsequent chip R&D!
To achieve this effect, sales of several chips must reach an incredibly massive scale.
To this end, Wang Yi decided to bundle fast-charging chip C1 and power management chip P1 for sales to other companies.
A standalone fast-charging chip C1 costs 60 yuan each for small quantities and 40 yuan each for large quantities.
But when bundled with two P1 chips, a set of three chips costs 90 yuan for small quantities and only 60 yuan for large quantities!
This way, for large quantities, the average price per chip is only 20 yuan, which is lower than the price Qualcomm offers to other companies.
After all, only Xingyi Technology can get a unit price of 20 yuan per chip from Qualcomm.
Other companies don't have such large order volumes and cannot drive prices down so low.
If 30 million sets of three chips can be sold, that's 90 million chips.
With a unit price of 20 yuan per chip and a profit of 19 yuan, 90 million chips would yield 1.7 billion!
The future smartphone market is far larger than just 30 million.
Xingyi Semiconductor's C1 fast-charging chip is in a monopoly position; so many brands need it, making it possible to sell 60 million sets annually.
These three chips can earn over 3 billion, but compared to an annual R&D investment of 20 billion, it's still not enough.
Then the smart home chip H1 also needs to operate on a large scale.
Xingyi Technology cannot dominate the smart home appliance market alone, let alone monopolize it.
This industry, which is related to people's livelihoods, can only flourish with a hundred flowers blooming and a hundred schools of thought contending.
Instead of stubbornly seizing the market and pursuing a monopoly, it is better to launch the Xingyi Smart Home ecosystem standard, sell smart home H1 chips, and provide a complete set of Xingyi Smart Home solutions.
This way, traditional white goods giants like Haier, Midea, Gree, and Hisense will all use Xingyi Technology's solutions, use Xingyi Technology's H1 chips, and join Xingyi Technology's smart home system!
If so, Xingyi Technology can earn more without monopolizing the market.
And traditional home appliance giants, with ready-made solutions provided by Xingyi Technology, can save on R&D processes and costs, and can greatly leverage Xingyi Technology's technical solutions, systems, and equipment to directly enter the new era of smart homes and smart appliances!
This can be considered a win-win!
After all, smart home ecosystem solutions and chips are not so easy to establish, and most companies do not have this capability.
Rather than putting in a thankless effort to develop it themselves, it's better to directly use Xingyi Technology's chips and solutions.
A few giants have the capability to build their own ecosystem, but cannot persuade other competitors to join.
In his previous life, Haier's smart home ecosystem was only used by Haier; Midea, Hisense, and Gree all dismissed it.
Similarly, Midea's smart home ecosystem was only used by Midea itself; Haier, Hisense, and Gree also dismissed it.
Smart homes cannot be done by a single enterprise unless it starts the earliest, launches the earliest standards, has the most complete supporting facilities, and the most users.
For example, in his previous life, Xiaomi was completely inferior to giants like Midea and Haier in the home appliance sector, but Mijia Smart Home had a much higher market share and many more users than Haier and Midea Smart Home.
The reason is that Xiaomi was the first to launch Mijia Smart Home, building the Mijia Smart Home ecosystem chain, which led many supply chains to join.
Coupled with the hundreds of millions of users accumulated by Xiaomi phones, it would be difficult for Mijia Smart Home not to grow big.
This time, Xingyi Technology started earlier, Xingyi phones developed faster, and accumulated more users.
Furthermore, Xingyi Technology not only aims to build a smart home ecosystem, but has also developed the smart home chip H1 and the power management chip P1!
Plus the WiFi chips, Bluetooth chips, router chips currently under R&D...
They can fully provide a complete smart home ecosystem solution and offer a full set of smart home chips!
This way, competitors only need to pay to easily introduce Xingyi Smart Home solutions and equipment, transforming their traditional home appliances directly into smart home devices at minimal cost!
Small brands will not refuse this.
Big brands also cannot refuse.
Once the Xingyi Smart Home system grows large, even giants like Gree and Midea will have no choice but to join.
There's no other way; if competitors' products all become smart appliances that can be intelligently controlled by mobile phones, speakers, sensors, TVs, and other devices, while Gree and Midea's products remain traditionally controlled, how could consumers not resist? How could sales not plummet?
To prevent plummeting sales, these giants will have to connect to the Xingyi Technology Smart Home system.
As for full in-house R&D? The high cost is one thing, but time cost is also an issue.
This solution is entirely feasible.
However, first, the smart home market must be ignited, making consumers realize the power of smart homes and that the era of smart homes has fully arrived.
And the name of Xingyi Smart Home's ecosystem must be made famous!
Only then will consumers recognize it, and those traditional home appliance companies and giants will be willing to cooperate.
In 2012, smart homes and smart appliances were a very fashionable existence, and also a process from nothing to something.
All of this required Wang Yi to meticulously plan, gradually develop, and step by step ignite the entire market.
Wang Yi decided that smart homes must be fully accelerated!
It would be best to launch Xingyi Smart Home when Xingyi TVs are released.
By then, in addition to first launching a few smart home products, a complete set of solutions must be presented, negotiations held with competitors, white goods giants introduced, and the Xingyi Smart Home ecosystem chain gradually built!
With this thought, Wang Yi headed straight to the Smart Home Business Unit.
During this period, Jian Ziyan has been frantically recruiting people, and the Smart Home Business Unit now has abundant personnel.
Wang Yi gathered the senior management of the Smart Home Business Unit for a meeting:
"First, let's talk about the current progress."
"Okay, Chairman."
Meng Qingzhen, the head of Smart Home, spoke first:
"During this period, our Smart Home Business Unit has undergone expansion and segmentation. We broadly recruited talented individuals, and in terms of business, we continuously refined our segments.
Currently, the entire Smart Home Business Unit is mainly divided into the Planning Department, Algorithm Department, Product R&D Department, and Marketing Department.
The Planning Department is responsible for the overall coordination, decision-making, and strategic development of the entire business unit, personally overseen by me and several managers.
The Algorithm Department is responsible for the development, maintenance, and upgrading of the smart home ecosystem. Xingyi Technology's smart home system is built by them.
The Product R&D Department is responsible for developing brand new smart home furniture and appliance products. For example, routers and AI speakers are developed by the Product Department.
The Marketing Department, on the other hand, is responsible for market promotion, sales, customer development, and maintenance, among other tasks."
Listening to Meng Qingzhen's introduction, Wang Yi nodded:
"Add a new department: the Intelligentization Department!"
"Intelligentization Department?"
Everyone was a bit confused.
Meng Qingzhen also asked,
"Chairman, the development of smart home products is handled by the Product R&D Department. Wouldn't adding another Intelligentization Department create a conflict?"
Wang Yi waved his hand,
"No conflict, the two departments are completely different."
"The Product R&D Department develops brand new smart home appliances, such as intelligently controlled routers, AI speakers, as well as smart wearable devices, smart bands, smartwatches, and other products."
"The Intelligentization Department, on the other hand, is responsible for empowering traditional home appliances with intelligence, making them smart home appliances!"
"For example, a traditional air conditioner needs to be controlled by a remote, but by simply adding a smart chip, it can become a smart air conditioner, controllable via a mobile app. It can also be integrated into the Xingyi Smart Home system, controlled by an AI speaker or sensors!"
"Similarly, traditional switches, sockets, washing machines, fans, table lamps, chandeliers, etc., can all achieve intelligentization by adding smart control chips, becoming smart home appliances and integrating into the Xingyi Smart Home ecosystem!"
"The purpose of the Intelligentization Department is to achieve this goal."
Meng Qingzhen suddenly realized:
"The R&D Department is for entirely new development, while the Intelligentization Department focuses on empowering traditional products with intelligence!"
Wang Yi smiled slightly,
"This is just one aspect. Subsequently, the Intelligentization Department will also need to launch a complete set of intelligentization solutions to help our clients, such as Haier, Hisense, Midea, Gree, etc., empower their traditional products with intelligence, integrate them into the Xingyi Smart Home ecosystem, and transform them into smart products."
"That's a great idea! This way, in the future, Xingyi Technology will set the entire smart home ecosystem standard. And the largest smart home ecosystem will also be our Xingyi Smart Home ecosystem!"
Wang Yi nodded,
"Exactly."
But one manager was puzzled,
"Chairman, if we help white goods giants achieve intelligentization, how do we profit?"
Wang Yi smiled slightly,
"Firstly, we will also launch our own smart products to compete for market share.
Secondly, when empowering white goods giants with intelligence, they will have to pay us for using our solutions, our smart chips, and our technical support.
Thirdly, once white goods giants all use our smart home solutions, they will have to integrate into the Xingyi Smart Home system, at which point the Xingyi Smart Home ecosystem will be dominant. Users will also only be able to choose Xingyi Smart Home, leading them to purchase large quantities of our various sensors, devices, smart home products, and so on.
It can be said that as long as the Xingyi Smart Home ecosystem grows large, profits will not be a concern in the future."
"The Chairman is brilliant."
Everyone was deeply moved.
Helping competitors like Haier and Hisense achieve intelligentization might seem like aiding enemies, but it's actually binding them to the Xingyi Smart Home ecosystem's battleship!
The ambition is huge!
Once the Xingyi Smart Home ecosystem becomes the largest in the country, or even globally, profits will no longer be a concern.
This is Wang Yi's ultimate plan.
Wang Yi changed the topic,
"AI speakers, routers, sensors, smart lighting, smart sockets, smart fans, smart air conditioners can all be developed and advanced as quickly as possible. Multiple products can be launched simultaneously. Our smart home factory can partially start production in the second half of the year. If capacity is insufficient, we can also find reliable OEM factories, or even acquire them!"
Most of Xiaomi's smart home products are OEM produced, so product quality can be inconsistent.
Some are of excellent quality, while others are a matter of luck.
To ensure quality control and quality, Wang Yi still preferred to control his own factories and produce himself.
Only in this way can all aspects of R&D, production, and after-sales service be better managed.
Acquiring high-quality OEM factories became an excellent option.
Subsequently, the entire Smart Home Business Unit began to be frantically busy.
Wang Yi ordered so many products at once; some required R&D from scratch, while others needed intelligent transformation, and all had to be advanced one by one.
For the Smart Home Business Unit, this was both an opportunity and a challenge.
If they do well, getting an additional five or six months' worth of year-end bonus will not be a problem.
If they don't do well, they can only watch the adjacent departments receive theirs.
Suddenly, everyone was full of fighting spirit and went all out.
Wang Yi was delighted by this.
If these people perform well, it's estimated that smart home products can be launched in the second half of the year, alongside Xingyi Smart TVs X40 and X50!
That would be perfect!
Also, Meiyou Science Park will be completed and operational in the second half of the year.
During the renovation process, it will directly install a full set of Xingyi Smart Home systems to create a modern and intelligent science park!
And in a few years, for Xingyi Real Estate, fully furnished houses can also feature the complete Xingyi Smart Home system.
This way, it would be considered truly intelligent high-end products!
For example, the simplest scenario: when a person arrives at the door, the smart lock automatically opens via facial recognition; upon entering, the lights intelligently turn on, welcoming the owner home; curtains automatically open, air conditioning automatically runs, air purifier automatically purifies...
After this series of operations, which owner wouldn't be impressed?
If they can't set it up themselves, they'll just pay to buy it.
After all, this entire setup would still be considered advanced even ten years from now, let alone currently!
The best way to stand out is to create features that competitors cannot, and provide experiences that competitors cannot offer.
As long as Xingyi Smart Home gets off the ground, the money earned will be enough for chip R&D and wafer fab R&D!
This way, Wang Yi would be rid of two major burdens!
Subsequently, Wang Yi went to meet Old Liang's mentor, Old Hu.
If Williams was the chip R&D big shot Wang Yi poached from Texas Instruments.
Then Old Hu was the wafer fab process R&D big shot Wang Yi poached!
In his previous life, with Old Liang, SMIC developed rapidly, going from 28nm to 7nm in just a few years, almost like cheating.
Now that Wang Yi has Old Hu, the rapid development of Xingyi Semiconductor is also just around the corner!
After all, the second industry crisis encountered in semiconductor manufacturing, namely how to break through chip processes below 22nm, was solved by Old Hu!
Old Hu's original FinFET (Fin Field-Effect Transistor) broke the current Moore's Law, making 20nm, 14nm, and even 10nm, 7nm possible!
Without Old Hu's FinFET, the global semiconductor industry would have remained stuck above 22nm for an unknown number of years.
It was precisely because of Old Hu's FinFET that Intel mass-produced 22nm in 2011!
Similarly, with FinFET, TSMC also hopes to mass-produce 22nm in the second half of this year.
Now that Wang Yi has Old Hu, the founder of FinFET, there is hope to achieve 28nm, or even 22nm, within two years!
Now Old Hu has also moved into Xingyi Science Park.
Wang Yi allocated a research building to them, right next to Williams' chip R&D building.
Currently, the entire department has over a hundred people busy, all being wafer process R&D personnel and wafer fab technicians.
Seeing Wang Yi arrive, Old Hu's eyes lit up:
"Director Wang, you've come at a good time. There's something I wanted to discuss with you."
"Old Hu, please speak!"
"Here's the thing: Intel mass-produced 22nm last year, and TSMC's 22nm shouldn't be a problem in the second half of this year. Even SMIC can mass-produce 40nm in the second half of this year. Therefore, starting from 45nm for us is too far behind!"
(End of chapter)