The more high-end the chip, the greater the research and development difficulty.
But for low-end chips used in budget phones, that's much easier.
Wang Yi continued:
"There are also baseband chips, and it's the same, two versions. One is the 28nm Yilong 3000, and the other is the 40nm Yilong 2800. The 40nm Yilong 2800 can be taped out in the second half of the year for budget phones. The 28nm Yilong 3000 will be used for next year's flagship phones!"
"No problem!"
Williams had no objections.
First trying a simple one to accumulate experience, then doing a difficult one, naturally greatly increases the success rate.
What's more, after the 40nm trial production in the second half of the year, it can be taped out in their own wafer fab, which makes it even simpler.
In fact, many of Qualcomm's mid-to-low-end processors are also scaled down or modified from older processors; it's impossible to develop them all from scratch.
The biggest advantage of doing this is that R&D costs are greatly reduced.
A 7nm mobile phone chip, not counting other expenses, costs 2 billion RMB in design alone!
And the design cost for a 3nm mobile phone chip is as high as 4 billion RMB!
It is precisely such high costs that lead to very few companies being able to develop high-end mobile phone chips.
Even if the design cost of a 28nm mobile phone chip is lower, it still costs 300 million RMB.
As for 40nm mobile phone chips, the design cost is even lower, but still costs 200 million RMB.
Xingyi Semiconductor will launch so many mobile phone chips in one year: Kunpeng 500, 700, 900, baseband Yilong 2800, Yilong 3000, a total of five models!
If all of them were developed from scratch, not to mention the time and effort, the R&D cost alone would exceed 1 billion, and subsequent tape-out costs, production line costs, etc., would not be small figures.
But by scaling down, aggressively modifying, and upgrading the Kunpeng 700 to create the Kunpeng 500 and 900, the R&D cost would be much lower.
Plus the baseband R&D cost, it is estimated that 500 million would be enough to get everything done, saving at least half.
Like bombers, rather than researching many new models, none of which are fully developed, it's better to aggressively modify the Liu Ye!
Ten years later, the Liu Ye will have almost run out of the 26 letters, and no one knows how powerful it will truly be.
Wang Yi's strategy is aggressive modification!
In this way, the Kunpeng 500 chip + Yilong 2800 baseband can be mass-produced by the end of the year for next year's budget phones.
The launch time for budget phones cannot be postponed until mid-next year; instead, they must be launched at the beginning of next year!
Therefore, the R&D of budget phones must be fully accelerated.
Wang Yi had a plan in mind.
In 2012, the flagship xphone 1pro used the 40nm quad-core Nvidia Tegra 3 processor.
For budget phones in 2013 to use the 40nm quad-core Kunpeng 500 processor, there would be no problem at all.
Even Qualcomm's and MediaTek's quad-core low-end processors would only hit the market by the end of 2013, with phones featuring them launching in 2014.
Moreover, the cost of self-R&D and self-production would be even lower.
The total R&D cost for five chips is 500 million, averaging 100 million per chip.
Assuming a mass production of 100 million units, the R&D cost per chip would be diluted to only 1 yuan.
As for material costs, it depends on wafer prices.
A 28nm wafer, TSMC sells for $3000, calculated at the average exchange rate of 6.3 in 2012, which is 18900 RMB.
Approximately 700 chips can be cut from it, approximately 550 chips when factoring in the yield rate. The wafer cost per chip is about 34.3 yuan.
Plus packaging costs, amortized R&D expenses, marketing expenses, etc., the cost per unit would be upwards of 70 yuan.
It is for this reason that the cost of Qualcomm 800 and Apple A5 is around 70.
As for 40nm wafers, TSMC sells for $2000, also calculated at 550 chips, the wafer cost per chip is about 23 yuan.
Fortunately, low-end chips have low R&D costs, plus packaging and other costs, a single 40nm mobile phone chip has a cost price of about 40 yuan.
However, if Xingyi Wafer Fab produces it themselves, the cost would be even lower.
For example, for a 40nm wafer, TSMC foundry costs $2000 per wafer, while Xingyi Wafer Fab's own production would probably be around $1500. After all, TSMC needs to make a profit from its foundry services!
$1500, which is 9450 RMB, if 550 chips are cut from it, the cost per chip is 17 yuan.
Plus R&D costs, packaging costs, etc., it would be around 30 yuan.
Much cheaper than buying Qualcomm chips, and a quarter cheaper than TSMC foundry services.
But unfortunately, this is just the processor; the external baseband chip must also be included.
The cost of the baseband chip also needs to be nearly 30 yuan.
In this way, one Kunpeng 500 + one Yilong 2800 would cost 60 yuan per set.
The cost doubled.
No way around it, this is the difference between external basebands and integrated basebands.
A System-on-Chip (SOC) with integrated baseband, a single chip includes CPU, GPU, baseband, DSP, ISP, GPS, Bluetooth, WiFi...
The technical difficulty is much higher than external basebands, but the cost is much lower!
Wang Yi sighed and looked at Williams:
"William, if we were to make a 40nm SOC with an integrated baseband chip, can you be confident it can be done? Mass production before New Year's Day."
"Mass production before New Year's Day!" William frowned and thought for a moment, "Chairman, we started R&D for the 28nm integrated baseband Kunpeng 900 last year, but it can't be done before New Year's Day. The earliest would be mid-next year."
"However, a 40nm low-end SOC with integrated baseband is much simpler; if we go all out, there's great hope for it before New Year's Day!"
"But in that case, the 28nm high-end Kunpeng 700 chip will have to wait until after New Year's Day!"
Wang Yi nodded:
"This is not a problem. Xingyi Second Generation will only be released in September this year. The next generation flagship phone will have at least a six-month interval, so releasing it in March next year is not urgent!"
"Okay, then there's no problem." Williams agreed, "Then we will first make the 40nm SOC Kunpeng 500 with integrated baseband, mass production before New Year's Day. As for the high-end 28nm, the Kunpeng 700 with external baseband, mass production in February next year. The 28nm high-end Kunpeng 900 chip with integrated baseband, mass production before June next year!"
"Alright!"
Wang Yi nodded.
The release times for high-end phones must be staggered; one every six months is sufficient.
As for budget phones, they can be released in January.
The market launch can be slowed down to February.
One month's time, for public opinion to ferment, can instead cause a greater sensation.
After all, budget smartphones in early 2013 would definitely be a game-changer.
This 40nm SOC Kunpeng 500 with integrated baseband saves one baseband chip, and the cost per unit can then be controlled to 30 yuan!
The cost of the budget phone would then be completely pushed down to 550 yuan, and the profit would be considerable.
"I look forward to your results!" Wang Yi said with a smile, "But the performance can't be too bad; it must at least have the performance of Nvidia's quad-core Tegra 3 chip!"
"That's not a problem." Williams said with a smile, "Our chips, being late starters, have the advantage of being late starters. Nvidia's and Qualcomm's chips use the ARM V7 architecture, while we directly adopt the latest ARM V8 architecture. We are a generation ahead of them in architecture, so even a 40nm low-end processor will not perform worse than Tegra 3."
"That's good."
Wang Yi couldn't help but feel a little emotional.
Chips these days are a generation every year, progressing rapidly.
In the first half of 2012, the 40nm Tegra 3 was still the world's strongest quad-core chip.
But by the second half of the year, the 28nm Qualcomm quad-core 8064 became the strongest, leading a generation in process technology.
By early 2013, Xingyi Technology's budget phone chip Kunpeng 500, its performance would not be much worse than Nvidia's flagship Tegra 3 from a year ago.
There's nothing that can be done about it; chip upgrades are just this fast.
For example, the xphone 1's dual-core CPU Qualcomm 8X60, was still the strongest chip in the second half of 2011, but became a sub-flagship in the first half of this year, and will be a low-end chip by next year.
After all, the 8X60 dual-core processor belongs to the Qualcomm Snapdragon 200 level, considered low-end of the low-end.
Even Qualcomm's flagship processor APQ8064 in the second half of this year is only at the Snapdragon 600 level, and will become a mid-range processor next year.
Mobile phone processors are updated too quickly, dropping one tier a year, nothing can be done about it.
When the Kunpeng 500 quad-core processor launches next year, even if it can't match the 28nm quad-core APQ8064, it must at least compete with the quad-core Tegra 3!
Otherwise, it won't be viable.
Next year, Xingyi Wafer Fab will be in full production, with an annual capacity of 300,000 wafers, factoring in the yield rate, it can manufacture 165 million Kunpeng 500 SOCs!
These 165 million self-developed and self-produced chips are not only enough for budget phones, but an additional 65 million units can be used for xphone 1pro!
With the release of Xingyi Second Generation in the second half of the year, the dual-core xphone 1 will be completely discontinued next year.
The quad-core xphone 1pro will continue to be sold, but its processor will be replaced from Nvidia Tegra 3 to the self-developed and self-produced Kunpeng 500!
After all, both Kunpeng 500 and Tegra 3 are 40nm quad-core processors, with similar performance, but the cost is much lower.
The Nvidia processor for xphone 1pro will certainly see a significant price drop by next year, but even at its cheapest, it will still cost $17, plus a Qualcomm baseband chip at $13, totaling $30, or 190 RMB!
But the self-developed and self-produced Kunpeng 500, with integrated baseband, costs only 30 RMB!
190 replaced by 30, saves 160 yuan per unit, chip cost sharply reduced by 84%, this deal is absolutely worthwhile.
What's more, once the sales of Kunpeng 500 exceed 150 million, the cost can drop below 30!
Also, Xingyi Tablet X1 will also be discontinued next year to make way for Xingyi Tablet X2.
And Xingyi Tablet X1pro will continue to be sold, and its processor will also be replaced with Kunpeng 500!
Even the processors for Xingyi TV X40 and X50 will be replaced from Tegra 3 to Kunpeng 500!
In short, except for new flagships still using Qualcomm 28nm, all other phones and tablets will all be replaced with the self-developed and self-produced 40nm Kunpeng 500!
After all, self-R&D and self-production are the primary productivity!
However, since Xingyi Wafer Fab's capacity is all used for producing Kunpeng 500 SOCs, then low-end chips such as smart home chip H1, fast charging chip C1, and power management chip P1 can only be outsourced to SMIC for foundry services.
These low-end chips have low costs and not high profits, so there's no need to waste Xingyi Wafer Fab's limited capacity.
It just so happens that SMIC will mass-produce 40nm in the second half of the year, and can completely take on these orders next year, which can be considered supporting SMIC.
With the chip matters arranged properly, what remains is the advancement of the supply chain for budget phones.
The supply chains for high-end phones are all ready-made and can be secured with money.
But the supply chains for budget phones are mostly domestic enterprises, and all need to be nurtured and developed one by one.
Like screens, Samsung has been unchallengeable in recent years, cutting off supply to whomever it wished.
To choke Xiaomi, Lei Bus had to personally fly over to drink and apologize to get Samsung's AMOLED screens.
But ten years later, BOE and CSOT fully rose, with domestic products completely replacing them!
Huawei's entire flagship series used BOE, Xiaomi's entire flagship series used CSOT.
As for Samsung AMOLED screens? What's that, no one cared at all, only suffering from overcapacity!
At that time, Samsung was far from being arrogant, cutting off supply as it pleased; instead, Samsung had to beg Huawei and Xiaomi to use their screens!
But unfortunately, even if Samsung signed huge liquidated damages as a guarantee against supply cuts, Huawei and Xiaomi would not pay for Samsung's excess capacity!
This is the significance of the rise of domestic supply chains!
It is also Wang Yi's original intention to always support the domestic industrial chain.
The next focus is to cultivate the domestic industrial chain and build budget phones!
SOC chip, Kunpeng 500, self-developed and self-produced.
Batteries, casings, etc., are not a problem; BYD will handle it.
Speakers, earphones, etc., are also no pressure; Goertek will handle it.
What's left are the four major components: screens, memory, flash memory, and lenses!
As for screens, BOE, Visionox, Tianma, AUO can all be considered, especially BOE!
In his previous life, Huawei supported BOE; this time, Wang Yi will use RMB to strongly support BOE!
The simplest thing is that a large order for 100 million sets of screen modules for budget phones could make BOE rich in one go!
As for camera modules, we can see if Ofilm and Sunny Optical can handle it.
As for memory and flash memory, this is relatively difficult.
In 2012, and even 2013, domestic capabilities in this area were relatively weak, and we might still have to use companies like Toshiba, Samsung, and Hynix.
Even so, Xingyi Technology's budget phones have basically achieved over 80% localization, which is already very commendable.
BYD is easy to deal with, having collaborated many times, a single phone call will suffice.
But with BOE, Ofilm, and Sunny Optical, negotiations will have to be conducted one by one.
Thinking of this, Wang Yi approached Zhu Changlin:
"Changlin, our Xingyi phones currently use mostly international supply chain components, but we definitely need to vigorously cultivate the domestic industrial chain; in the future, it is only natural for domestic products to replace international industrial chains."
Zhu Changlin strongly agreed:
"The Chairman has a grand vision. Excessive reliance on international industrial chains not only incurs high costs but also makes us vulnerable to being choked. Currently, we self-develop chips, and can cultivate some in other areas. Chairman, do you have a target in mind?"
Wang Yi nodded:
"Screen suppliers BOE, Visionox, Tianma, and lens module suppliers Ofilm, Sunny Optical. Take a team to investigate and explore their technical level and development potential. If their capabilities are good, for next year's budget phones, we can consider cooperating with them!"
"Understood!" Zhu Changlin understood Wang Yi's meaning, "Then I will arrange personnel and go to BOE first tomorrow."
On the supplier side, let Zhu Changlin and his team first investigate and see the situation.
Once there are results, Wang Yi will then consider whether to make an investment.
Currently, BOE, Visionox, and Tianma are all short on funds, and their product lines are also outdated.
If they have Wang Yi's super large orders and resource support, they can naturally develop rapidly.
And Wang Yi's resources will only be given to one company, or two, chosen based on merit.
The night was like water.
Wang Yi and Lin Shu were eating together, watching the remastered version of "The Legend of Qin".
Lin Shu praised endlessly:
"The remastered 'The Legend of Qin' is so exquisite; special effects, modeling, are all several dimensions stronger than before!"
Wang Yi smiled faintly:
"That's right, 25 million in funds were not spent in vain."
Since regaining the copyright, Wang Yi invested funds to completely remaster all 62 episodes of the first three seasons of "The Legend of Qin"!
Two episodes aired per week, making it an annual series.
After the first three seasons conclude around November, a brand new fourth season will air one episode per week.
In this way, the entire first four seasons of "The Legend of Qin" have become S-grade blockbusters, providing the audience with the best visual experience.
After all, the picture quality and modeling of the first three seasons were too poor; they were unbearable to watch.
The results did not disappoint Wang Yi; since the remastered version of "The Legend of Qin" aired at the beginning of the month, it attracted a large number of "The Legend of Qin" fans, with many exclaiming "my youth is back"!
Although everyone has watched the previous seasons of "The Legend of Qin", it has been several years for most, much of the plot has been forgotten, and the modeling and picture quality were poor back then.
Now that Wang Yi has invested heavily in remastering, "The Legend of Qin" fans decisively became members to show support, causing Xingyi Video's membership revenue to surge again!
In just three weeks since the remastered "The Legend of Qin" began airing, it brought 500,000 new VIP members to Xingyi Video!
Coupled with the annual series broadcast, over half of the users purchased annual memberships, generating over 50 million in revenue for Xingyi Video!
It can be said that remastering the first three seasons of "The Legend of Qin" cost 25 million, and making the fourth season cost 19 million, totaling only 44 million.
But the new membership revenue in three weeks alone had already broken even and achieved profitability!
With continued airing in the following months, all additional new members would be pure profit!
Especially once the brand new fourth season airs, it will surely add over a million new members.
This wave of remastering not only didn't lose money but also made a considerable profit.
Such an unexpected outcome left Youku speechless.
What's worse is that although Youku also has the first three seasons of "The Legend of Qin", their versions are poorly made old versions, completely unable to compete with Xingyi Video's remastered new version.
Instead, "The Legend of Qin" fans have successively abandoned Youku and switched to Xingyi Video!
The contract between the two parties was only for the fourth season, to be distributed to Youku for free, only the fourth season; naturally, not including the remastered first three seasons!
For a time, Youku's vice president cried out that he had been tricked.
He also didn't expect Wang Yi to be willing to spend 25 million to remaster the first three seasons, nor did he expect this wave of operations to attract countless fans, not only without loss but also with profit!
It's simply outrageous!
One can only say that the people at Youku don't understand traffic and don't understand what "Ye Qing Hui" means!
Wang Yi had already anticipated such a result when he first began the remastering.
Soon, after finishing an episode of "The Legend of Qin", Lin Shu felt a bit unsatisfied:
"The progress bar can't keep up, sigh."
Wang Yi smiled faintly:
"No worries, I'll have them make more high-quality dramas for you to watch later."
"Alright, one more week, and 'Empresses in the Palace' will be out! I'm looking forward to it!"
Lin Shu said with a smile.
Wang Yi remembered this:
"Right, 'Empresses in the Palace' is coming out, Xingyi Video will have exclusive online broadcast rights, and will make a fortune again."
This time, just the remastered "The Legend of Qin" increased membership by 500,000, and when the brand new fourth season airs, it can increase even more, at least a million, or even 1.5 million.
As for the number of members brought by "Empresses in the Palace", that would be even more terrifying, definitely several million!
Another fortune to be made!
Of course, Jia Laoban, who sold the copyright to Wang Yi, would have to cry himself to unconsciousness in the restroom.
Recently, Jia Laoban hasn't been doing well; he discovered that the new model he just thought of, Wang Yi seems to already be doing...
This is simply magical!
"Oh right, Xiao Shu, in a couple of days I need to go back to Jeju to prepare for the new product launch."
Wang Yi remembered this.
In late March, with spring in full bloom, it was time for the "pure desire" style to sweep the globe again.
To this end, Wang Yi had set up several new factories and opened many stores globally!
Not to make a big splash would be inexcusable.
Lin Shu was in a great mood:
"Looks like there will be pretty little dresses to wear again, how nice!"
"Yes, last year's 'pure desire' style can't match this year's young ladies. Meiyou, Zhenyou, all need to launch a large number of new products to start a new wave of harvesting! No, to benefit young ladies!"
Wang Yi said with a smile.
People shouldn't forget their roots; he started with the 'pure desire' style, so he can't give up his old trade!
"Hehe. Okay, then let's get a good night's sleep tonight."
"Alright."
The next day, Wang Yi came to Xingyi Technology.
Jian Ziyan approached him:
"Chairman, today is March 20th, xphone 1pro is launching nationwide. Xingyi mobile phone factory and BYD foundry are all ready, logistics are all in place, and shipments are going out furiously! The first batch of goods, 1.5 million units, has already been distributed to stores nationwide two days ago!"
"Okay."
Wang Yi nodded.
After xphone 1pro was launched early at the end of last month, full payment pre-orders began on March 1st.
Now, in twenty days, full payment pre-orders have exceeded 4 million units.
With such a large order volume, Xingyi mobile phone factory's monthly capacity of 2.5 million is completely insufficient, and BYD foundry frantically increased orders by 2.5 million.
Under frantic production, as of the 20th, the stock prepared had just exceeded 3.5 million units.
But it can be managed.
"Chairman, how much will we ship this time? Will we ship everything?"
Jian Ziyan was full of curiosity.
Wang Yi nodded:
"Ship everything, send out all the stock we have. Also, notify the media and invite them to interview at the shipment site!"
"Understood!"
Jian Ziyan instantly understood Wang Yi's meaning.
Make a statement!
To make phones, you have to be high-profile!
Especially for xphone 1pro starting at 4999, a high-end phone, if not high-profile enough, it won't have many sales.
"What about CCTV, should we invite them?"
Jian Ziyan had a bold idea.
"CCTV?" Wang Yi thought for a moment, "This can be considered; if there's a report from CCTV, then xphone 1pro will become a national hit!"
"Okay, then I'll invite them all!" Jian Ziyan said with a smile, "But will they come?"
Wang Yi nodded:
"Absolutely! Our xphone 1pro is aiming for the high-end market, with 4 million full-payment pre-orders in 20 days; it's a highlight for Xingyi Technology and also a highlight for domestic mobile phones. For such a positive and proactive event, CCTV is highly likely to come!"
"Okay, I'll invite them now!"
"Mhm, at that time, invite them directly to the Xingyi mobile phone factory; nothing can compare to the shock of seeing carloads of phones being transported out of the factory!"
Wang Yi said meaningfully.
Xingyi factory still has 1 million units in stock, constantly shipping them out!
BYD's side is similar.
Fortunately, the first batch of 1.5 million units in stock was distributed in advance to flagship stores, specialty stores, and franchised stores across the country.
Otherwise, with so much stock, shipping would be troublesome.
Wang Yi had been stockpiling for 20 days, accumulating 3.5 million units in stock before starting sales, precisely to create a one-time explosion!
With xphone 1pro priced starting at 5000, its market performance would be hard to maintain continuous hot sales like xphone 1, which started at 3000.
Wang Yi could only think of ways to market and create hype.
For example, launching with an initial shipment of 3.5 million!
This is a very good gimmick, a nationally sensational gimmick!
If there were also CCTV reports, then...
(End of chapter)