2003: Starting with Foreign Trade

Chapter 1037 "Weilai Semiconductor"

P.S.: Requesting guaranteed monthly votes!
It is indeed just the beginning, but the company that National Technology was able to achieve a rapid breakthrough in mass production owes the most gratitude to SMIC.

SMIC's main business is currently consumer-grade chips, and it has not made much progress in automotive-grade chips. Given the tight supply of chip production capacity, it is understandable that the company chooses consumer-grade chips, which have a larger market.

SMIC originally did not want to accept the contract manufacturing orders from National Technology, a small company that only had one partner, Weilai Motors, and whose technological strength was relatively backward in SMIC's view.

When Guomin Technology was discussing cooperation with SMIC, it was going through a period of privatization and delisting, and its future was bleak. At that time, the automotive chip market did not actually have a great demand for domestic alternatives, at least not as great as the demand for mobile phone chips.

"Four years have proven your vision and strategy, Mr. Tan, as well as the excellence of the National Technology team and Weilai."

Zhao Haijun, co-CEO, is responsible for SMIC's overall operations and also oversees SMIC's specialty process business, which is related to automotive chips, including automotive MCUs, power semiconductors, and sensor/CIS chips.

"Not at all, I must thank Mr. Zhao for his strong support."

The first person Tan Jincheng persuaded was this person, which dates back to 2019 or even earlier. At that time, SMIC had not made much progress in the automotive-grade chip business, and the company was also facing considerable trouble.

Founded in 2000, SMIC experienced rapid growth in its early stages. However, starting in 2003, it became embroiled in a seven-year patent dispute with TSMC. After finally managing to recover, it received investment support from the National Integrated Circuit Industry Investment Fund and then caught the window of opportunity in 2018.

In 2019, SMIC was backed by the National Integrated Circuit Industry Investment Fund and had an IPO plan. From the outside, it seemed to be doing quite well. But in reality, there were undercurrents. It was a company that received the same treatment as Huawei.

The eagerness to go public was largely due to this reason; at that time, SMIC really didn't have much energy to expand its automotive-grade chip business.

"Not at all, it's a win-win situation through cooperation."

Zhao Haijun laughed and said that four years ago, this young man walked into his office and told him not to have any illusions, to buy lithography machines as soon as possible, and if there was not enough time, to accelerate technological breakthroughs and seek to advance chip manufacturing process research and development without advanced equipment.

Subsequently, it was stated that with the advancement of new energy vehicle projects, the market demand for domestically produced automotive-grade chips will increase significantly in just two to three years. SMIC can accelerate the layout of its specialty process business, and WIL is one of their best partners.

Tan Jincheng left a deep impression on him at the time. As an industry practitioner, he was naturally aware of these things. However, in 2019, the relationship between the two sides was relatively relaxed, and many people were still hoping to negotiate.

Many within their ranks shared this view; most remained unwilling to believe or accept it. Tan Jincheng's unwavering stance left the deepest impression on him.

Four years have proven Tan Jincheng's judgment at the time; even if someone else had been in his shoes, the situation would have remained the same, or even worse.

This is the scene of their first meeting.

Since then, through multiple negotiations, SMIC has reached a cooperation agreement with National Technology and Weilai. In 2020, SMIC began to devote more energy to mature processes, expanding its 28-nanometer and above production capacity to meet the market demand of automobiles, the Internet of Things and other industries.

At the same time, SMIC also accelerated its research and development of advanced processes in the absence of advanced equipment. This was not because of Tan Jincheng's reminder, but because of the circumstances. Everything was happening too fast, forcing them to respond in this way.

However, for Zhao Haijun himself, his first meeting with Tan Jincheng planted a seed in his heart to some extent. When things came to a head, the reminder from that time resurfaced, and he was able to be more composed when carrying out the company's operations.

It is widely believed that SMIC does not currently possess many advanced manufacturing processes, including those of its partners. However, this is not the case. Through secret research and development, SMIC has already achieved considerable strength.

"Going forward, without affecting your company's plans, we hope you can give Wei some preferential treatment in terms of production capacity."

Today, SMIC has partnered with more than just one automaker in the automotive-grade chip business. Other automakers such as BYD and Wenjie have also become SMIC's clients, and this business of SMIC has been successfully developed.

"No problem, I can make that decision."

Zhao Haijun readily agreed. As the first new energy vehicle company to cooperate with SMIC, Weilai is not only an industry leader but also their fulcrum for entering the new energy market, as well as the largest customer among car companies.

This priority is achievable. Another point is that Zhao Haijun also wants to see if he can snatch the Horizon Robotics foundry contract from TSMC through the cooperative relationship with Wei Lai.

Although Tan Jincheng no longer actually controls Horizon, his influence remains.

On the last working day of May, Sun Yingtong reported to Tan Jincheng at the headquarters of ByteDance's advertising platform.

The so-called headquarters is actually hidden in the Flashpoint Building. Ever since Tan Jincheng stepped down from his position at Flashpoint Group, the top floor of the Flashpoint Building headquarters has been transformed into the headquarters of ByteDance.

The top three floors belong to ByteDance, and are separated from the elevators on other floors. ByteDance operates discreetly, and even employees of FlashDrive Group who work on this floor rarely see them.

Tan Jincheng rarely works here anymore.

Currently, National Technology has achieved mass production of automotive-grade chips, but it can only make some basic replacements. Among the companies it has partnered with, only Weilai is involved. If the company wants to develop rapidly, in addition to further research and development, it also needs to develop more customers.

When it comes to specific business matters, these are not things that Tan Jincheng should be concerned with. They require the efforts of Sun Yingtong and the National Technology team. In other words, Tan Jincheng's role at National Technology has come to a temporary end.

"Here are three benchmarks for you."

Flash Tower remains the tallest building in Beicang District, standing alongside Sun Yingtong in front of the floor-to-ceiling windows to enjoy the view.

"Please tell me."

In recent years, the company has focused on R&D and has cut some low-end businesses as much as possible. National Technology's revenue has almost stagnated, and all its expenditures have come from the financial support of ByteDance. It's time for a change.

Sun Yingtong knew that the boss was assigning them tasks for the next phase, as they didn't expect to make money in the short term, but at least they needed to increase revenue to the billion level as soon as possible.

"The worst-case scenario is that you end up like Saiteng Micro, still shipping small batches to Weilai, or getting into the supply chains of some second-tier car companies. Life won't be great, but you'll barely survive."

Saiteng Micro entered BYD's supply chain this year, but as any component supplier who has worked in BYD's supply chain knows, its gross profit margin is very limited, and in most cases it can only exist as a second or even third supplier.

If a company doesn't focus on upstream research and development, it will have virtually no presence in the market and will only be able to play a manipulated role in the industry chain.

"The second benchmark is SemiDrive Technology."

SemiDrive is a young company; they only started building their team in 2018. However, SemiDrive, which originated from the NXP team, has developed at a remarkably rapid pace, attracting significant capital investment in addition to its technological prowess.

SemiDrive first taped out its first tape-out in 2020, less than three years after its founding.

In 2021, SemiDrive's mass-produced chips appeared in models such as Chery Jetour and Nezha U. This year, they have entered the supply chain systems of BYD, Changan, and Weilai. SemiDrive provides chip supply for Weilai L1, and its X9 series is expected to ship a total of 50 chips this year.

SemiDrive Technology, which has been developing rapidly, has completed its Series C financing this year and its current valuation has reached 120 billion yuan. This chip company, which has only been established for five years, is expected to ship more than 200 million chips by 2024, with a market share of 5%, second only to Horizon Robotics and Huawei.

For SemiDrive, a valuation of 120 billion is just the beginning.

Sun Yingtong nodded repeatedly, then asked with a smile, "So the third benchmark is the horizon?"

Tan Jincheng also smiled, shook his head and said, "No, it's GigaDevice."

Horizon Robotics was the first company Tan Jincheng invested in in the chip industry. It was initially established by him and Yu Kai's team. However, at that time, Tan Jincheng was a novice and did not know much about chips. Yu Kai's team also had to explore the route, so they were delayed in dealing with the route issue.

Fortunately, the team was professional, and Horizon Robotics quickly got back on track. Today, Horizon Robotics is a well-known domestic company specializing in automotive-grade AI chips and algorithms, focusing on autonomous driving and intelligent cockpit computing platforms.

From technology research and development to large-scale mass production, Horizon Robotics' flagship product is now the Journey series. The Journey 3 has a 7-nanometer process and a computing power of 5 TOPS. It focuses on L2+ADAS and is currently used in many Wynn models.

In addition, Horizon Robotics will also release the Journey 5 series in September this year, which is aimed at NVIDIA Orin and supports L4 autonomous driving. Although it has not been released yet, it has already attracted several brands.

Domestic brands including BYD and Hongqi have already signed orders with it, securing production capacity, with mass production expected in 2023.

To date, Horizon Robotics holds approximately 50% of the market share in my country's autonomous driving market with its Journey series, and more than 60% of the L2-level ADAS market. However, globally, Horizon Robotics' market share is less than 5%, indicating significant room for growth.

But this is the only company that can compete with international giants. Chrysanthemum is currently one of Horizon Robotics' main competitors in this field, but internationally, we still have to look to Horizon Robotics.

With a valuation of nearly 10 billion US dollars, Horizon Robotics is a true unicorn company and is considered one of Tan Jincheng's most successful investments. In addition, most investors and peers have witnessed Tan Jincheng's grand vision in Horizon Robotics.

In its early days, Horizon Robotics relied on Tan Jincheng and his massive engine. With the strong support of SAIC, Horizon Robotics embarked on a collaborative model of "chip + vehicle".

Besides Wynn and SAIC, Horizon Robotics has also introduced major automakers such as BYD, Great Wall Motors, and Volkswagen through multiple rounds of financing. In addition, it has also made close cooperation with emerging electric vehicle companies.

Although Xiaopeng and Wenjie, two leading emerging companies, did not directly invest, they indirectly acquired shares in Horizon Robotics through funds. The fact that so many well-known automakers were able to invest and participate in R&D testing is directly related to Tan Jincheng, who relinquished actual control of Horizon Robotics and returned control to Yu Kai's team.

If Horizon Robotics had always been controlled by Tan Jincheng, it would have been impossible to attract so many car companies to participate.

At least BYD will not get involved. Chips are different from power batteries, especially in the field of smart cockpit chips. Even domestic alternatives are scarce. How could a company like BYD, which is all in on new energy, hand over the smart chip supply chain to a direct competitor?

Take BYD's pioneering work in pure electric vehicles, the Han EV, for example. It was equipped with the Journey series chip last year. If Wei had been in charge of Horizon Robotics, he probably wouldn't have won this order.

Although he had a good personal relationship with Tan Jincheng, in business operations, Brother Boatman was just as rational as Tan Jincheng.

The actual control of Horizon Robotics now rests with Yu Kai's team, and all operations are decided by Yu Kai's team. The founding team's shareholding in Horizon Robotics has also risen to more than 15%, making them the second largest shareholder.

Although Tan Jincheng and ByteDance are no longer actually involved in the operation of Horizon Robotics, they remain the largest shareholder, similar to the model of some internet companies invested in by Tencent, where the largest shareholder does not participate in the actual operation of the company.

This model is most beneficial to both Horizon Robotics and WTI. Only by involving more automakers can Horizon Robotics make further progress in algorithms and maintain its competitiveness with international giants.

However, National Technology doesn't need to play the same role as Horizon Robotics.

National Technology is to Weilai what BYD Semiconductor is to us; it requires no other companies to participate and little financing.

GigaDevice?

"Yes, GigaDevice."

Tan Jincheng nodded. The lower limit is Saiteng Microelectronics, the mid-range is ChipDrive Technology, and the upper limit is GigaDevice. This is Tan Jincheng's plan for the future of National Technology. At present, National Technology has basically escaped the crisis of bankruptcy, so this plan will not be too aggressive.

Founded in 2005, GigaDevice initially positioned itself as a NOR Flash memory manufacturer, filling a gap in the domestic market. Its early customers were mainly Huawei, ZTE, and Lenovo.

After 18 years of development, the company was listed on the Shanghai Stock Exchange main board in 2016, entered the MCU market in 2013, and began to form a dual-engine pattern of memory and MCU in 2017.

GigaDevice, now valued at over 100 billion yuan, will ship more than 50 million automotive-grade MCUs this year, supplying products to Tesla, Wynn, BYD, Xiaopeng and many other new energy companies.

"We will definitely not get involved in the memory business, but we can learn from GigaDevice in the field of automotive-grade MCUs."

Sun Yingtong nodded. The boss's plan was indeed sound. A company can't function without any goals. While it seemed to be benchmarking against three chip companies, it actually set short, medium and long-term goals for National Technology.

By 2022, competition in the automotive-grade chip market intensified. National Technology entered the market relatively late, but there are still many opportunities. While we can't say whether GigaDevice has the same market position, SemiDrive Technology should at least give it a shot.

National Technology can only serve as a secondary or tertiary supplier for Weilai now, but it has effectively filled the gaps in Weilai's chip supply chain. With National Technology, Horizon Robotics, and third-party partners such as GigaDevice and SemiDrive, Weilai will no longer have to worry about chip supply chain security after this year.

Sun Yingtong pondered for a moment and said, "There's another question: Will National Technology secure funding?"

The semiconductor industry is an industry with extremely high investment, and financing is a very crucial step. National Technology currently relies on the financial support of ByteDance, and even if it expands its business, it will still need financial support for at least several years.

This funding either comes from ByteDance's advertising platform or through financing.

"I don't know if we will raise funds in the future, but we won't raise funds within the next five years. I said I would invest at least 500 billion yuan, and that's what we'll do."

Sun Yingtong smiled and nodded: "Then I understand. Does the boss have any other instructions?"

In fact, National Technology is only one year behind SemiDrive Technology. As long as there is continuous capital injection, it is not difficult to catch up. Compared with financing, he prefers other things.

ByteDance's engine is wholly owned, and its daily operations are controlled by their team. Cheng Linfeng manages the finances. They have plenty of money and almost no interference, so working here couldn't be more comfortable.

When National Technology went public, he had to devote more energy to the company's operations and dealing with the listed company's shareholders, which diverted most of his energy.

The fact that there are no plans to raise funds within five years means that National Technology will not relist for at least five years, which also means that its net worth is just that – net worth. However, it is easy to cash out without going public: pledge the shares. The boss will never be short of money.

"In that case, let's change the company name."

Sun Yingtong suggested that the current National Technology, apart from the name, has little to do with the original National Technology, and all its management methods reveal the style of Wei Lai.

He himself had gotten used to Wei Lai's pace. If it weren't for the trouble in Shenzhen, he would have moved the company to Ningbo or Shanghai, not just to change the name.

Tan Jincheng thought about it and agreed.

"Then let's change the name to Weilai Semiconductor. The previous name, Guomin Technology, was indeed not suitable."

A brand new semiconductor company, entirely owned by Wei Lai Semiconductor Company.

"Okay, I'll get it done when I get back."

After seeing Sun Yingtong off, Tan Jincheng lay back in his office chair, slowly closed his eyes, and began to ponder. Up to now, he had basically completed the general direction of Weilai Automobile's industrial layout.

The three core components of the electric drive system, including the core chip supply, have all entered a stage of self-reliance and control. The basic security layout of the industrial chain has been completed. What remains is some patching and time to make technological breakthroughs.

In terms of sales volume, Weilai has no shortage of customers.

Although today's sales figures haven't been finalized yet, Weilai's approximate sales for this month have been confirmed. Driven by the May promotions, Weilai's sales this month are quite impressive.

In May, Exeed S01 sold approximately 2.13 units, ranking first in the pure electric vehicle sales chart. This marks the fifth consecutive month that Exeed S01 has topped the pure electric vehicle sales chart this year. In the price range of 10 to 15 yuan, Exeed S01 currently has no rivals.

In the pure electric vehicle sector, besides the continued hot sales of the Exeed S01, the biggest increase in sales was seen in the ET5, which was operating at full capacity. In May, a total of 10,300 ET5s were delivered, marking the first time that domestic sales exceeded 10,000 units.

In addition to the ET5's sales exceeding 10,000 units, the Aion S, a pure electric vehicle, also saw a significant increase in deliveries in May, with monthly sales reaching 10,500 units. In the pure electric vehicle sector, there are now three models with sales exceeding 10,000 units.

"The only slight regret is that we don't yet have a pure electric SUV model with sales exceeding 10,000 units."

BYD is facing a production shortage, and the same applies to Weilai. If the production capacity of the ET5 is maximized, the production capacity of another pure electric SUV model, the ES3, cannot be maximized. This model also has the potential to achieve monthly sales of over 10,000 units in a single market, but it cannot be promoted vigorously at present due to production capacity constraints.

It's somewhat funny, but Weilai, which started with SUVs and pure electric technology, still doesn't have a single pure electric SUV with monthly sales exceeding 10,000 units.

However, in the hybrid vehicle sector, Weilai's SUVs have performed quite well, with the Galaxy P1 delivering 1.21 units in a single month and the L1 delivering 1.15 units. Making money still depends on hybrid vehicles.

It's all thanks to Da Zui (Big Mouth). He promoted the range extender everywhere, and things have improved for him. Although it was for his own Hongtu X5, it has more or less boosted the sales of the Weilai L series.

It can be said that they benefited from the traffic generated by the big mouth (referring to a specific brand or brand). However, thanks to the promotion of the big mouth, the monthly sales of the X5 have steadily exceeded 5000 units. Although it is far from the big mouth's expectations, it has to be said that this model is truly a success.

To boost sales, Dazui also announced plans to launch a pure electric version of the Hongtu X5. It's unclear when the pure electric version of the X5 will actually be launched. Dazui is certainly good at making empty promises.

With two hybrid models and three pure electric models selling over 10,000 units each, plus the only pure electric model on the market with sales exceeding 20,000 units, Weilai's performance in May was very encouraging. However, there were also some issues.

"Old Hu, isn't it time to make some changes to the E series?"

Holding the complete sales statistics for May, Tan Jincheng walked straight into Hu Zhengnan's office. The sales of Weilai L1 exceeded 10,000 units for several consecutive months, and the blind order data for L9 was also very good, which boosted Weilai's sales.

However, at the same time, the survival space of ES6 and ES8 has been greatly squeezed, giving the feeling of "family members beating each other up".

Hu Zhengnan frowned; he was also having a headache over this matter: "Yes, we should make some changes. The market size is only so big, with prices ranging from 30 to 40 yuan. It's really not a good feeling for us to fight each other."

"Then let's hurry up, we can't let this go on any longer."

This trend wasn't very obvious in April due to special circumstances, but it became particularly clear in May. If this continues, there will be problems.

Pure electric vehicles are the ultimate strategy for Weilai.

(End of this chapter)