2003: Starting with Foreign Trade

Chapter 774 The Semiconductor Dream of the Second Biggest Winner
June 26, Tuesday, Beijing.

The New Century Nikko Hotel near Zhongguancun was bustling with activity.

Lei Jun stood at the entrance of the hotel lobby, looking energetic and greeting the VIPs as they entered, a smile always on his face.

A Weilai ES6 with a green license plate slowly pulled up in front of the hotel. Lei Jun recognized the license plate and quickly went to greet it.

"Mr. Tan, welcome, welcome! You've been enjoying great success lately."

"Haha, without you, Mr. Lei, you'd be in the limelight. You've really paid a heavy price today."

"Haha, no problem, no problem, please come in."

It really cost a fortune; Xiaomi booked the entire hotel today, which was a real financial blow.

However, today was indeed worthwhile, as it marked Xiaomi's Series D funding round. Starting with Tan Jincheng's investment, Xiaomi has completed its seventh round of financing, both large and small.

In the previous rounds of financing, apart from the introduction of Qiming Venture Partners, IDG and Qualcomm, the rest were basically invested by ByteDance, controlled by Tan Jincheng, and Shunwei Capital, controlled by Lei Jun.

Of course, Lin Bing and other founding team members also continued to increase their holdings during this process.

Prior to today's Series D funding round, Xiaomi's valuation was $10 billion. However, after signing the agreement today, Xiaomi's valuation has increased to $40 billion, a fourfold increase.

However, ByteDance and Shunwei Capital did not participate in this round of financing. Tan Jincheng only came to witness and sign the documents.

"Last month was incredibly successful. The thing you said you couldn't talk about before was the acquisition of Nvidia shares."

The two chatted quietly as they walked inside.

"Yes, at that time, nothing was even in the works, so there was really no way to announce anything to the public."

In the past six months, companies of all sizes have gone public, raised funds, launched new products, and engaged in lively capital operations. However, none of these events have caused as much of a stir as the acquisition of a 10% stake in Nvidia by the overseas subsidiary of Weilai Group, marking its entry into the chip semiconductor industry.

From the moment Tan Jincheng saw Nvidia's stock price at the beginning of the year, he vaguely had the idea of ​​investing in Nvidia. It took only half a year from the start of the formal operation to the completion of the final acquisition.

This really fits Tan Jincheng's style; his investment projects have always been so efficient.

"No wonder you said that if it succeeds, it will have some impact on us. Is Nvidia planning to enter the domestic mobile phone chip industry?"

"That's not what I meant. Since you've already partnered with Qualcomm on mobile phone chips, there's no need to partner with Nvidia again. However, you could meet with Mr. Huang and discuss artificial intelligence technology."

The phone that Nvidia and Xiaomi collaborated on was a mixed bag, and Tan Jincheng had no intention of forcibly promoting the collaboration between the two companies; of course, if Huang Renxun could persuade Lei Jun like he did in his previous life, he wouldn't mind.

Since Qualcomm has already invested in Xiaomi, Xiaomi will eventually join the Qualcomm camp anyway, and the Xiaomi 2 will still use Qualcomm Snapdragon processors.

"artificial intelligence?"

"Yes, artificial intelligence. During my meeting with Mr. Huang this time, he mentioned artificial intelligence the most."

When Tan Jincheng met Huang Renxun in early May, his biggest impression was that this guy was a genius, but also a very shrewd businessman.

Interestingly, after the two met, Huang Renxun didn't mention any technical details like chips at all. Instead, he talked to Tan Jincheng about the artificial intelligence research that Nvidia had recently started.

It's normal not to talk about these things. Large chip companies actually have all kinds of chip development capabilities; they just have different business focuses.

Perhaps he thought Tan Jincheng wouldn't understand those technical terms, but that doesn't matter, since he really doesn't understand those so-called professional terms anyway, and there's a professional team to manage that.

Perhaps all truly remarkable people are like this; the boatman was able to foresee the future of new energy vehicles back in 2003.

Huang Renxun is another example. He started working on artificial intelligence in 2012, but it seems that artificial intelligence only began to gradually become popular around 2022.

In 2013, the new energy vehicle market will certainly be very different from what it is now; both are products of a decade-long strategic planning.

While being a chosen one is certainly a matter of destiny, foresight is also very important.

Fortunately, Tan Jincheng was cheating.

The collaboration with Nvidia is actually forward-looking, reflecting the company's recognition of Nvidia's capabilities in artificial intelligence and AI.

The relationship is good now, and if things turn sour, it won't be until 2018. That's six years, so there's still plenty of time to learn some technology from Nvidia.

As far as I can remember, even during the most serious conflict, the car's chips didn't seem to be affected.
"Ha, Nvidia started researching artificial intelligence so early? It's not bad in China right now. Speaking of which, this is quite similar to the research direction of your Weilai Intelligent Driving."

Lei Jun certainly knows about artificial intelligence, and there is some involvement in this field in China, but there is relatively little research.

"It's somewhat similar. We mainly research Level 2 assisted driving, which also involves some artificial intelligence. Our collaboration with NVIDIA also includes this aspect."

Level 2 assisted driving is almost a standard feature of new energy vehicles in a decade or so. Right now, the technology is still a bit behind. It's definitely more than Level 1; it's about half and half.

Weilai Intelligent Driving has been developing in this direction from the very beginning. As for L3, it was just a gimmick when Tan Jincheng was reborn. Later, it seems that due to advertising laws or some other reason, no company continued to promote it.

However, the direction is definitely right. Autonomous driving is certainly a good thing, but it cannot be realized for the time being.

In terms of research and development, Tan Jincheng also prefers to take things one step at a time. Nvidia's direction is correct, but several times it almost killed itself because it was too far ahead of its time. This kind of pressure is not something that ordinary people can bear.

The boatman is very smart. Although he sees the future of new energy vehicles, he won't directly launch new energy vehicles until the time is right.

"Wow, Mr. Tan, your Intelligent Driving system has been established for several years now. It's hard to believe that your company realized this problem so early. No wonder the ES6 has received rave reviews since its launch."

By combining a mobile app with offline direct-sale stores, Weilai has pioneered a new sales model for new energy vehicles, and the ES6, launched after its release, has been quite impressive.

Currently, this is the best new energy vehicle in China, and its driving experience is indeed comparable to those million-dollar luxury SUVs.

The ES6 has been on the market for nearly three months, and Weilai has not released its sales figures. However, judging from the market buzz and the level of discussion on the app, Weilai's sales in the past two months should be quite good.

Tan Jincheng doesn't care about sales of a few hundred vehicles a year, but for the current state of new energy vehicles, selling a few hundred vehicles a year is already a very good achievement.

Professional car magazines, car reviewers, and test drive teams have all given the ES6 very positive reviews. While many of these reviewers are paid by the company itself, there are also quite a few neutral media outlets.

Wei Lai can spend a lot of money on marketing through self-media car reviewers and has his own channels of communication, but he certainly can't control everything.

"Then I must thank you for your support, Mr. Lei."

Lei Jun was among the first Tesla consumers in China, which shows that he paid close attention to the new energy vehicle industry chain very early on. Now that the ES6 has been launched a year earlier than the Model S, Lei Jun naturally bought one out of his own pocket.

Believe it or not, quite a few internet bosses like Lei Jun have actually bought the Weilai ES6, including Li Bing and Mr. Li from Autohome.

Tesla likes to hire a bunch of celebrities to endorse its new cars for marketing purposes, and Wei Lai has also learned this trick.

Now, all the executives of Shanchi and Weilai Auto have switched to the ES6 for their daily travel. In addition, Tan Jincheng has also mobilized his network of friends who are active on the Internet to buy cars and help promote them if possible.

Liu Yifei is undoubtedly the most hardworking among them. In May, domestic media photographed her riding in a Weilai ES6 in public several times.

With only three years left on his ten-year endorsement contract with Flash, the two sides have not yet discussed a renewal. Both Chris Lee and Jay Chou, who sign contracts every two years, have already renewed their contracts three times each.

Although there are still three years left, and it's not time to discuss contract renewal yet, Liu Xiaoli is anxious.

Furthermore, and most importantly, despite having four models of sedans and SUVs, Weilai Auto has yet to appoint a celebrity spokesperson for any of its vehicles.

Many A-list celebrities might not be interested in cars priced in the tens of thousands, but the ES6, with its high-end design, advanced technology, and relatively high price, is still very appealing to many stars.

To put it jokingly, if Zhang Yong had just a little bit of crooked thinking, he could have easily taken advantage of some second- or third-tier celebrities.

"Haha, no need for thanks. In fact, I should be the one thanking you for this round of financing."

Unlike its predecessor, Xiaomi's equity structure is relatively simple in this life. ByteDance, Shunwei Capital, and the original team formed by Lei Jun are Xiaomi's original investors.

They had both money and manpower, and for a long time they didn't need to seek external financing.

The subsequent investment from Qiming Venture Partners, IDG Capital, and Qualcomm not only solved the funding problem for purchasing components but also essentially laid the foundation for where Xiaomi would list in the future.

Qiming Venture Partners has invested in several internet companies that are listed on the US stock market and the Hong Kong Stock Exchange in recent years, but their network of contacts is more concentrated in the Hong Kong area.

In addition, IDG needs no introduction; they were Tencent's initial investors.

Qualcomm, on the other hand, was introduced as a strategic investor to solve supply chain issues for core components, and its equity relationship is quite clear.

The "thank you" that Lei Jun said was actually a thank you to Tan Jincheng for his support throughout Xiaomi's financing process.

As the only institutional investor besides him and the founding team, ByteDance's advertising platform played a significant role in Xiaomi's growth, bringing in substantial cash and helping Xiaomi solve battery supply and manufacturing issues.

In addition, ByteDance's engine has provided a lot of help in other parts supply chains. Furthermore, Tan Jincheng personally provided a lot of constructive advice in the company's development process.

Tan Jincheng deserves at least half the credit for MiTalk's ability to compete on equal footing with WeChat in the realm of instant messaging software.

In addition, the lead investor in this round of financing was Sequoia Capital, which was introduced by Tan Jincheng, and Tan Jincheng also kept his promise, with both he and his Shunwei Capital waiving their right to participate in this round. This undoubtedly provided great convenience for this round of financing.

"Haha, it's a win-win situation. When Xiaomi goes public, should I also give you a gold bar, Mr. Lei?"

Before 2010, Tan Jincheng's investment was more like speculation. He would remember some A-share listed companies that he could recall, and if he could invest, he would; if not, he would just let it go.

The resources provided were also limited, which is one of the reasons why his initial attempt to invest in Meizu failed.

If Tan Jincheng had truly understood Mr. Huang, he might not have invested in such a company, even though it was very famous and was once the only Android brand in China that could compete with Xiaomi.

"Haha, no problem, but it's too early to go public. I have similar thoughts to Mr. Tan; we have no plans to go public for at least the next three to five years."

"Haha, it's okay, I can wait."

With a funding amount of $2.16 million and a valuation of $40 billion, ByteDance's stake in Xiaomi decreased to 18.92% after its seventh round of financing, but it remains Xiaomi's second-largest shareholder.

Over two years, Tan Jincheng invested a total of $3000 million in Xiaomi. After the Series D funding round was completed, this $3000 million investment became a valuation of $7.57 million.

"Mr. Tan, congratulations on your investment! You've made a fortune. Thank you so much."

At the signing ceremony, Shen Nanpeng raised a glass of red wine to Tan Jincheng with a smile.

Two months, two major signing agreements, one in the United States and one in China. This was the year in which Shen Nanpeng and Tan Jincheng met most frequently since they met.

Compared to last month's collaboration, this investment in Xiaomi is relatively simpler.

Since its founding two years ago, each major round of financing for Xiaomi has been able to sustain it for about six to nine months. When it runs out of money, it will intersperse some smaller rounds of financing, but rarely to the public.

It's a real shame that they couldn't compete with Qiming Venture Partners for the $8800 million Series C funding round, except that Qualcomm's position is unshakeable.

Fortunately, they made it into the Series D round. Although the valuation increased fourfold, money was nothing to Sequoia Capital. Just getting a ticket to the game was enough. Originally, DST was competing with them for the lead investment qualification.

To be honest, if it weren't for Tan Jincheng's mediation, they would have had a hard time competing with DST. This was the case in the Series C round, where Qiming and Sequoia were both shareholders of Orange Technology, so Tan Jincheng had no reason to favor them.

"Saying thank you is too formal. Let's help each other achieve our goals."

Sequoia Capital's assistance to Nvidia stems from two main reasons: firstly, Sequoia Capital headquarters was very keen to invest in Tan Jincheng, and secondly, Xiaomi's involvement also played a role.

In just two years, Lei Jun, who used to work in software, has shown everyone his integration capabilities in the hardware market and his control over marketing.

In addition, Xiaomi's ecosystem is becoming increasingly rich, with its own MIUI, social software, and the Xiaomi Community and online store, which were boosted by the hot sales of the Xiaomi 1.

Capital investment is a storytelling process. Xiaomi was able to reach a valuation of $40 billion in just two years and have people willing to pay for it, which means that Xiaomi told its story very well.

If Xiaomi can complete this system, which includes hardware terminals (mobile phones), social networking (MiTalk and Xiaomi Community), and e-commerce (Xiaomi Mall), then its future will be full of potential.

In contrast, Nvidia, which Tan Jincheng invested in, is no longer the company that can tell a good story. Founded in the early 90s, Nvidia currently has a market value of only twice that of Xiaomi.

The only consolation might be that the two companies are simply different entities.

"Haha, that's right. Saying thank you is a bit too formal. It should be mutual support. I'll punish myself with a drink."

After taking a sip, Shen Nanpeng continued, "By the way, the Ministry of Commerce's review should be completed by the end of this month or the beginning of next month, so there shouldn't be any major problems."

The headquarters is right. Tan Jincheng now holds a very high position in the domestic business world. Behind this attack on the Ministry of Commerce, in addition to various capital groups led by Red Shirts, there are also many domestic forces involved.

Especially regarding the establishment of Weilai subsidiary, it is quite evident that considerable resources were mobilized domestically.

Choosing Frankfurt was a really good location. It acted like a third-party organization, balancing the interests of all three parties very well. There must have been some expert guidance behind it.

"That's good. I'll have to trouble Red Shirt to follow up on that later. I probably won't have many opportunities to go to the US these days."

"No problem, it's what we should do."

This was a cocktail party without media present. Tan Jincheng and Shen Nanpeng chatted idly in a corner, while Lei Jun, at this moment, transformed into a social butterfly, toasting everyone around.

He had already noticed Tan and Shen in the corner, but now he could tell that they were talking about something, so he didn't go up to disturb them.

Today's Series D financing is very important for Xiaomi. Executives and shareholders were all present, as well as some important figures from Beijing and Lei Jun's very close friends. The event was of a very high caliber.

Normally, after an internet company completes its Series D funding round, it should start thinking about going public. Xiaomi, which has adopted the dual-class share structure (AB share) from the beginning and has a VIE structure, is clearly aiming for an overseas listing.

There are no companies with dual-class shares that have successfully listed in Hong Kong yet. When Lei Jun was designing this shareholding structure and choosing investment institutions, he actually had some hesitation.

Tan Jincheng's answer at the time was, "Who knows what will happen in a few years?" Ali was delisted from the Hong Kong stock market after only a few years.

Although Lei Jun stated at the financing meeting that Xiaomi currently has no intention of going public, in any case, Xiaomi has gotten back on track after its Series D financing.

The next step is to follow the same pattern as Apple, releasing phones and related products generation after generation until they hit the market after several generations.

In other words, Xiaomi has moved beyond its initial startup phase and officially entered its mid-stage of development, making today a truly celebratory day.

Lei Jun was naturally the focus of this signing party, but besides Lei Jun, the young man chatting with Shen Nanpeng, a well-known figure in international venture capital, in the corner was equally dazzling.

As Xiaomi's second-largest shareholder, it only spent $500 million to acquire a 20% stake in Xiaomi during its venture capital round two years ago, and has continued to invest since then until this round when it began to dilute its shares. It is undoubtedly the biggest winner besides Lei Jun.

Based on the amount and valuation of each round of financing, his investment has appreciated at least 25 times.

Furthermore, despite the fact that ByteDance, as the second-largest shareholder, has relatively low voting rights under the dual-class share structure, no one can ignore its influence on Xiaomi.

He supplies the batteries, and his factory produces the phone casings and many accessories. He is the one who connects the contract manufacturers. Rumor has it that he was the one who single-handedly promoted the early development and independence of MiTalk.

Even Sequoia Capital, the lead investor in the Series D funding round, was highly recommended by him.

With Class A shares, Lei Jun only needs to own 9.1% of Xiaomi's shares to completely control the company. Lei Jun is an excellent boss, but no one can deny Tan Jincheng's influence within Xiaomi.

In addition, he invested in Nvidia last month. Once he passes the review of the U.S. Department of Commerce, he will have the technology to manufacture chips, which is another major advantage.

I heard that his company, ByteDance, has been researching semiconductor companies all over the place since last year. Everyone present knows what this means.

After returning from the United States, Tan Jincheng became a hot commodity.

ByteDance's AI platform, Ocean Engine, has been researching semiconductor companies since last year. Whether it's acquisition or building its own factories, it would be very beneficial for local governments.

High-tech companies, just thinking about them makes me envious.

After returning to China from Frankfurt at the end of May, Tan Jincheng did not make any public statements, but according to people familiar with him, Wei Lai had already begun to establish their own BYD Semiconductor.

Ningbo, Beijing, Luzhou, and Jiangcheng, the provincial capital and hometown of Lei Jun, are currently the four cities with the best chance of acquiring "Weilai Semiconductor".

Tan Jincheng also frequently appeared in these four cities in June.

Many people at the scene today actually wanted Lei Jun to act as a matchmaker. While socializing, Lei Jun was also keeping an eye on Tan Jincheng's corner.

About 15 minutes later.

Judging from the expressions on Tan Jincheng and Shen Nanpeng's faces, Lei Busi felt that the two had almost finished their conversation, so he stepped forward with his wine glass.

Shen Nanpeng is his major financial backer today, contributing 200 million of the 2.16 million US dollars. Sequoia Capital acquired 5% of Xiaomi's shares, while Tan Jincheng was his early financial backer, providing significant assistance during Xiaomi's establishment.

"President Shen, President Tan, what are you talking about?"

Shen Nanpeng shrugged and said, "What else can we talk about? Of course, we'll talk about Nvidia."

Tan Jincheng also laughed and said, "The American review hasn't been approved yet, so I'm a little worried."

"Don't worry about your Nvidia for now. I want to talk to you about something. What's the deal with that co-branded phone you mentioned last time?"

Upon hearing this, Shen Nanpeng asked with some curiosity, "A co-branded phone? Can I listen to it?"

Tan Jincheng looked at Lei Jun and then at Shen Nanpeng: "There's nothing I can't hear. We at Weilai have developed an app, right? I don't know if President Shen has tried it. There's a peripheral section on the app, and I'm thinking of having Weilai ES6 interact with Xiaomi."

The combination of mobile phones and electric vehicles represents the biggest change in future new energy vehicles. Currently, 4G has not been widely adopted, so it is highly unlikely that it will achieve the same effect as in the future.

However, it's still worth trying to create a collaborative product.

"That's interesting. Tell me about it."

Tan Jincheng's explanation piqued Shen Nanpeng's interest. He really had nothing he couldn't listen to, especially since he was already a shareholder in both companies.

(End of this chapter)