Rebirth 08: Rise from copycat phones

Chapter 300 Simple Business Competition

The initial launch of the Zhiyun S series flagship phones every year is the most important moment for Zhiyun Group and even for the entire industry chain, including related consumer electronic components and semiconductor industries.

Whether Zhiyun's S series flagship phones can continue to sell well, how much sales can increase, or even whether they can be stabilized, all these are directly related to the jobs of millions of people and deserve the high attention of Xu Shenxue and other senior executives of the group.

After all, this is a super product with annual sales of more than 150 billion US dollars.

If the sales of S series mobile phones were counted as the GDP of an entity, it would rank about 58th in the GDP of countries around the world, exceeding 150 countries or regions.

This shows how exaggerated it is!
At the same time, as an electronic consumer product, mobile phones also have their life cycle. Every year when new mobile phones are launched on the market, most of their sales cycle is concentrated in the first six months of the launch.

Zhiyun Group's S series and A series mobile phones often have a high sales ratio in the first half of each year, that is, in the half year after the release of the new mobile phone. By the first half of the next year, the sales volume tends to shrink significantly because the sales peak has passed.

Especially in the second quarter of each year, as old mobile phones have been on the market for a long time and new mobile phones have not yet been launched, and there are also a large number of potential consumers who would rather wait for new mobile phones, Zhiyun Group’s second quarter marketing will decline significantly.

Looking at the sales of S series mobile phones, you will find that the situation is best in the third quarter of each year, followed by the fourth quarter, then the first quarter, and the second quarter is at the bottom, showing a very obvious gradual downward curve.

This means that how many phones can be sold in the third quarter at the beginning of the launch and in the fourth quarter later often directly determines the overall sales volume of the new S series phones.

This also led to Zhiyun Group attaching great importance to the sales and production of mobile phones in the first few months after they were launched on the market.

After the release of the S mobile phone every year, the focus of the entire Zhiyun Group is on the launch and sales of the flagship phone.

Even the big boss Xu Shenxue is no exception.

Among many tasks, marketing and production are the top priorities.

Marketing work is directly related to people's purchasing enthusiasm, while production is related to whether people can buy the Zhiyun S series flagship phone.

Considering that Zhiyun S series mobile phones are often in short supply after they are launched on the market and people's enthusiasm for purchasing them is very high, the key factor directly related to the sales of S series mobile phones is production capacity.

On August 25, Xu Shenxue inspected the Shenzhen production base of Weiku Industrial.

Two days later, Xu Shenxue inspected the Shenzhen semiconductor production base under Zhiyun Microelectronics, focusing on Factory No. 503, which is currently the only wafer factory capable of producing S chips.

When inspecting Factory No. 17, Xu Shenxue not only visited the factory as usual and listened to various production plans, but also held a relatively large-scale one-on-one discussion meeting in the conference room in the afternoon of the same day.

The meeting was not attended by the top management of Zhiyun Microelectronics. Instead, the big boss Xu Shenxue directly faced some middle-level managers and technicians in the Shenzhen Semiconductor Base and even the No. 17 Factory, and adopted a one-on-one conversation method.

Listen to what difficulties they have encountered in their recent work, what issues need to be resolved or any other difficulties.

On weekdays, Xu Shenxue's understanding of Zhiyun Microelectronics mostly comes from company executives like Ding Chengjun. Sometimes the so-called meetings and discussions are just everyone sitting together and saying nice things, and what they say sounds good, but what is the problem?
No problem, everything is fine!
It goes without saying that your immediate superior, the company's top executives, are sitting nearby. What can ordinary middle and top executives dare to say? What can they say?
Xu Shenxue is well aware of this, and generally speaking he would not break this tacit understanding. As long as they both do their jobs well, it will be fine.

Of course, it won't always be like this. Occasionally, he will have similar one-on-one conversations to listen to the ideas of middle and senior management and core technical personnel.

The ideas of the group's top management are often different from those of the middle management.

In addition, Xu Shenxue also pays attention to the ideas of some grassroots employees on a daily basis... The company has anonymous feedback and reporting mechanisms, and these matters will be directly connected to the company's internal supervision department. He will receive report emails from the supervision department every day.

Large companies like Zhiyun will also set up internal anti-corruption supervisory agencies, and the employees in such departments are often extremely senior experts, such as experienced and insightful investigators, criminal psychology experts, and so on.

Through various internal investigations, if any internal corruption is found, the case will be handed over to the judiciary for litigation and other procedures.

Zhiyun actually transfers quite a lot of corrupt officials to judicial authorities every year, but the outside world does not know about it.

Big companies are prone to all kinds of problems, and it is not uncommon to have a few corrupt employees, especially in the field of foreign cooperation, which is often the hardest hit area.

For example, the logistics department of a subsidiary of Zhiyun wants to purchase a batch of office equipment. How should it purchase it and which company should it use? There are many things worth talking about here.

In response to this, Xu Shenxue previously instructed Yihai Technology to set up a "Yihai Enterprise Procurement Platform" to supply the Zhiyun Group and other companies under Xu Shenxue's name. Later, the scale expanded and it is now open to the outside world.

Nowadays, when the companies and departments under Zhiyun want to conduct various routine purchases, they must do so through this platform to eliminate corruption caused by procurement as much as possible.

Xu Shenxue also knew that various measures could not completely solve various problems, and he did not expect to solve them completely. He only hoped to keep the problems under control at a certain level.

To understand the problem, we naturally need a wide range of feedback channels for the source of the problem.

In general, Xu Shenxue hopes to know the opinions of people at all levels of the company and even in different branches, to help him better understand Zhiyun, a giant company with a total number of employees that has expanded to 300,000!
What Xu Shenxue wanted to know was what management at different levels and from different angles thought of the company’s various measures...he wanted to explore how to better improve efficiency, reduce costs, increase the company’s cohesion and ability to act, and so on.

At the same time, Xu Shenxue is not someone who is out of touch with the world, always floating in the clouds and not eating meat. He also understands the many ideas and demands of the company's grassroots employees.

He often has different views on people at different levels and from different perspectives, so Xu Shenxue needs to have a multi-faceted understanding.

If he was just a grassroots employee of Zhiyun, he would think about getting a higher salary, working less and not working overtime, having a bigger year-end bonus, having fewer people to hate, and having a more friendly boss. If he could be promoted to a grassroots manager after working for a few years, that would be perfect.

If he is just a middle-level manager of Zhiyun, he will consider the performance of the department and how to squeeze or motivate his employees to complete more tasks and obtain higher salary benefits within the limited staffing and salary quota, so as to prove his team management ability and add a chapter to his resume so as to get a promotion and salary increase.

As for senior management, they will consider the business scope they are responsible for and how to achieve results, whether it is reducing costs and increasing efficiency, or developing new businesses and new markets, and then obtain high-value options and open the ladder to the top of the group.

Sometimes, in order to reduce costs and increase efficiency, he would lay off a large number of employees, implement the last-in-first-out policy and optimize the old employees; in order to open up new businesses, he would also invite some managers or technical backbones with high salaries, acting like a humble person.

The person is still the same person, but when he is in a different position, he considers the problem from a different angle, and then his ideas will change greatly.

What Xu Shenxue needs to do is to understand the views of as many groups as possible, and then bring different people together to continue to support the voyage of Zhiyun.

A ship needs a captain, a first mate, a second mate, and so on, but it also needs the lowest-level sailors!
Only by working together can we continue to sail through the storm!

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After inspecting Zhiyun Microelectronics' 17th factory, Xu Shenxue also visited the other four wafer factories in Zhiyun Microelectronics' Shenzhen Semiconductor Base.

There are five wafer fabs that have been built and put into production in the entire Shenzhen Semiconductor Base, not to mention the No. 17 wafer fab. In addition, there are two 12-inch wafer fabs with 28-nanometer process production capabilities.

Ding Chengjun, who has been stationed in the Shenzhen base for many years, said to Xu Shenxue: "Our two 700-inch wafer fabs are currently fully producing various series of -nanometer process chips, including the W series chips, an important product of Zhiyun Semiconductor."

"This W700 series chip is the chip released by Zhiyun Semiconductor this year for Wecoo Electronics, Fourstar Electronics and other mobile phone manufacturers. It is produced using the 28NLP process and covers mid-range and high-end, meeting the chip needs of various mid-range and high-end mobile phones. We successfully mass-produced the chip in February this year, and it has been shipped steadily since then. The shipment volume of this chip is very large, and it is expected that the shipment volume this year will reach million pieces."

"Last year's W600 series chips and S400 series chips are also currently being produced in the Shenzhen base, and the shipment volume is still very large!"

Ding Chengjun said: "The current monthly production capacity of these two 28-inch wafer fabs has reached 7 pieces. They are the main 24NLP process manufacturing plants under our company. The orders are currently fully booked until the beginning of next year. Except for the necessary maintenance time, they are running at high speed hours a day, days a week, and the capacity utilization rate has reached %."

"It has contributed a lot of revenue to Zhiyun Microelectronics and even to our parent company Zhiyun Group."

Xu Shenxue said: "The contemporary 28-nanometer process is still the main process in the market. The production capacity is scarce, the price is relatively expensive, and the profit is good. It is the main revenue-generating process node for major chip manufacturing companies. You still have to do a good job in mass production of the 28-nanometer process node and subsequent technical upgrades!"

Although we now have a more advanced 18-nanometer process, it is expensive... Not to mention the outside world, even for giant companies in the chip design field like Zhiyun Semiconductor, it is impossible to use the most advanced process for all chips.

Because top-quality craftsmanship is too expensive!
The design of the previous S403 chip and the subsequent tape-out costs cost a total of more than million US dollars.

However, this year's S503 chip is more complex internally and more difficult to design. At the same time, the cost of tape-out using the -nanometer process is also higher. In the end, its design cost and tape-out cost directly increased to $ million USD, which is a huge increase in cost.

According to Zhiyun Semiconductor's estimates, when the more advanced 14-nanometer process is used next year, the design and tape-out costs of the new S series flagship products are expected to increase to US$150 million.

This is a high price to pay for staying ahead...

Who asked you to pursue the most advanced technology all the way, to have the latest everything, and then to bear the high initial premium?

If the project can be postponed for just one year, tens of millions of dollars can be saved, but can it be postponed?

No!

Zhiyun's S series of mobile phones are in a chip arms race with Apple phones, and the release has been delayed for a year... Let alone a year, even a delay of half a year will result in a loss of tens of billions of dollars in market value.

Now, Zhiyun and Fruit are both in a state of dilemma. They pay extremely high costs every year to pursue the most advanced chip technology, and even forcefully push the chip manufacturing industry forward...

No matter how high the design and tape-out costs of the new process are, you have to grit your teeth and go for it, because if you don’t, your competitors will, and then you’ll be finished.

The cost of the new process is so high that even if Zhiyun Group has excess production capacity for its 18nm process this year, it is impossible to launch the W series of 18nm SOC chips. It is too expensive.

This is the case with Zhiyun Semiconductor, and other chip design companies are similar. Except for Intel, Qualcomm, Zhiyun, Sixin and the ambitious domestic Huawei, whose core products, such as flagship mobile phone SOC, computer CPU and GPU, are all pursuing top-level technology, other companies or projects basically do not do this.

Faced with the huge costs of the new generation of process technology, they often choose to slow down, pause at the 28-nanometer process node, and wait a few years to see the situation!
Based on this situation, this year and even next year, the 28-nanometer process will still be the mainstream process on the market, bringing huge revenue and profits to various chip companies.

Zhiyun Microelectronics is no exception!
In this regard, Xu Shenxue still attaches great importance to the production situation of the 28-nanometer process.

In addition to visiting these two 12-inch wafer fabs that mainly produce 28-nanometer process, Xu Shenxue also went to see the two 8-inch wafer fabs next door.

These two eight-inch wafer fabs are the first and second phases of the Shenzhen Semiconductor Base, built successively. They focus on nodes above 65 nanometers and provide mature 65 nanometer and 90 nanometer process nodes for the group company and other domestic and foreign manufacturers.

Xu Shenxue came to see it specially because these two factories used a lot of domestic DUV dry lithography machines produced by Haiwan Technology and other corresponding supporting equipment. Ding Chengjun naturally knew why Xu Shenxue came to see these two eight-inch wafer factories with backward technology, so when introducing them, he focused on the domestic front-end lithography machines and etching machines, back-end lithography machines, ion implanters and other domestic equipment of Haiwan Technology under Fairy Mountain Holdings.

"We have been using DUV dry lithography machines provided by Gulf Technology on a large scale in our production lines since last year. Currently, they are mainly used in many of our company's eight-inch fabs, and are also used as auxiliary lithography machines in some twelve-inch fabs!"

"In the production process of advanced chips, in order to reduce the overall cost, the most advanced DUV immersion lithography machines are not used in all processes. Instead, DUV dry lithography machines are used for some processes. DUV immersion lithography machines are only used in necessary processes. Therefore, even in advanced 12-inch factories, there is a considerable demand for DUV dry lithography machines!"

"In the eight-inch fab, the DUV dry lithography machine is the main lithography machine. Our newly expanded production lines, including the two newly established eight-inch fabs, all use Gulf Technology's DUV dry lithography machines as the main lithography machines!"

"So far, we have actually used 36 Haiwan DUV dry lithography machines in various factories. In the next two years, we will further increase the number of domestically produced Haiwan DUV dry lithography machines to more than 100."

"For other core equipment, such as etching machines, back-end lithography machines, etc., we also use a large number of domestic lithography machines!"

"Although the overall performance of these domestically produced equipment is somewhat inferior to that of ASML and Nikon's lithography machines, the overall production cost actually has some advantages because of the lower procurement cost and subsequent maintenance cost."

Xu Shenxue looked at the DUV dry lithography machine of Gulf Technology that was in operation in the factory and smiled: "This is good. It is safer to have core equipment such as lithography machines in-house. Gulf Technology's R&D capabilities are good, and you as users should also increase your support!"

“Not only the current DUV dry lithography machine, but also the UDV immersion lithography machine needs strong support!”

Ding Chengjun said: "Don't worry, Mr. Xu. We also know the importance of this. When Haiwan Technology developed the first prototype in May this year, we sent a technical team to cooperate in various tests to speed up the mass production plan of domestic DUV immersion lithography machines!"

"According to feedback from the technical team, the progress seems to be quite good. It is estimated that it will be able to move into our production line for various production tests by October, and mass production is expected to begin next year."

Xu Shenxue said: "That's good!"

After seeing the DUV dry lithography machine, Xu Shenxue was itching to try it out, so he went straight to Gulf Technology while there was still time.

Anyway, the distance was not very far, and the convoy arrived at Gulf Technology in more than half an hour.

After arriving at Gulf Technology, Wang Daolin, who had received the news in advance, was waiting downstairs of the company's building early.

When Xu Shenxue's convoy arrived, he quickly stepped forward to greet them.

After getting off the car, Xu Shenxue said, "Why are you being so polite to such a large group of people? Just go back to work. Mr. Wang will be there to accompany you!"

Then he said to Wang Daolin, "I heard that your DUV immersion lithography machine is doing quite well. Will you start trial production and testing in October?"

Wang Daolin also guessed why Xu Shenxue came over, and immediately said, "Yes, my colleagues have been working overtime recently to catch up with the progress. If nothing goes wrong, we will be able to take the first trial production version of the lithography machine to the Zhiyun Microelectronics Factory next door in October to carry out various trial production tests."

Xu Shenxue: "This is great news. Please let me know when the trial production is finished. I will go and take a look!"

The research and development of lithography machines is actually a relatively long process, and it does not mean that you can use it as soon as the prototype is produced.

In fact, Gulf Technology had already developed the first test prototype in October last year, but this prototype could only be used for technical verification of some subsystems and testing various technical indicators to see if the products could be used.

It is still a long way from actual production.

After half a year of technical verification, adjustment and improvement, it was not until April this year that the first real prototype was produced, which can theoretically be used for production!
But it's only in theory!
In fact, after this test prototype is developed, it is necessary to conduct repeated tests and adjustments, and also require various test feedback from the wafer factory. This process often takes more than half a year or even more than a year.

And this is referring to the DUV immersion lithography machine, which is a mature lithography machine that can be used as a reference.

If it is an EUV lithography machine, it will take many years from the test prototype to mass production.

ASML delivered the first generation of EUV lithography machines to Samsung a few years ago, and later delivered research and testing prototypes to TSMC. These EUV lithography machines are actually for research and testing and cannot be used for chip production.

In the past few years, Quadrupled and TSMC have been actively cooperating with ASML in various R&D tests. As for the test and mass production models, they were originally expected to be delivered around 16.

The above is still the normal situation.

The actual situation is that due to the "unconventional accidents" caused by the EUV light source subsystem suppliers and some other key component suppliers, ASML's EUV lithography machine project has almost stagnated, and there has not been much technological progress in the past few years.

The delivery of small batch test and mass production is still a long way off, let alone 16 years, 20 years is enough...

Even if Xu Shenxue doesn't do any tricks now and everything goes smoothly for them, it will probably be delayed for several years.

But you can't expect Xu Shenxue not to play tricks... EUV lithography is related to the life and death of Zhiyun Group, who will play by the rules with you?

On the issue of EUV lithography, Xu Shenxue's attitude has always been very tough: I can't use it, and you can't expect to use it either...

"Either use it together, or no one uses it."

"There's no point in discussing this issue. Even if the king of heaven comes, it won't help. I said so!"

Then the man from the old consortium on the other side chuckled, "I'll do it first, but I won't give it to you. You want to bite me? You stinky nouveau riche, you don't know how high the sky is and how deep the earth is just because you have a few new money. Do you really think I'm afraid of you?"

Then they forced ASML to continue: Don't be afraid of those crazy people at Zhiyun, I'm protecting you, just go ahead and do it boldly!

However, there are more than 100,000 components on an EUV lithography machine, with suppliers spread all over the world and thousands of irreplaceable core parts.

If Zhiyun randomly picks any supplier or any spare part to sabotage, they will be at a loss and it will be too easy to strangle them.

In recent years, ASML has often encountered various troubles. Today, component supplier A went bankrupt, tomorrow, supplier B’s laboratory caught fire, and the day after tomorrow, its core engineer had a car accident!

This is also what makes ASML very uncomfortable being caught in the middle. Brothers, I am just an assembly plant, don’t treat me as a battleground.

If you have the guts, go out and fight yourself!
Damn it, one of you forces me to do it, and the other won’t let me do it... You’re not the ones who are going to die, so you just keep making trouble, right?
The consortium is amazing, FUCK...

Unfortunately, no one listened to ASML's opinions.

EUV lithography machines are of great importance, especially as both sides are currently competing in the consumer electronics and semiconductor industries, no one will compromise.

The American consortium wants to take a further lead and leave Zhiyun completely behind, so it wants to strike at Zhiyun's main artery, that is, the semiconductor manufacturing business that maintains the core foundation of the entire group.

Zhiyun naturally didn't want to let their goal succeed, so he just overturned the table!
Otherwise, in two years, the other manufacturers will be able to use EUV lithography machines, and then come up with a low-cost 7-nanometer process, and then come up with a -nanometer, -nanometer, -nanometer or even -nanometer equivalent process;
However, Zhiyun does not have the corresponding EUV lithography machine to compete, resulting in serious lag in chip performance. Various smart terminals, especially S series mobile phones, will lose competitiveness due to the lack of advanced chips.

By then, Zhiyun Group can consider bankruptcy reorganization...

But Xu Shenxue would never allow such a thing to happen!
If the other party wants to cut his aorta, he will give the other party a car accident. He wants to see if the people in this consortium are all supermen who are not afraid of car accidents!
Business competition is sometimes just so simple!
So, the EUV lithography machine issue was stuck.

----

In fact, the American consortium has recently been considering the possibility of blocking Zhiyun from obtaining the DUV immersion lithography machine, but gave up after a little consideration.

Xu Shenxue has already produced a test prototype of the DUV immersion lithography machine, so why are you still stuck? As soon as you get stuck, others will use their own DUV immersion lithography machine. It's not that it can't be used even if it's a little worse.

Xu Shenxue has stockpiled a large number of DUV immersion lithography machines, and the existing DUV immersion lithography machines are sufficient to support them until their own DUV immersion lithography machines mature.

Similar situations exist in other equipment and consumables fields. Xu Shenxue has been planning for many years and invested hundreds of billions of dollars. At the same time, he is also using various legal or illegal means to achieve technological breakthroughs.

A large number of joint ventures were also introduced to invest together... Zhiyun Microelectronics is a top three semiconductor manufacturing company in the world, with a large annual procurement volume. It is an important customer or even the largest customer of many equipment and consumables companies.

In order to ensure the security of the supply chain, Zhiyun Microelectronics often requires them to set up joint ventures in China.

If you ask Xu Shenxue to produce equipment and consumables that can be used commercially and do not infringe on patents, that is unlikely... But if you ask Xu Shenxue to produce equipment and consumables for emergency use and temporary support without considering patents, Xu Shenxue can really do it.

Even the core consumables, such as photoresist that can be used in DUV immersion lithography machines, are already available to Xu Shenxue, but they cannot be used commercially due to patent issues.

In this regard, the consortium in the United States is quite resentful towards the Japanese. You couldn't even protect such an important thing. The core R&D personnel collectively resigned and were poached by Zhiyun, who copied it exactly, and you didn't even know about it. We had to inform you that the technology was leaked before you were so angry... The consortium suspected that these Japanese had colluded with Zhiyun to be traitors!

The outside world is not very clear about these things, but the top people on both sides are well aware of them.

Besides, now is not the time to completely break off relations, so there is no need to make such a big move. If we really break off relations, God knows what those crazy people Zhiyun will do.

So it evolved into what it is now.

After all, they acted too late... If they had taken action against Zhiyun a few years earlier, the situation would have been different, but now, the best opportunity has been missed.

But who could have thought that Zhiyun would develop so rapidly!

At the beginning, Zhiyun was just an assembly plant, and all its core components were imported, making it a good opponent in the eyes of the other consortium. In the past few years, the president of Qualcomm would support the Zhiyun S mobile phone at the press conference.

Then Zhiyun gradually took control of the supply of core components. This was a process of boiling a frog in warm water. The other party knew there were some risks, but felt that the risks were controllable. Besides, Zhiyun, such a big customer, could not be abandoned casually because it had to be responsible for the stock price.

Then slowly, after Zhiyun's core components were all independently controllable, it was too late for them to take action again.

Looking back now, there is a saying that goes: It’s too late to regret!
(End of this chapter)