Rebirth 08: Rise from copycat phones

Chapter 556 A Crazy Profit of Two Hundred Billion Dollars!

In fact, Xu Shenxue was quite satisfied with Wang Lintu's work.

Before Wang Lintu took over the smart terminal business unit, the global smart terminal market had already entered a saturated market, with global smartphone sales declining year by year, and other major smart terminal products also entering a saturated market.

Specifically within the smart terminal business of Zhiyun Group, the sales of C-series phones have declined year by year, while the sales of A-series phones have been sluggish for a long time.

Tablet computers have passed the market trend of light office work, and their overall market sales are gradually shrinking.

Smartwatch sales have reached their peak.

At the same time, Zhiyun Group's smart terminal business is also facing a concentrated attack from many manufacturers... It's not a competition between one or two manufacturers in the conventional sense, but all smart terminal manufacturers are eyeing Zhiyun, forming a situation of encirclement and suppression.

In overseas markets, there is direct competition from Apple and Samsung, as well as domestic brands like Huawei and Weiku Electronics, whose high-end models are gradually gaining traction overseas.

Despite its relatively low profit margin, Vcool Electronics' mobile phones, especially the Blue MAX series, are very successful. Priced at three to four thousand yuan, they can sell over thirty million units, and they are also very popular in overseas markets.

In the domestic market, the world's largest smartphone market, manufacturers such as Huawei, OPPO and Vivo, as well as Vcool Electronics and Dami, have all regarded Smartisan phones as a target for challenge.

The decline of Zhiyun Group's C-series mobile phones, which were eventually forced to cease production and withdraw from the market, was also due to the encirclement and suppression by numerous manufacturers... all of them were targeting Zhiyun's C-series mobile phones.

When many mobile phone manufacturers release new phones, they like to bring out the Zhiyun C series phones as the villains and kick them while they're down.

At the same time, they are also focusing their efforts on cracking down on A-series mobile phones!

As for the S series phones, they're in a better position; they're too high up for them to pose a threat for the time being.

Under the concentrated attack of numerous mobile phone manufacturers, Zhuyun Group's mobile phone business, apart from the continued development of the S series, faces huge threats to other mobile phone series, especially the C series and A series.

The intelligent terminal business unit, which Wang Lintu took over, is actually facing enormous external and internal pressures.

After Wang Lintu officially took over the smart terminal business, he formulated a series of smart terminal strategies.

First, we must continue to stabilize the crucial S series, maintain the brand's style, and introduce as many new technologies as possible.

Secondly, we will vigorously promote the development of the SX/SXL series, attracting second-hand users while also penetrating the mid-to-high-end market of three to four thousand yuan.

Finally, we will continue to promote the development of the New Cloud brand... The operation of the New Cloud brand in the past year can be described as quite successful.

In the past year, the sales volume of the Xinyun brand mobile phones has exceeded 40 million units. As a new mobile phone brand that replaces the C series and focuses on the mid-range market, it is quite remarkable that it has achieved this level of success, even with the backing of a behemoth like Zhiyun Group.

It is precisely the surge in sales of the new cloud phone that has enabled Zhiyun Group to maintain its overall mobile phone sales at a scale of just over 300 million units.

If there hadn't been a significant increase in new cloud phone sales last year, then the sales volume of Zhiyun phones would likely have fallen below 300 million units.

Although the gross profit margin of the new cloud phone business is relatively low, at least there are sales. With sales, more core components can be sold continuously, such as W-series SOCs, memory chips, flash memory chips, and screen costs, which contributes significantly to the group's overall profit.

Furthermore, higher sales volume, coupled with a focus on the mid-range market, allows for the continued use of mature technology components, further extending the lifespan of these components. This is highly beneficial for reducing the overall cost of Zhuyun Group's mobile phone business.

The fact that XinYun Technology Co., Ltd., a subsidiary, is not very profitable does not mean that ZhiYun Semiconductor, ZhiYun Storage, and HuaXing Technology are not profitable...

Therefore, mobile phone sales are still very important to Zhiyun Group.

The S series is the core mainstay, supplemented by the SX/SXL, and then there are the new cloud phones targeting the two to three thousand yuan market... Finally, there is the A series as an add-on, which has been half dead in recent years, but can still maintain more than ten million units.

Zhuyun Group's mobile phone business achieved sales of approximately 310 million units in the past year, continuing to hold the top spot in global mobile phone sales!

Continue to lead by a large margin over four stars and Vcool Electronics!
Other smart terminal industries have also remained stable, with sales and prices not falling. On the contrary, as technology matures and costs decrease, gross profit has even increased.

In a saturated market, maintaining sales and revenue is already a victory, let alone further increasing profits.

Under Wang Lintu's leadership, the smart terminal business generated approximately $330 billion in revenue and $130 billion in gross profit over the past year.

Xu Shenxue believes this result is already quite good... Revenue and profit have maintained a slight growth rate, which is not easy in the current market.

Therefore, Xu Shenxue was quite satisfied with Wang Lintu's work.

After Wang Lintu finished his report, Xu Shenxue acknowledged his work performance and presented him with a generous year-end bonus: a stock incentive package worth 150 million yuan!
As a senior manager in the group, Wang Lintu's salary is directly linked to his work performance, and his basic annual salary is not much, only 35 million yuan.

An annual salary of 35 million is not high for a senior manager like Wang Lintu... He is not an ordinary corporate executive, but a senior manager in charge of a business with revenue of more than 2 trillion.

Wang Lintu's salary is primarily reflected in stock incentives.

According to his current employment contract, he can receive stock incentives worth between 50 million and 500 million yuan each year... The exact amount he receives will depend on his work performance.

In addition, there are other benefits such as security measures, a private jet, and daily allowances for official travel, but those are not easy to calculate in terms of money.

Wang Lintu's salary and benefits are actually not as good as Xie Jianyong's before... Before Xie Jianyong officially retired, his total annual income could reach more than 500 million yuan!
Senior management at large high-tech companies earn very substantial incomes!
Whether it's Xie Jianyong or Wang Lintu, their incomes are actually very high... mainly because both of them hold a large number of Zhiyun Group shares.

These two individuals, as early core employees, received substantial stock options before the Zhuyun Group officially went public, and continued to receive considerable stock incentives over the years.

Xie Jianyong is now retired, but he still holds a considerable number of shares in Zhuyun Group, worth at least hundreds of billions... He is a super-rich man.

Wang Lin has fewer disciples, but the value of the stocks he holds is still two to three hundred billion.

So don't be fooled by the fact that the senior management of Zhiyun Group... or rather, the various companies under Xu Shenxue's control, are just employees. In reality, they are all super-rich, with assets of billions or even tens of billions being commonplace.

As for employees with assets worth hundreds of millions, there are even more...

From the early management and R&D staff of Zhiyun Group before its IPO to now, if they hadn't foolishly sold their shares along the way, their net worth would basically be around this level...

In his early years, Xu Shenxue was quite generous with stock incentives in order to attract talent and stabilize the R&D and management teams.

Let alone these people, even the cleaning lady in the company back then could receive a small amount of stock as an incentive. If those stocks were still around today, they would be worth tens of millions.

Xu Shenxue has basically treated his early employees who worked alongside him fairly well!

Of course, if you sell the stock halfway through, that's a different story altogether.

Comparatively speaking, employees who joined later have significantly less net worth… There's no way around it; they joined later, after the startup phase had already passed. However, even with just salaries and stock incentives, the combined annual income of Zhuyun Group employees is quite substantial, placing them in a unique tier in China…

Wang Lintu's smart terminal business segment maintained stability and even saw slight growth, which Xu Shenxue was quite satisfied with.

As for other businesses, there are both good and bad aspects.

The most eye-catching sector is naturally the semiconductor sector... Over the past year, with the continued popularity of artificial intelligence and the continuous development of the intelligent electric vehicle market, all kinds of terminals equipped with so-called artificial intelligence have emerged one after another!

Meanwhile, the significant growth of Zhuyun Group's own virtual equipment and robotics businesses has also driven the overall demand for computing chips!
All of these factors have greatly stimulated the demand for various computing chips.

The APO series graphics cards, PX chips, ZY chips, EYQ chips, and LC series chips, these representative computing power chips, have seen a continuous surge in shipments over the past year, and their prices are extremely high.

All of these factors have brought substantial revenue and profits to Zhuyun Semiconductor!
It also boosted the revenue and profit growth of Zhiyun Storage and Zhiyun Microelectronics.

The semiconductor business segment of Zhiyun continued to maintain rapid growth, showing a very good momentum.

In addition to the semiconductor business segment, there are also virtual equipment and robotics businesses.

Virtual devices, as a business that has only been running for a year, are actually still in the loss-making stage... This is mainly because the cost of virtual devices is too high. At the same time, in order to expand the market, Zhiyun Group has adopted a strategy of low gross profit in the early stage and continuously lowering the product price in exchange for a larger market share.

This resulted in a loss of over $5 billion despite the strong sales of virtual devices—nearly 500,000 units sold and over $40 billion in revenue in the past year. The main reason was that while a large number of virtual devices were sold in the past year, the virtual device business itself was not very profitable, and continuous investment in research and development, building after-sales channels, and ongoing advertising and marketing was still required.

This ultimately led to losses in the overall business!
But everyone knows that this loss is only temporary... In fact, if Zhiyun Group were willing, it could turn a profit in no time, or even make a lot of money. It would only need to reduce its continuous R&D investment in virtual devices and then raise the product price slightly.

The problem is, Zhuyun Group itself is unwilling...

The ambitions of Zhiyun Group are huge. They are willing to lose money to continue cultivating the market, and they hope to generate hundreds of billions of dollars in revenue from virtual devices and more than 100 billion dollars in annual profit in the future.

Zhuyun Group doesn't care about short-term profits or losses of a few billion dollars!
This business strategy is actually modeled after the early strategy of the robotics business: initially not making money or even incurring losses, continuously lowering product prices to expand market capacity.

In its early stages, Zhiyun Group's robotics business continued to suffer losses. Despite annual revenue of several hundred billion US dollars, it was still losing money, which made ordinary people shake their heads. However, investors were overjoyed and increased their stock holdings. Everyone was waiting for Zhiyun Group to reap the rewards after it developed the robotics market.

And Zhuyun Group did not disappoint its investors!

Thanks to Zhiyun Group's continuous efforts to reduce the cost and price of robots, focusing on entry-level models priced at around 100,000 yuan, Zhiyun Group's annual robot sales exceeded three million units in the past year, which is a very significant sales breakthrough.

The huge sales volume also brought in good revenue, with more than $70 billion in revenue throughout the year, and achieved good profits, with hardware gross profit reaching $12 billion.

And it continues to maintain rapid growth. Many analysts are confident that next year, Zhiyun Group's robot sales are expected to exceed five million units, revenue is expected to reach more than 120 billion US dollars, and gross profit is expected to reach more than 25 billion US dollars.

This rapid growth in sales volume, revenue, and gross profit can be attributed to the significant reduction in costs and selling prices that Zhiyun Group has implemented in its robotics business over the past few years.

If Zhiyun robots were to sell for millions of dollars from the start and maintain that high price, they could only achieve a few billion dollars in revenue per year at most... After all, robots costing millions of dollars would have very low sales volumes!
The robots that sell for over 100,000 yuan nowadays have low unit prices and not high profit margins, but they are sold in large quantities!

And as I said before, the fact that the robotics business earns less doesn't mean that the semiconductor business of Zhiyun Group earns less... The EYQ and ZY chips in these robots have a very high premium.

This principle also applies to virtual devices!

The virtual device may seem to be losing money, but the APO graphics card, ZY chip, WZ320 server CPU, advanced DDR5 memory, advanced 3D NAND flash memory, and some self-developed sensors and other components are all installed on the virtual device.

These things are all profitable!

For example, the most expensive component in virtual devices is the APO graphics card. When calculating its cost, it is based on the external supply price of Zhiyun Semiconductor, with a slight discount. For example, the cost of the APO4600S/80GB graphics card is calculated at 130,000 per card.

However, when the neighboring Zhiyun Semiconductor Technology Co., Ltd. calculated the cost of the APO4600S/80GB graphics card, it was actually only 17,000 yuan... Of the internal selling price of 130,000 yuan, 113,000 yuan was Zhiyun Semiconductor's gross profit.

To be specific, Zhiyun Storage, which provides high-bandwidth video memory, offers 80GB of HBM2 video memory. The internal supply price is around 10,000 yuan. HBM2 video memory is also the most expensive component in APO graphics cards!
The contract manufacturer, Zhiyun Microelectronics, is responsible for manufacturing the GPU cores and also for the advanced packaging of APO graphics cards. The internal price is around six thousand yuan... The GPU core manufacturing itself doesn't cost much, as it uses a mature 12-nanometer process, which is very cheap.

The main reason is that the 2.5D packaging process is expensive. The internal price quoted by Zhiyun Microelectronics for packaging an APO4600S graphics card is around 5,000 yuan, which is very expensive!

Adding in other miscellaneous but inexpensive hardware costs, the overall hardware cost of the APO4600S is approximately 17,000 yuan.

This means that for every APO4600S graphics card used in the virtual device business, Zhiyun Semiconductor can earn a gross profit of 113,000 yuan... If two APO4600S graphics cards are used in a single machine, the entry-level virtual device with a price of around 800,000 yuan can contribute a gross profit of 226,000 yuan to Zhiyun Semiconductor.

Then, Zhiyun Semiconductor can make tens of thousands more from the ZY chips used in virtual devices, the NVIDIA X5 high-end gaming graphics cards, and other chips!
For every virtual device that Zhiyun Group sells with a price of 800,000, Zhiyun Semiconductor can earn at least 300,000... This is not revenue, but gross profit!
The same applies to virtual devices and robotics. EYQ and ZY chips are relatively expensive with very high premiums, which can bring considerable profits to Zhiyun Semiconductor.

Many people in the current virtual device and robotics businesses feel like they're just working for Zhiyun Semiconductor... They work hard to make products, but the profit margins are minimal.

On the contrary, Zhiyun Semiconductor does nothing and makes a fortune while lying down... These semiconductor companies are too ruthless. They even made a product like APO4600S, which is like toothpaste that sucks out the toothpaste, to harvest their brother departments. They have no shame!

However, these factors also led to a significant increase in revenue and profit for Zhuyun Group's semiconductor business segment last year.

This significantly boosted the overall revenue and profit growth of Zhuyun Group.

Last year, all of Zhiyun Group's businesses, including smart terminal business, semiconductor business, virtual device business, smart robot business, plus software and internet business segments, and intelligent cloud computing business segment (cloud computing, servers).

Ancillary businesses such as Zhiyun Satellite and Zhiyun Aviation!

Then there are after-sales service and peripheral business segments such as data cables, Bluetooth headsets, and keyboards.

We supply some standard spare parts to various manufacturers.

In addition, there is a financial investment business... Zhuyun Group has so many cash assets that need to be managed, and it will make some financial investments. However, these investments are all fixed-income, low-risk products, such as government bonds of some countries, and various securities products such as the value stocks of other large companies.

The main purpose is to avoid inflation in various currencies, rather than actually making money.

Then there's a whole host of income from dividends or market capitalization/valuation increases from holding companies and invested enterprises.

In the past year, Zhiyun Group's overall revenue has once again set a record... not only for Zhiyun Group itself, but also for all companies around the world!

Its revenue reached an astonishing $773 billion, which was still within the expectations of many analysts. At the beginning of last year, many analysts believed that Zhuyun Group's revenue should reach between $750 billion and $780 billion.

However, the profits were astonishing, reaching two hundred billion US dollars, which far exceeded the estimates of many analytical institutions. The general estimate of many analytical institutions was one hundred and eighty billion US dollars, so this directly exceeded it by two hundred billion US dollars.

Zhuyun Group's profits exceeded expectations, mainly due to the large-scale shipments of computing chips last year and their very high gross margins...

Of course, Zhuyun Group makes a lot of money, but its various expenses, especially R&D costs and financial expenditures in the semiconductor business segment, have once again reached a record high, which is frightening to many people!
(End of this chapter)