Rebirth 08: Rise from copycat phones

Chapter 558 Monopolizing the Global Assisted Driving Market
In late January, Xu Shenxue and the senior management of Zhiyun Group held a three-day corporate strategy meeting.

The focus of this meeting is to finalize the company's next development strategy and adjust the overall development strategy in a timely manner based on the technological and market changes over the past few years, especially the past year.

Among these, the most significant impact should be the series of enormous effects brought about by the release of virtual devices.

In the past year, although Zhiyun Group may seem to have only sold a few hundred thousand virtual devices, which doesn't seem like much... in reality, this is quite a significant amount.

The sales of hundreds of thousands of virtual devices brought Zhuyun Group hundreds of billions of dollars in revenue... However, the virtual device business unit itself did not make much money from this revenue, and even suffered losses. But other subsidiaries of Zhuyun Group, such as Zhuyun Semiconductor, Zhuyun Storage, Weizhi Technology, and Zhuyun Microelectronics, did make a lot of money by relying on various chips.

Overall, the sales of these hundreds of thousands of virtual devices have brought Zhuyun Group profits of at least tens of billions of US dollars...

This is the benefit of integrating the industrial chain and making core components ourselves!

The profits didn't disappear; they were simply transferred... and ultimately reflected in the overall profits of the Zhiyun Group... Of the Zhiyun Group's $200 billion in profits over the past year, at least tens of billions were driven by the virtual equipment business.

This also shows the huge impact and changes brought about by virtual businesses!
Aside from the impact on revenue and profit... the biggest impact of the virtual business is the huge demand for APO graphics cards, ZY chips, and X5 graphics cards!

The demand for APO graphics cards and ZY chips has increased by more than one million units each!

The demand for X5 graphics cards increased by more than two million units.

And that was last year's situation. This year, many analysts predict that sales of virtual devices are expected to exceed two million units.

This will lead to even greater demand for chips!
Assuming at least one virtual device requires two APO graphics cards and two ZY34/38 chips, that's a demand of four million APO graphics cards and ZY chips respectively. In addition, there's an extra demand of four million X5 graphics cards... The actual figures will be even larger.

Because only the entry-level models priced at around 400,000 RMB use dual APO4600S graphics cards, dual ZY34 chips, and four X5 graphics cards.

The high-end version currently on sale, priced at 800,000, uses four APO4600S processors, four ZY34 chips, and four X5 graphics cards!

The deluxe version, costing over a million, features a configuration of dual APO5000 graphics cards, dual ZY38 chips, and four X5 graphics cards.

The flagship version, costing over three million, features a configuration of four APO5000 graphics cards, four ZY38 chips, and four X5 graphics cards!
While the version with over 400,000 units sold accounted for the vast majority of sales, the versions with over 800,000 and over 1 million units sold were also quite substantial.

However, the flagship version, which sold over three million units, didn't sell very well... it was too expensive.

In this scenario, if two million virtual devices are actually sold, the demand for APO graphics cards could reach around five million, ZY chips around five million, and eight million X5 gaming graphics cards.

Of the two graphics cards mentioned above, only the X5 gaming graphics card uses a mature packaging process; the other two require 2.5D or 3D packaging technology.

A better comparison is with APO graphics cards... Zhuyun Group produced only about 11 million APO series graphics cards in the past year.

The 20GB version of the APO5000, also known as the AI6000 graphics card, numbered approximately 2.5 million, and was used either for internal purposes or supplied to relevant organizations.

Because of the special nature of this graphics card, especially its use of more advanced technologies and architectures, it is not sold to the public. Even sister companies like Yihai Technology and Hailan Auto cannot obtain it.

The products sold externally are APO5000/80GB graphics cards, with shipments of approximately two million units over the past year... mainly supplied to strategic clients both domestically and internationally, such as some large high-tech companies in China and high-tech companies overseas.

整个APO5000/AI6000系列，一年的产能也就四百五十万张而已……这已经压榨了现有的绝大部分3D封装工艺产能……还有一部分3D封装工艺产能是用来生产ZY38芯片以及EYQ6芯片，还有少量产能则是用来优先生产国防专用终端算力芯片！
The 7-nanometer process for defense-specific terminal computing chips also went into production in the second half of last year. Although the output was not very high, the technical requirements were too stringent, resulting in a very low yield. As a result, it also occupied a lot of the capacity of 3D packaging process.

From a technical perspective, this 7-nanometer process-based computing chip for defense-specific terminals is the most advanced computing chip ever designed and manufactured by Zhiyun Semiconductor and Zhiyun Microelectronics!
In addition to the aforementioned top-tier chips, Zhiyun Group has also produced a large number of other high-performance computing chips in the past year!

The APO4600 graphics card, which also uses 3D packaging technology, had a total production of about 1.8 million units before production was halted in July... Of these, about 600,000 to 700,000 units were used to supply the group's own virtual equipment, and the remaining capacity was used to fulfill the last batch of orders.

该卡在七月份后全面停产，腾出了3D封装工艺产能用来生产APO5000/AI6000显卡或ZY38芯片、EYQ5芯片等。

The APO4500 graphics card, which uses 2.5D packaging technology, had a production run of 3.2 million units, of which several hundred thousand were used to supply virtualization devices... This graphics card will be officially discontinued in January, and the production capacity of the 2.5D packaging technology will be freed up for the downgraded APO4600S graphics card!

In fact, a large portion of Zhiyun Microelectronics' existing 2.5D packaging capacity is used to produce ZY34, ZY35, EYQ4, and EYEQ5 chips.

The ZY35 chip is a motion coprocessor chip specifically designed for Zhiyun robots and is not sold externally. Currently, no other products in the Zhiyun Group use this chip.

At the same time, it also produces PX4 and PX3 series chips in large quantities. All Tesla models, some BYD models, and high-end models from other manufacturers all use this series of chips when they adopt their self-developed driver assistance technology.

The EYEQ4 and the more advanced EYEQ5 chips are supplied in large quantities to a large number of car manufacturers and other smart device manufacturers.

Apart from Hailan Auto using its proprietary EYQ chip, almost all electric vehicles produced by other automakers, and even some gasoline vehicles, use PX or EYEQ chips provided by Zhiyun Semiconductor, as long as they employ driver assistance systems.

To put it bluntly, if Zhiyun Group were to cease production of its PX, EYEQ, and EYQ chips, the global production of cars using driver assistance technology would have to come to a standstill... because there are currently no alternative chips!

Automotive-grade terminal computing chips are also a major product for which Zhuyun Group has completely monopolized the global market.

Excluding the EYQ chip used by Hailan Auto, the PX chip requires manufacturers to develop their own driver assistance algorithms for training, which is the choice of many powerful car companies... including Tesla, BYD, and many other manufacturers.

The EYEQ series chips provide a one-stop solution for assisted driving, offering chips, cameras, LiDAR, and the core algorithms... all sold as a package, allowing automakers to simply adapt them after purchase.

Basically, all the major car manufacturers in the world are customers of this series of chips!
The EYEQ3 offers a camera-based pure vision solution, which is simple in technology and inexpensive in hardware. A large number of gasoline cars and low-to-mid-range electric vehicles are using this technology. It provides basic driver assistance functions such as adaptive cruise control, lane keeping assist, and parking assist.

The EYEQ4 solution provides a dual-composite driver assistance technology solution based on cameras and LiDAR, which can reach L2+ level... The technical level is quite good; at least most of the driver assistance technologies developed by car manufacturers themselves are not as good as this!
As for the higher-level L3 assisted driving, Zhiyun Group does not provide it. It's not that they are unwilling to sell it, but that Zhiyun Group itself does not have this thing.

The autonomous driving technology team of Zhiyun Group was sold to Hailan Auto a long time ago... Today, Hailan Auto is the only company in the world with L3 or even L4 level autonomous driving technology.

The management of Hailan Auto was willing to give up a large number of shares to acquire the autonomous driving technology team of Zhiyun Group, just to bring L3 and even L4 level autonomous driving technology into their own hands and prevent Zhiyun Group from being sold to a second company... The management of Zhiyun Group really did such a thing!

In order to sell computing power chips, they even dared to open-source cutting-edge artificial intelligence technology like GTAI, making it available to people all over the world for free, let alone autonomous driving technology! To prevent Zhiyun Group from selling its autonomous driving technology, Bao Yongyan and others from Hailan Auto gritted their teeth and simply took out a large number of shares to acquire Zhiyun's technology team, and also made a promise to purchase EYQ chips at a high price, thus plugging this loophole.

This makes Hailan Automotive the only automaker in the world to master L3 and L4 level autonomous driving technology.

Currently, the EYEQ technology team at Zhiyun Group is patching up L2 assisted driving and offering L2+ level packaged solutions to customers. As for developing higher-level L3 assisted driving technology, Zhiyun Group has not invested many resources in this area and can only take it slowly.

The main reason is that Xu Shenxue has focused the development of autonomous driving technology on Hailan Auto... The current EYEQ business group of Zhiyun Group is a marginal business group that is neither loved nor supported.

With a small business volume, minimal impact, and meager earnings, few superiors care about them... They can only rely on themselves and continue their arduous research and development!

We strive to develop Level 3 assisted driving technology as soon as possible, and then provide customers with a one-stop solution package service.

Of course, this L2+ level is sufficient at the current stage, while gasoline cars or some low-end electric cars still use the L2 level of the EYEQ3 series.

The EYEQ4's L2+ level assisted driving technology can still be used for many years; they have plenty of time to continue research and development!
The EYEQ project team, which possesses L2+ assisted driving technology, is considered a peripheral business within the Zhiyun Group.

But in reality, that would be a core business for any high-tech company, after all, it's a business with revenue in the billions of dollars... Many well-known high-tech companies don't even have that much revenue in a year.

Even though it's a business worth several billion dollars, it's only considered a peripheral business for Zhiyun Group!
To put it simply: they don't even earn as much as Zhiyun Group does selling accessories for smart terminals!

Last year, Zhiyun Group generated over $10 billion in revenue from selling phone cases, wireless/wired chargers and data cables (including data cable interface licensing), tablet cases, wireless keyboards, Bluetooth headsets, wired headsets, Bluetooth speakers, and other smart terminal accessories, with exceptionally high profits!

Phone cases start at 200 yuan, how can the profit margin not be high!

And not only are they expensive, they also sell exceptionally well...

The EYEQ project team is in an awkward position because they're making less money selling high-tech driver assistance solutions than their sister department is making selling parts.

However, in reality, this is still a high-tech industry with few competitors!

After all, there are only a handful of companies in the world that have achieved Level 2+ assisted driving technology. Apart from Hailan Auto and Zhiyun Group, Tesla is one of the better ones. Other automakers are not quite there yet.

Currently, most car manufacturers that claim to have developed their own driver assistance systems are actually using the EYEQ solution... Some emerging domestic and foreign car manufacturers claim to have developed L2+ advanced driver assistance technology in their high-end electric vehicles, but if you take them apart, you can see that they all use the same EYEQ chip!

Industry insiders know that Zhiyun Group's EYEQ chip is not sold individually, but only in packaged solutions... However, consumers are not very aware of this... Therefore, many people regard these manufacturers' driver assistance technologies as the self-developed technologies of these car manufacturers.

It can't be said that they didn't do any self-developed work at all; they did some adaptation work, and adaptation work is also very important.

Therefore, even when using the same EYEQ solution, some car manufacturers have better driver assistance systems, while others have worse ones. This tests the car manufacturers' adaptation and development capabilities.

Of course, Zhiyun Group is very low-key and generally won't come out to contradict its clients by saying that it was done by them and had nothing to do with these car manufacturers.

The client paid money, and quite a lot of money at that, so Zhiyun's EYEQ project team naturally had to cooperate. Even if the client boasted that it was a self-developed assisted driving technology, they had to pretend they didn't see it!
Because driver assistance technology is so popular now, electric vehicles and even some gasoline vehicles are using driver assistance technology, so the shipment volume of EYEQ3 and EYEQ4 chips is also very large!

This chip also uses 2.5D packaging technology!
Because there are so many computing chips using 2.5D packaging technology, the production capacity of 2.5D packaging technology at Zhiyun Group is also very tight.

This directly led to the complete shutdown of the APO4500 graphics card this month. Zhuyun Group plans to use some of its 2.5D packaging capacity to produce the APO4600S graphics card... Currently, the card has begun mass production and is being supplied to customers!

Finally, there's the APO4500M graphics card, which uses the mature BGA packaging technology. It's an old 12nm process, but because of its low price and ample supply, it has a large number of orders. After going into production in the second half of last year, it produced about two million units to supply the market... This graphics card will also be used in the next generation of entry-level virtual machines from the Zhiyun Group.

Of all the APO graphics cards produced, the advanced APO5000 and AI6000 series had a production run of 4.5 million units; the discontinued APO4600 series had a production run of 1.8 million units; the APO4500 series had a production run of 3.2 million units; and the outdated APO4500M series had a production run of 2 million units.

Adding it all up, it's roughly a little over eleven million!

However, at least four million of these graphics cards were used by Zhuyun Group or its own core companies such as Fairy Mountain Holdings and Nanmen Aerospace.

Only about seven million copies were actually sold to the public.

Of the aforementioned eleven million graphics cards, the GPU cores themselves don't require much production capacity, as Zhiyun Microelectronics can supply them adequately. However, the packaging process is a problem...

If virtual device sales expand significantly this year, at least five million additional APO4 graphics cards and five million ZY34 chips will be needed.

Even if many of them can be replaced by APO4500M/64GB, it will still create a demand for at least three million APO4600S graphics cards, and there are no cheaper alternatives to the ZY34 chip, which will create an additional demand for four million cards.

This poses a significant challenge to the advanced packaging capacity of Zhuyun Group!
To address the chip shortage and expand production capacity, Xu Shenxue personally formulated a plan at a strategic meeting, increasing investment in advanced packaging technology, using funds to buy time, and accelerating the expansion of advanced packaging technology production capacity!

In particular, the existing 2.5D packaging plant, which is expected to start production this winter, and the 3D packaging plant, which is expected to start production next spring, need to accelerate their progress and strive to start production as soon as possible to meet the increasing capacity demand of advanced packaging processes.

At the same time, we will make large-scale expansions of production capacity for APO4600S graphics cards and ZY34 chips to meet the market demand for a significant increase in expected sales of virtual devices.

At the same time, it will lay a better computing power foundation for the further development of artificial intelligence.

Xu Shenxue also demanded that the APO6000/120GB self-use version, which uses a five-nanometer process, must be successfully put into production before this fall, so as to create a more advanced intelligent computing array in conjunction with a superconducting quantum computer.

"Our tasks are still very demanding this year, but we can't just turn down money that's practically handed to us!"

"The market demand right now is practically lining up to give us money, so what's there to hesitate about? Let's roll up our sleeves and get to work!"

(End of this chapter)