Rebirth 08: Rise from copycat phones

Chapter 599 The Koreans: Shock and Reflection

Following the release of information about the senior executive meetings of Zhiyun Group, the stock prices of many listed companies rose...

During the meeting, the announced investment scale alone reached a staggering five trillion yuan... including three trillion yuan in data center investment, 1.5 trillion yuan in semiconductor and electronics investment, and another 500 billion yuan in investment in superconducting quantum computer manufacturing, which is also ostensibly included in semiconductor investment. Therefore, the semiconductor investment that the public sees has reached a staggering two trillion yuan.

These two items alone bring the total investment to five trillion!

Such a massive investment will undoubtedly drive revenue and profit growth for a large number of related companies. These companies are expected to perform well in the coming years, and investors are not stupid. They seized the opportunity to increase their holdings of related stocks in advance, thereby driving up stock prices.

Especially the data center-related industry chain and the semiconductor-related industry chain!

As a result, within just two days, so-called "computing power concept stocks" and "semiconductor concept stocks" appeared in the securities market, covering not only major suppliers of Zhiyun Group, but also some companies outside of Zhiyun Group's supply chain!

After all, Zhiyun Group isn't the only company in China involved in artificial intelligence and semiconductors. There are many other companies as well. Although their investment scale cannot compare with the massive scale of Zhiyun Group, it is actually not small.

Leading domestic internet companies such as Tencent and Yihai Technology have also invested heavily in the field of artificial intelligence. Even if we don't develop better AI technologies, or even just use algorithms like GTAI, which are open-sourced by Zhiyun Group, operating large-scale AI data models still requires massive computing power.

Computing centers are not only used to train artificial intelligence, but also to operate it... Especially since these internet companies have a large number of users. Even if each user only uses a small amount of computing power, the total number is still enormous.

These internet companies need to expend enormous computing resources just to provide users with basic artificial intelligence services.

This also means that they also need to spend huge sums of money to build computing centers!

These companies' suppliers do not necessarily overlap with Zhiyun's suppliers, thus bringing ample orders to a large number of manufacturers outside of Zhiyun's supply chain!

The impact of 'computing power concept stocks' is very widespread!

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The same applies to the semiconductor industry!
In the semiconductor industry, while Zhuyun Group is undoubtedly a behemoth, its strengths are primarily concentrated in advanced process manufacturing and high-end chip design.
However, they haven't ventured into the low-to-mid-end market much.

In the field of chip design, a large number of semiconductor design companies of all kinds have emerged in China in the past few years. These are not only innovative companies, but also many large companies that set up chip design departments to design chips themselves in order to save costs or to gain a competitive technological advantage. This is more common in industries that use chips, such as smart terminals, home appliances, automobiles, and industrial equipment.

Well, we can't produce advanced chips like x86 CPUs, high-end GPUs, and mobile SoCs, but producing mid-to-low-end chips shouldn't be a big problem.

Therefore, there are now many chip design companies in China, which has propelled China to become the world's largest chip manufacturing country.

Among the domestically produced chips, there are not only advanced logic chips and storage chips from Zhuyun Semiconductor and Zhuyun Storage, but also a large number of less noticeable low- to mid-range chips.

These chips are installed in various industrial products... and most of them are even used in some less noticeable products.

Even seemingly low-tech electronic toys that cost only a few dollars may contain chips...

Besides Zhiyun Microelectronics, a large number of other domestic semiconductor manufacturers also support China's massive chip usage and exports.

Over the past five or six years, China's semiconductor production capacity has experienced explosive growth, rapidly becoming the world's largest.

Aside from the advanced process capacity of Zhiyun Microelectronics, the increase here actually refers to the capacity of more mature and even outdated processes, mainly concentrated in the 14-nanometer, 28-nanometer, and even more outdated 45-nanometer, 65-nanometer, 90-nanometer, and 130-nanometer processes, which seem to be outdated.

While these mature processes are not as profitable as Zhiyun Microelectronics' 7nm and 5nm processes, they are still profitable.

In particular, as the chip manufacturing processes required by smart homes, smart electric vehicles and many other industries gradually shift from mature processes to 14-nanometer and 28-nanometer processes.

At the same time, some emerging industries have a strong demand for mature processes for certain special semiconductor products, such as various semiconductor sensors, special storage, power management chips, and other types of chips.

Despite the impressive progress of Zhiyun Microelectronics in developing 5nm and 7nm processes, the actual domestic production capacity for 45/40nm, 150nm, and 180nm processes is currently insufficient to meet demand!
In particular, the current 28-nanometer and 14-nanometer processes are still considered advanced processes... Zhuyun Microelectronics doesn't value these two processes and hasn't invested in expanding its production capacity.

However, for a large number of second- and third-tier semiconductor manufacturers in China, this is still a relatively profitable advanced process field.

Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since and was Dean of the Department of Fine Art from -. In – she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.

For example, SMIC has invested heavily in the 14nm and 28nm processes, and its production capacity has expanded rapidly.

Furthermore, they are continuing to tackle technical challenges to develop an equivalent 7-nanometer process, and I've heard that things are going quite smoothly... Although their technology is relatively average, they are not limited by equipment. They can purchase EUV lithography machines and other top-of-the-line equipment from Fairy Mountain Holdings in China!
Given SMIC's current capabilities, it would be extremely difficult for them to achieve an equivalent 7nm process using the quadruple exposure process of DUV immersion lithography.

In a certain time and space, they couldn't buy EUV lithography machines, so they had no choice but to stubbornly stick to the quadruple exposure process of DUV immersion lithography machines.

However, in this time and space, there is no need to do that. They can use the HEUV-300 series lithography machine provided by Gulf Technology to carry out the equivalent seven-nanometer process, which is much less technically difficult!

If the technology isn't good enough, just use top-of-the-line equipment. It's a classic case of brute force leading to failure... The wavelengths of the HEUV-300B and C-type lithography machines are only thirteen nanometers... If even with such top-of-the-line equipment, it's much simpler to achieve an equivalent seven-nanometer process.

Of course, as a latecomer, you will also face many patent issues!
Companies like Zhiyun Microelectronics, TSMC, Samsung, and Intel have built a large patent wall ahead of us, so it's not easy to find a new path around it.

However, even if it is difficult, it is still simpler than forcing a 7-nanometer process using a DUV immersion lithography machine.

Besides SMIC, other domestic semiconductor manufacturers are also vigorously expanding their mature process capacity, mainly focusing on the 28-nanometer to 90-nanometer process. At the same time, many semiconductor companies are also involved in the memory chip field.

Storage chips aren't just the top-tier storage chips made by Zhiyun Storage; a huge number of mid-to-low-end storage chips are also needed... In other words, an electronic product that needs logic chips will most likely also need storage chips; the two are used simultaneously.

Therefore, while the domestic semiconductor low-end logic chip industry is developing rapidly, the low-end memory chip industry is also developing rapidly.

The development of China's semiconductor manufacturing industry is extremely rapid... and this is inseparable from the support of Fairy Mountain Holding Group in semiconductor equipment and consumables!

It's not that Fairy Mountain Holding Group is doing charity by selling equipment and consumables at very low prices. Rather, it's because of Fairy Mountain Holding Group that domestic semiconductor manufacturing companies can easily purchase the corresponding semiconductor equipment and consumables.

No need to worry about being held back by technology, and no need to worry about after-sales service for the equipment.

Most importantly, it is possible to purchase top-of-the-line core equipment such as lithography machines!
If it weren't for Fairy Mountain Holdings' subsidiary, Gulf Technology, developing and supplying the HEUV-300 series lithography machines on a large scale... domestic semiconductor manufacturers wouldn't even have a whiff of EUV lithography machines, let alone EUV lithography machines. Even the slightly more advanced DUV immersion lithography machines wouldn't be sold to them by American conglomerates.

After Gulf Technologies developed an advanced lithography machine, the American conglomerates did not impose a sales ban on lithography machines...

Actually, they don't need to ban the sale. If domestic semiconductor companies want to purchase imported lithography machines, the application process will be extremely complicated... They need to explain in detail the necessary reasons for purchasing imported lithography machines!
The main problem is that the market for lithography machines is very small, and the domestic market for lithography machine procurement is also limited... However, the research and development of lithography machines is very expensive, so it is very necessary to protect the industry to a certain extent.

Meanwhile, the various lithography machines provided by Gulf Technology are all top-notch in performance, no less than ALMS, and even more cost-effective. The overall performance of the top-of-the-line HEUV-300C is comparable to that of ALMS' top-of-the-line lithography machines.

In this situation, if a company wants to purchase an imported lithography machine, it must provide a detailed explanation of the reasons why it must purchase one... What exactly makes you give up domestically produced lithography machines that offer better value for money and equally excellent performance? Why insist on using imported goods?
Of course, in reality, apart from a few civilian enterprises, no legitimate medium-sized or large semiconductor companies have bothered to apply for imports in recent years!
Many things don't need to be said or documented; anyone with a brain knows what can and cannot be done.

This explains why Gulf Technology, despite being unable to export its two main lithography products, EUV and DUV, can still make a relatively good living by relying on the domestic market.

With the equipment support from Gulf Technology, it becomes much simpler for domestic semiconductor manufacturers to develop technologies and increase production capacity... they just need to throw money at it.

They don't have any grand ambitions; they wouldn't dare to dream of developing 5nm, 3nm, or even 7nm, as no other company besides SMIC is currently working on it.

They are working on 14-nanometer, 28-nanometer, and more mature processes such as 40-nanometer, 65-nanometer, and 90-nanometer... and these process nodes are still in short supply in China and are quite profitable.

There's no way around it; China's industrial scale is simply too large, and with the technological advancements of recent years, the demand for chips across all industries has increased dramatically... This is an era where even the production capacity of 40/45 nanometer process nodes cannot meet the demand!

The market for mature semiconductor processes remains a vast and promising sector!
Meanwhile, Zhuyun Microelectronics, a domestic semiconductor manufacturing giant, is too lazy to develop these mature processes with little profit... With the funds and talent, Zhuyun Microelectronics prefers more advanced processes with higher profits!

Zhuyun Microelectronics' target is advanced processes such as 7nm, 5nm, 3nm, and even future 2nm and 1.5nm! Zhuyun Microelectronics has no plans to expand production beyond 7nm.

This leaves ample room for other domestic semiconductor manufacturing companies to survive and even grow.

Zhiyun Microelectronics doesn't care about the hard work involved in making mature processes, but they do!
Even hard-earned money is still money!
The expansion of these second-tier domestic semiconductor manufacturing companies has also brought a large number of supply chain orders.

Sigrún has taught at the Iceland University of the Arts as a part-time lecturer since and was Dean of the Department of Fine Art from -. In – she held a research position at Reykjavík Art Museum focusing on the role of women in Icelandic art. She studied fine art at the Icelandic College of Arts and Crafts and at Pratt Institute, New York, and holds BA and MA degrees in art history and philosophy from the University of Iceland. Sigrún lives and works in Iceland.

The stock market has recently seen a significant surge in the data center and semiconductor manufacturing sectors, sparking heated discussions both domestically and internationally.

Of course, they don't pay attention to other second- or third-tier semiconductor or artificial intelligence companies in China; they mainly focus on news about Zhiyun Group.

A South Korean television station even produced a mockumentary to report on the country's technological development in artificial intelligence, infrastructure, and semiconductors.

This leads to many other issues, such as the semiconductor competition between the two countries... This competition is also very fierce, with Zhuyun Microelectronics and Fourstar Semiconductor vying for advanced process foundry business; and the most core are Zhuyun Storage and Fourstar Semiconductor's storage business and Hyundai Hynix's storage chip business, which are in direct and intense competition.

Well, actually we should also add the American company, Micron.

Four Star Semiconductor, Hynix, Micron, and Smart Memory are the world's four leading memory chip manufacturers. Together, they occupy the vast majority of the global memory chip market, especially in the mid-to-high-end segment.

Zhiyun Storage also possesses significant technological advantages in 3D NAND. Therefore, the development of South Korea's storage chip industry has faced considerable challenges in recent years.

As for the logic chip field, South Korea itself no longer has any advanced logic chips. Its mobile phone SoCs are barely surviving, and it has neither CPUs nor GPUs. All that's left is to manufacture logic chips for American semiconductor companies. Qualcomm and AMD are important customers of Samsung Semiconductor.

Then, this South Korean mockumentary also extended to the comparison of the technological development of the two countries... such as the field of artificial intelligence, which they are very concerned about. The technological progress of the Zhiyun Group in the field of artificial intelligence has hurt many South Koreans who watched the documentary!

Finally, they are still trying to explore why this is happening... and they are also trying to find the answer in education.

Then we came to an answer: South Korea is crazy about medicine, and China is crazy about science!
They say that the top students in South Korea all apply to medical school... The top students apply to medical schools, which are the top ten schools in the country! On the other hand, in China, science is king, and all the outstanding high school seniors are aiming for science.

South Koreans were shocked, cursing and reflecting on their actions, and other countries were in a similar state.

Many countries' hot news topics are related to China, and among these news items, emerging industries such as smart terminals, smart electric vehicles, artificial intelligence, virtual industries, and robots are always involved.

As the conversation goes on, Xu Shenxue inevitably comes up again... Although Xu Shenxue has always been very low-key over the years, rarely attends public events, and only gives a handful of interviews a year, he is still one of the most renowned technology entrepreneurs in the world.

He is famous not because he is the world's richest man... but more because of the top-notch high-tech companies under his control, such as Zhiyun Group, Hailan Auto, Yihai Technology, Weiku Electronics, and Nanmen Aerospace, which are sweeping the globe!

Xu Shenxue may be low-key, but the companies under his management are anything but!
So despite Xu Shenxue's low-key demeanor, he is still frequently brought up by news media from various countries.

To some extent, Xu Shenxue is probably the most well-known entrepreneur or even individual on Earth right now... Even people in primitive African tribes have heard of him and know that Xu Shenxue is a super awesome tech tycoon.

With his high profile and his frequent use of cutting-edge technology, he is a favorite subject for media outlets around the world, especially self-media professionals. They use his name to drive traffic to any news they see.

As the years went by, Xu Shenxue's fame grew higher and higher!

Although Xu Shenxue rarely posted any related messages on some social media accounts he used in his early years, and even when he did, they were mostly reposts of unimportant business news, he still had a large number of followers. He never expressed his personal opinions on social media.

Xu Shenxue, a true global celebrity, continued to steadily advance his various projects amidst the turmoil in the outside world.

Anyway, he's been famous for a long time, so he's used to it.

Starting in mid-January, Xu Shenxue began to attend high-level meetings of his various subsidiaries more frequently.

The main reason is that during this period, the listed companies under my management have successively completed the compilation and analysis of the financial reports for the fourth quarter of last year and the financial reports for last year, and will release the relevant financial reports one after another in late January.

Before the official release of the financial report, Xu Shenxue would also hold a meeting to discuss the financial situation and summarize and reflect on the operating performance of the past year.

We should continue to promote the good aspects and improve the aspects that are not done well.

There are no major problems with Zhuyun Group; all its core businesses are progressing steadily.

Meanwhile, Vcool Electronics has seen some divergence. For example, its smart home business, which was highly anticipated in earlier years, seems to be doing quite well, but it hasn't made much money, and its revenue and profit growth have fallen short of expectations.

The company's core business, smart terminal business, was affected by the overall shrinking of the smart terminal market and the intensification of domestic and foreign competition, resulting in a certain degree of decline. Sales volume dropped by five percentage points, and revenue and profit also declined.

The decline in Vcool Electronics' core business will definitely affect its stock price once the news is released!

However, there's nothing that can be done about it. The overall smart terminal market is shrinking, and the competition is fierce... Especially since competitors like Huawei and Dami are doing better and better. Even after the C series of Zhiyun Group went out of business, they created a new cloud brand. All of this has brought a significant impact to Weiku Electronics!
In addition, in overseas markets, Vcool Electronics also has to compete with its old rival, Four Star Electronics... Most of Four Star Electronics' sales are actually mid-range mobile phones, making it a major competitor for some of Vcool Electronics' flagship models.

The overall market is not doing well, and competition has intensified, making it increasingly difficult for Vcool Electronics to operate its smart terminal business as it gets older.

In response, Vcool Electronics' strategy is to continue to find ways to innovate and develop new products in the field of smart terminals in an attempt to stabilize its market share, and to explore new avenues!

We've tried many other random sectors, but the most successful one is the smart electric vehicle business launched last year.

The 'Little Blue 2020' model released by Vcool Electronics has achieved excellent sales and reputation since its launch... High appearance and high cost performance are the most obvious features of the Little Blue 2020, and also the features that attract consumers the most.

Since its launch, Bluegogo has been selling 200,000 to 300,000 vehicles a year, which is quite an achievement for a new car brand.

The success of Xiaolan Auto was also a major factor driving the continuous and significant rise in the stock price of Weiku Electronics last year... Many investors are optimistic that it will become the second Hailan Auto in China... well, even if it's just a low-end version of Hailan Auto!

In addition, another successful business for Vcool Electronics last year was the VR virtual reality device launched in November.

Because of its excellent price-performance ratio, Vcool Electronics' VR virtual reality devices have become one of the choices for many users who cannot afford Zhiyun virtual machines after they were launched on the market. Although it also faces competition from VR virtual reality devices from companies such as Apple, Huawei, Sixing, and Google, Vcool Electronics has been making terminal devices for many years, and its brand, channels, and design integration capabilities are still quite good, so its market competitiveness is not bad.

In the VR virtual reality device market, its shipments in December last year even surpassed those of Apple's VR virtual reality devices, making it the world's largest VR virtual reality device in terms of shipments. However, due to the emergency release and production launch, the initial production capacity was limited, so although it seemed to be booming, the actual delivery volume was not high!

However, once production capacity ramps up next year, Vcool Electronics' revenue and profits from VR virtual reality devices will experience explosive growth, at which point this business will become a significant source of growth for Vcool Electronics.

The success of its electric vehicle and VR virtual equipment businesses has enabled Vcool Electronics Group to find new business growth points, which is also the main reason for the recent continuous rise in Vcool Electronics' stock price.

After holding a meeting at Weiku Electronics, Xu Shenxue went straight to Hailan Auto for a financial report meeting to hear last year's business report and some business plans for this year.

In comparison, the situation is simpler for Hailan Auto. Its main business, intelligent electric vehicles, continues to maintain rapid growth. The current problem plaguing Hailan Auto is the production capacity of solid-state batteries, rather than a market issue.

As for new businesses, Hailan Auto is developing intelligent robots, but the technology is too difficult and Hailan Auto cannot develop them in the short term. It is unlikely to be launched smoothly this year, and the earliest it can be launched is the year after next.

In addition, the solid-state battery business of Hailan Battery, a subsidiary of Hailan Auto, is also progressing smoothly, and it is gradually entering the field of portable terminal batteries.

With the growth of multiple businesses, Hailan Automotive Group's revenue and profits are still quite good.

After visiting Hailan Auto, Xu Shenxue held meetings with Weiku Industry, a listed company, and Yihai Technology, an internet company that has not yet gone public.

The continuous, intensive meetings over several days weren't exactly exhausting, but the schedule was so packed that there wasn't much time to breathe!
However, there's nothing that can be done about it, since he owns too many companies, and several of them are quite important and require his personal supervision.

As Xu Shenxue continued to hold meetings, it was already the end of January, the start of the Spring Festival holiday.

This year's Spring Festival was nothing special for Xu Shenxue. While others were resting, he spent most of his time working. He had to finalize the annual reports and business plans of various companies in early February so that he could smoothly carry out subsequent work after the holiday, especially the release of financial reports.

As February drew to a close and the holiday officially ended, several of the listed companies under his management successively released their financial reports!
First, VKO Electronics made its announcement, followed by Hailan Auto and VKO Industrial!
However, the most attention-grabbing document is still the annual report of Zhuyun Group!

Although numerous analytical institutions have already conducted analyses and statistics, and Zhiyun Group has successively released its financial reports for the first three quarters, there are still some uncertainties in this annual report, and the predicted data from many statistical analysis institutions also differ.

Many investors are now paying close attention to the annual report of Zhiyun Group, especially the growth of its four core businesses: revenue, profit, smart terminals, semiconductors, robots, and virtual equipment, as well as their gross profit margins.

Then we also need to pay close attention to the R&D expenditure and capital expenditure of Zhiyun Group... Investors know that Zhiyun Group spends a lot of money, and the amount of money spent will directly affect the stock price.

After all, it's important for businesses to make money, but it's even more important how much of that money is spent.

Zhiyun's ability to make money is known worldwide... but Zhiyun's extravagant spending is also globally renowned!

On February 10th, just two days after the Lantern Festival, Zhuyun Group officially released its financial report for last year at midnight that night!
Once the financial report was released, it quickly spread around the world!

Because all the figures in this financial report are too exaggerated... $885.3 billion in revenue and a staggering $260 billion in profit.

Not only are the revenue and profits exaggerated, but everything else is too.

The revenue growth rate of the intelligent robot business reached 83%, and the profit growth rate reached 260%, which means that the robot business has officially contributed a large amount of profit to Zhiyun Group!

The growth rate of the virtual equipment business is even more impressive, with revenue growth reaching 370% and profit growth reaching 530%... Last year, the virtual equipment business suffered huge losses, but this year it has indeed ushered in high profits.

In just one year, Zhuyun Group turned its hugely loss-making virtual equipment business around, allowing it to start contributing some profits to the group.

In addition, the computing chip business saw a growth rate of 130 percent and a profit growth rate of 170 percent!
The phenomenal growth rates of these three core businesses have directly made them important growth drivers for Zhuyun Group.

In particular, the computing chip business, with its huge profitability, has become the core source of profit for Zhiyun Group, along with the smart terminal business, and supports Zhiyun Group's huge R&D and capital expenditures!
This year's financial report was so outstanding that, unusually, the stock price of Zhiyun Group did not fall.

Every time Zhiyun Group releases its financial report, its stock price fluctuates, and a slight drop is commonplace, but this time it didn't.

This also means that the optimistic predictions of some investors have become a reality...

This is actually quite remarkable for Zhiyun Group, which receives global attention and is the subject of various detailed analyses...

(End of this chapter)