Those Years When I Was Forced to Top the Forbes List

Chapter 260 Make him lose out!
Ningbo, Bird Procurement Department.

"Mr. Xu, our SC6600 chip supports EDGE networks and has almost the same parameters as MediaTek's. We will also have a new solution soon, with power consumption 8% lower than MediaTek's MT6226 and superior performance across the board! It's priced at $8.5, which is $0.5 lower than MediaTek's price in the Huaqiangbei market. As long as you wait for the new product to come out, we guarantee that we will not raise the price."

As the leading domestic brand with cumulative sales of 5000 million units in the past few years, Rong Xianwen, the president of Spreadtrum, personally took charge of the negotiations.

Mr. Xu, sitting opposite him, felt a chill run down his spine.

MediaTek's selling price in the Huaqiangbei market is actually lower than what they were paid?

But his expression remained unchanged, and he smiled and said, "We are very touched that President Rong came in person. Xiao Zhang, make President Rong a cup of tea. Please sit for a moment, I need to make a phone call."

Mr. Xu walked out of the room and made a phone call.

"Mr. Liu, I heard you're selling them for $9 each in Huaqiangbei?"

There was a moment of silence on the other end.

"Mr. Xu, who told you that?"

"Ha, after dealing with each other for so many years, if we can't even be this honest, it will be difficult for us to continue our cooperation."

"Mr. Xu, please listen to me. This is just a temporary strategy. Prices will rebound soon. You have a large order and a tight timeframe. We'll be responsible for all production capacity if we work for you. Who else can handle your demands besides us?"

The conversation was still going on. Once Mr. Xu got a definite answer, he stopped talking and went back into his office. He put his phone on speakerphone and placed it on the coffee table in front of Rong Xianwen.

“Mr. Liu, Mr. Rong from Spreadtrum is right in front of me. They said that production capacity is not a problem, and the price is $8.5 per chip.”

Rong Xianwen's expression darkened, but he still said, "We are cooperating with both SMIC and Huahong at the same time, so there is absolutely no problem with the birdboard order."

"Mr. Xu, don't listen to his nonsense! Both SMIC and Huahong have orders. SMIC's 12-inch fab has signed contracts with Infineon and Elpida. There's not much capacity left; at most, it can only guarantee Spreadtrum's business in Huaqiangbei!"

Wafer fab capacity is the market foundation for IC design companies.

Chip production follows the same logic as panel production. Wafers are glass substrates, and to make finished products, they need to be cut. The larger the wafer size, the more finished chips can be cut in a single operation, resulting in higher production efficiency and capacity.

8英寸晶圆超面积33183毫米，12英寸70659平方毫米，是8英寸的2.13倍。

Larger sizes also have a lower waste rate.

Some functional chips are small in size, baseband chips are medium in size, and CPUs are large in size.

MediaTek and Spreadtrum's integrated chips contain both baseband and CPU chips, which are medium to large sizes. Even a 12-inch wafer can only yield a limited number of finished products. The baseband chip can be cut into six or seven hundred pieces, while the CPU chip can be cut into less than two hundred pieces.

8-inch wafers account for less than half that number.

A wafer fab's planned monthly production capacity is only 70,000 to 80,000 wafers, and the actual capacity is even lower. The actual number of wafers it can cut is obvious.

MediaTek is backed by TSMC. It has four 8-inch wafer fabs and one 6-inch wafer fab in Hsinchu and Tainan Science Parks. Its US subsidiary also has an 8-inch fab, and another 12-inch wafer fab in Tainan.

Currently, there are two main companies in mainland China: Huahong has two 8-inch wafer fabs in mass production, SMIC has one 8-inch wafer fab in Shanghai, Tianjin acquired Motorola's 8-inch wafer fab, and BJ has one 12-inch wafer fab. In addition, there is another 12-inch wafer fab under construction in Shanghai.

These production capacities aren't just for MediaTek and Spreadtrum. They have plenty of other orders, and they want large quantities at low prices, but they don't want to be put on a waiting list. So they have to book the production capacity. The supply and demand relationship is a dynamic balance. Whether it's a buyer's market or a seller's market depends on demand, and agreements need to be made several months in advance.

MediaTek has a large market share and long-term contracts with TSMC. Production capacity has always been MediaTek's strength.

But it was a coincidence.

Although Mr. Chen's market is not large, he is bold. Recently, Spreadtrum has been in talks with SMIC about securing capacity for its 8-inch fab in Shanghai, and there is also a cooperation agreement for 90nm capacity, guaranteeing priority capacity and low prices.

Spreadtrum and SMIC have reached an agreement to prioritize certain production capacity and then lower prices once Spreadtrum's shipments reach a certain level.

Huahong has a lower yield rate and cannot compete with SMIC in terms of cost savings, so it serves as a supplement to production capacity.

When it comes to production capacity, Spreadtrum has nothing to hide.

"Mr. Xu, our production capacity is sufficient, and we can sign high-value default contracts. If you do not receive the goods on time, we will compensate you with half of the contract price."

Rong Xianwen made a confident promise, but immediately turned cold: "However, your way of negotiating is a bit disrespectful to Spreadtrum. We are afraid we will have to change our approach. The special offer of $8.5 is now. If Mr. Xu cannot make a decision now, I will return to Shanghai."

The moment he revealed his assertiveness, both the person on this end of the phone and the person on the other end tensed up.

Mr. Xu became somewhat embarrassed: "Mr. Rong, it was my fault. Shall we talk in the conference room now?"

The phone on the table is still on.

"$8.30!" MediaTek hurriedly replied, "Mr. Xu! We'll reduce the price by $1 from the original $9.30!"

The atmosphere became awkward again.

Bird didn't want to change the solution so quickly, and now that they've suddenly received a discount of $1, Mr. Xu has already done a great job.

Rong Xianwen smiled and stood up.

He has achieved his goal.

When Mr. Xu across the table saw that Rong Xianwen was about to leave, he hurriedly hung up the phone and got up to see him off.

"Mr. Rong, I'm so sorry! Please have dinner with me!"

"No need," Rong Xianwen said with a gentle smile, abandoning his earlier assertiveness.

“We will also have new products that completely surpass MediaTek. If Mr. Xu changes his mind, you are welcome to come and talk to us again.”

Shenzhen, SEG 57.

Lu Weibing was making a phone call with a big smile on his face.

"Old leader!"

"Little Lu! How have you been lately?"

"It's alright, thanks to you!"

"Haha, I heard you went to be the president of a private company, with an annual salary of 100 million? That's doing well! Have you made any achievements at your new company?"

"Hey, not bad! Our head office recently acquired a stake in Spreadtrum!"

"Spreadtrum? Oh! Your company is quite large!" The other person spoke with a more serious tone: "You're a promising young man. Come over for dinner sometime!"

"Okay, boss. I wanted to ask you about some of Konka's recent new phone models, which all use MediaTek chips?" The voice on the other end hesitated for a moment: "What, are you trying to help Spreadtrum sell its products? I don't handle business!"

"Hehe, no, I'm not here to make things difficult for the leaders. It's just that MediaTek and Spreadtrum are currently engaged in a price war, and the chips they supply to Bird are selling for eight dollars. I wonder if the price they supply to Konka has been reduced?" Lu Weibing said, not without exaggeration.

He just received news from Ningbo that MediaTek offered a minimum price of $8.3, saying that eight yuan isn't too far off.

Konka is a state-owned enterprise, and the leaders there are very good at reading between the lines. Lu Weibing's words were enough for the other side to understand.

Eight dollars? That's low?

“Very low, I estimate it’s 20% lower than the spot price Konka got.”

The person on the other end of the phone immediately became serious: "Let me ask!"

BJ, Tianyu Langtong.

Zhou Chengyun, Vice President of Sales at Spreadtrum, made a visit.

Rong Xiuli personally brewed the tea, looking apologetic.

"Mr. Zhou, I'm sorry, MediaTek was pushing us too hard. We had no choice but to terminate our cooperation with you."

A little over a month ago, Tianyu and MediaTek reached a cooperation agreement.

She witnessed the magic of MediaTek's turnkey solution, but also a wave of rogue tactics that insisted on "absolutely not allowing the use of competitors' products."

Tianyu mobile phones are a long-term customer of Spreadtrum.

Of the three million units Spreadtrum sold previously, some were captured by Tianyu.

Tianyu Langtong officially obtained its production license in April of this year and has since grown rapidly, collaborating with MediaTek, BYD (batteries), and Foxconn (assembly). It became the national sales champion in 2006 and the following two years, with its products reaching India, Africa, and Hong Kong. At its peak in 2008, its sales reached 2100 million units, approaching Nokia's sales volume.

Of course, Zhou Chengyun was unaware of these things.

He was only instructed by Chen Xuebing to take over the company.

He also received a special privilege: he was allowed to bring the full-touchscreen prototype.

“Mr. Rong, we’re old friends, so I won’t make things difficult for you. I know what level MediaTek is at, but you can go to Shenzhen and ask around. We’re now cooperating with Singularity Technology, and our service level and solution quality have far surpassed what they used to offer, even exceeding MediaTek’s. What they can provide, I can provide; what they can’t provide, we can also provide.”

Rong Xiuli had only seen Spreadtrum's service platform a few months ago, and the system solutions it offered were indeed inferior to MediaTek's. Upon hearing this, she hissed and crossed her legs, saying:

"What can you provide? Let me take a look."

Zhou Chengyun smiled.

"I won't go into what they provide, but the system and after-sales service you need are all there. Let me show you some things they don't have."

As he spoke, he stood up, took out his phone from his pocket, and walked over to Rong Xiuli.

Let me show you.

A dozen minutes later, Rong Xiuli looked at the full screen in front of her and let out a long sigh.

Seeing this phone, she knew that all her previous self-developed technology had been for nothing.

"I want the solution for this phone!"

She always harbored a desire for independent research and development. Although she had been working on knock-off products before, she had kept her independent research and development department running and hadn't disbanded. What she wanted was a dream phone like this.

"We can't mass-produce it yet, but as long as you cooperate with us, we will provide you with a solution as soon as we integrate the supply chain."

"how long?"

Women are always asking questions.

Zhou Chengyun wasn't sure either: "Um, about six months to a year. The screen and chip are already sorted out, there's not much left to go."

Rong Xiuli was getting impatient: "So long? Have you sorted out the battery supply chain yet? I've been working with BYD for a long time, they're very strong, I can introduce them to you."

The batteries supplied by BYD were the ones she was most satisfied with; she truly loved BYD.

"Okay, let me go back and report to my boss. How about the collaboration?"

"Let me make this clear first: if I can't be the first to get the solution for this phone, we'll terminate the cooperation immediately."

As soon as Rong Xiuli revealed her thoughts, Zhou Chengyun felt a surge of joy.

Although Tianyu is not as good as Bird, it still receives three to four million orders a year.

"I guarantee you'll get it before any other manufacturer in Huaqiangbei!"

"What about the price of the chip?" Rong Xiuli asked in return.

"How much is MediaTek offering you? We're old friends, so we'll offer 5% less than them!" Zhou Chengyun knew that MediaTek wouldn't offer Tianyu a low price right now.

Rong Xiuli gave a number after a moment: "9.3 US dollars."

Zhou Chengyun's face twitched, and he repeated what he had just said: "President Rong, we are old friends."

$9.3 was the lowest price MediaTek had previously offered to Bird, a top-selling price with advertising benefits. It was impossible for them to offer that to Tianyu; Tianyu would be lucky to get $10.

Rong Xiuli then smiled and said, "I want $9.3."

Zhou Chengyun coughed and tentatively asked, "9.5?"

Rong Xiuli insisted, "No, I entered the industry in 93, which is an auspicious number."

Zhou Chengyun touched his forehead.

Women are truly unreasonable.

"Okay! Then it's 9.3. You can't just turn around and go back to MediaTek, can you?"

"As long as you provide good service, we will never change anything."

(End of this chapter)