Reborn in 2011, 985 missing from two copies

Chapter 570: Qualcomm surrounded and blocked Wang Yi fiercely, but Wang Yi fought back!

Zhu Changlin frowned. "The first phase of the M2 wafer plant, which will be put into production early next month, also uses a 28-nanometer process. It is backward compatible and can be used to mass-produce 40-nanometer chips, right?"

George sighed, "We can mass produce, but we still have 28 million orders for 3-nanometer chips from third-party customers, and our own 28-nanometer chip consumption is also very high. I'm afraid the M2 wafer fab doesn't have enough production capacity."

"And the 28-nanometer production line needs to adjust all parameters to produce 40-nanometer chips, which is technically difficult for a new wafer fab that has just been put into production. And the cost will be much higher!"

Zhu Changlin understood what George meant.

The 28nm production line can indeed produce 40nm chips, but the parameters need to be fully adjusted.

If it is a wafer fab that has been in production for a long time, adjustments will be easy and may be completed in a week.

However, the M2 wafer factory will not be put into production until the beginning of next month, and all aspects are starting from scratch. Only some of the technical personnel are old employees transferred from other wafer factories, and the others are new technicians with limited experience. The adjustment may take half a month or even longer.

During the adjustment period of more than half a month, production had to be suspended. Xingyi Semiconductor, which was short of production capacity, was simply unable to bear such losses.

More importantly, using a 28nm production line to produce 40nm chips is like using a Katyusha as an RPG rocket launcher, which is a waste of resources and very costly.

"So, if TSMC stops manufacturing for us, we will be in big trouble! Even our survival will be at stake!"

Zhu Changlin said in a deep voice: "By then, we will have a shortage of 40-nanometer chips. For this reason, we will have to face a situation of choosing one of the two."

"Either we stop production of the first generation of Infinity and Infinity TV A1 and deliver the limited 50nm chips to third-party customers. Or we refuse to deliver chips to third-party customers and ensure a stable supply of our own products!"

"But no matter which one it is, it will be a disaster and a fatal blow to Xingyi Technology!"

"Indeed." Wang Yi's face became serious and he looked at George: "This is consistent with Qualcomm's style. Is the information reliable?"

"It's very reliable. I bought it from a senior executive at TSMC."

"Okay, the company will reimburse the expenses. Continue to add funds and make sure to keep track of the progress of the negotiations between TSMC and Qualcomm."

"Don't worry, Chairman, I have arranged everything." George said.

They are all in the semiconductor industry, and he also has information channels at TSMC.

Wang Yi said in a deep voice: "We have given TSMC a large order of 2000 million chips per month. TSMC does not want to give up all at once, but Qualcomm will definitely make a series of promises, such as Qualcomm bearing the penalty for breach of contract, such as additional orders, or even direct threats, forcing TSMC, Qualcomm, and Xingyi Technology to choose one..."

"TSMC is still hesitating, but Qualcomm will not give TSMC too much time. We must prepare a response strategy."

Zhu Changlin nodded. "Yes, if most of our 3G mobile phones are discontinued next year, it doesn't matter even if TSMC stops manufacturing. Our own wafer fabs have enough capacity, but now our 40-nanometer mobile phones, tablets, and TVs are all hot-selling, and third-party customers have orders for 1.5 million 40-nanometer chips, which cannot be separated from TSMC's foundry. If the other party really stops manufacturing, it will be a big problem."

George also spoke up: "I suggest looking for a new foundry immediately and prepare for the worst."

Wang Yi pondered, “It may not be that easy to find a new foundry.”

"Since Qualcomm has lobbied TSMC to stop manufacturing for us, Samsung is probably also reaching a consensus. As for Intel, it mainly makes PC chips and has no mobile phone chip business for the time being."

"SMIC has no problem producing 40-nanometer memory chips. As for the 40-nanometer logic chip production capacity, it may take some time, and there are also problems with technology licensing. Not to mention Huahong and the like."

Wang Yi thought quickly: "Then the remaining options are Unigroup, GlobalFoundries, STMicroelectronics and other wafer fabs."

"No matter what TSMC plans to do, whether it will stop foundry or not, we have to prepare for the worst and find a new foundry."

George agreed very much: "Chairman, I will contact the contacts and contact these OEM factories to place additional orders."

"Well, but I guess Qualcomm has also thought of this step, and I'm afraid they have explained it in advance. Let's give it a try first."

"This..." George's eyes dimmed.

On the one hand, Qualcomm’s current influence is still considerable.

On the other hand, Xingyi Technology has its own wafer fab and is in competition with other wafer fabs.

Under this situation, neither TSMC, GlobalFoundries, nor STMicroelectronics will offend Qualcomm, a pure major customer, for the sake of a potential competitor, Star Semiconductor.

No one would do this kind of thing that puts the cart before the horse.

After all, Qualcomm only develops chips, does not mass-produce them, and is a purely large customer.

All chip orders in Asia are manufactured by TSMC and Samsung.

But some orders from Europe and the United States will also be given to GlobalFoundries, STMicroelectronics, etc., with which we have cooperation.

It is unwise to annoy major customers for the sake of competitors.

After all, this wave of orders from Xingyi Technology is only temporary.

By next year, Xingyi Technology's 40-nanometer products will be discontinued one after another, and the demand for 40-nanometer chips will drop significantly.

By then, Xingyi Technology’s own 40-nanometer production capacity will be able to meet all demands, and it will no longer place orders with third parties.

Based on this, the major wafer foundry giants will not risk offending Qualcomm and do foundry for Xingyi Technology just for this "temporary order".

The pros and cons here are easy to calculate.

Sure enough, George contacted all the major wafer giants and they all implicitly said that their production capacity was limited and they were powerless...

Wang Yi was not surprised: "Sure enough, Qualcomm has already given us a heads-up. This time, Qualcomm is really ruthless!"

"What should we do then?" Zhu Changlin frowned, "Do we have to contact SMIC?"

George shook his head: "Let's not talk about whether it can be done. Even if it can be done, their 40 nanometer technology is also introduced from IBM. If they do OEM for us, it will be difficult..."

Xingyi Technology owns its own 40-nanometer and 28-nanometer technologies. It can produce whatever products it wants and can do OEM for whomever it wants. It has the final say.

But if you use someone else's technology, it's hard to say.

In the past, around 2019, SMIC also began to fully de-Si.

Build 40-nanometer production lines and 28-nanometer production lines that do not contain U.S. technology or equipment.

But that’s not possible right now.

Wang Yi fell into deep thought: "SMIC is an idea. Next, we can either acquire a SMIC wafer fab, introduce our own 40-nanometer process, and mass-produce 40-nanometer chips."

"Either we cooperate with SMIC, they provide the wafer fab, and we provide the 40-nanometer process technology to mass produce 40-nanometer chips."

"But no matter which one it is, it takes time."

"The first one is that the negotiation for acquiring a wafer fab takes a long time, at least half a month. The handover takes another half a month. In addition, the introduction of technology, employee training, equipment adjustment, production line debugging, etc. all take time."

"From negotiation to final production, it will take about two months in total."

"The second option is not to acquire the company but to introduce technology. The negotiation process is simpler. However, we still need to train employees, adjust equipment, and debug the production line. It will take a month and a half to start production!"

"But the question is, will Qualcomm give us a month and a half?"

“Can TSMC hold out for another month and a half?”

Hearing this, several people fell into silence.

Right now, Qualcomm is almost going crazy in its attempt to suppress Xingyi Semiconductor.

Even other wafer foundry giants have all given their warnings, typically leaving no room for maneuver.

Qualcomm will continue to put pressure on TSMC.

In this regard, TSMC will definitely eventually agree to Qualcomm and stop manufacturing chips for Xingyi Semiconductor.

But TSMC is definitely thinking of holding on a little longer, and if it can continue to produce for one more month, that’s it.

Firstly, by doing one more month of foundry work, TSMC can earn an extra 2000 million chips in foundry fees.

Secondly, there is one month less penalty.

Thirdly, if they can extend the foundry business for one more month and produce 2000 million more 40-nanometer chips, Xingyi Semiconductor will feel better and it will offend Wang Yi less.

If Xingyi Technology can continue the OEM business for three months, it will have a chance to survive this crisis.

But unfortunately, Qualcomm will not give TSMC this opportunity, let alone Xingyi Technology.

The key lies in how long TSMC can hold on!

Wang Yi made up his mind: "TSMC is unreliable, and we are running out of time to deal with SMIC. We must prepare for the worst!"

"The worst-case scenario is that the supply of 40nm chips will be cut off, and third-party customers will have to choose between their own products and our own!"

Zhu Changlin's expression changed drastically. This was the most fatal result:
“So do we give up our own products, or third-party customers?”

George was also silent: "..."

This choice concerns the interests, goodwill and reputation of Xingyi Technology. No one dares to make it except Wang Yi.

“We must not give up on orders from third-party customers, and we must deliver them on time with guaranteed quality and quantity!”

Wang Yi said calmly: "As long as Xingyi Semiconductor wants to continue to make a living as a foundry, it cannot destroy its reputation and brand!"

Why is Samsung disliked by customers?

Samsung just has a small vision and a small mind.

Seeing that competitors’ products are selling better than their own, they often get stuck and run out of stock.

In this situation, Samsung's A screen is currently too excellent and irreplaceable, so friendly companies have to buy it.

Whenever a substitute appears, even if it is slightly worse than the Samsung A screen, third-party customers will instantly abandon the Samsung A screen and abandon this untrustworthy traitor.

After the rise of domestic screens in the past, few brands use Samsung A screens anymore.

On the contrary, even the screens of flagship mobile phones are starting to use domestic products.

So much so that no one is interested in Samsung A screens.

That's the truth.

Wang Yi would not destroy the goodwill and reputation of Xingyi Semiconductor for the sake of temporary interests, causing irreversible consequences.

Zhu Changlin also agreed: "Yes, reputation comes first. Orders from third-party customers cannot go wrong no matter what. But if this happens, our own products will be in trouble..." "When you are at the end of your rope, there is always a way out. Don't worry, there will always be a way."

Wang Yi waved his hand: "Well, notify the third-party customers immediately and tell them to rest assured that the chip orders of the customers will be delivered in priority according to the contract and there will be no problems."

"Second, immediately arrange for someone to go to SMIC to negotiate the acquisition of a wafer fab or cooperation. Even a small 8-inch fab will do."

“Third, immediately check our existing 40-nanometer chip inventory and other component inventory of corresponding products and make statistics.”

"Fourth, arrange people to keep a close eye on the negotiations between TSMC and Qualcomm, and it would be best to keep track of the progress."

"Okay, Chairman, we'll go right away."

George, Zhu Changlin and others responded, left the office, and went back to their respective duties.

Wang Yi was looking at the autumn wind outside the window and felt the coolness of this autumn.

Qualcomm's move this time was swift and decisive.

But Xingyi Technology will never admit defeat.

Regardless of whether SMIC succeeds or not, and regardless of how many months TSMC can last, Wang Yi has prepared a plan B!

Next, we will wait for TSMC’s results and then take follow-up measures!

TSMC headquarters.

A fierce negotiation began again.

Lao Zhang and Qualcomm Vice President Franz Quentin sat opposite each other, and the atmosphere was somewhat tense.

Franz Quentin spoke first, in a bad tone: "Mr. Zhang, let's not waste time talking nonsense. I want to know what choice TSMC is going to make. Are you going to give up all cooperation with Qualcomm for the current order from Xingyi Technology? Or will you continue to be Qualcomm's core ally?"

"Give up all cooperation..." Lao Zhang's face changed drastically. The other party directly revealed his cards and forced him to choose one of the two!

I understand in my heart that Qualcomm has lost its patience and there is no room for improvement.

As for having the best of both worlds, that is just a dream.

The current situation is, either Xingyi Technology or Qualcomm!
He immediately laughed and said, "Mr. Quentin, you are joking. Our cooperation with Xingyi Technology only started in the past year. But our cooperation with Qualcomm has been going on for a long time."

"As TSMC's strongest ally, Qualcomm has always been its most important strategic partner. We will naturally choose to stand firmly with Qualcomm."

"That means you agree to stop manufacturing Kunpeng chips for Xingyi Technology?" Franz Quentin was not surprised.

"Of course!" Lao Zhang sighed in his heart: 'Mr. Wang, Mr. Wang, don't blame me. Your orders are just temporary. You won't need TSMC next year. Qualcomm is a permanent major customer. I really can't refuse.'

'The only thing we can do is to delay it for two months and give you 4000 million more chips to mass produce. That should be enough for you to find a way out, right?'

But unfortunately, Franz Quentin saw through Lao Zhang's thoughts at a glance and asked further: "When will it stop?"

"This..." The expression on Old Zhang's face became more complicated. Franz Quentin was really hard to fool:
"Our contract with Xingyi Technology is signed until the end of February next year, which is four and a half months away. If we stop early, we will have to pay a very high penalty."

"Don't worry. We, Qualcomm, will pay the penalty!" Franz Quentin said with a smile, blocking Zhang's excuse of delaying by paying the penalty.

Lao Zhang was speechless for a moment: "..."

Franz Quentin is really hard to deal with!
"Okay, you pay the penalty for breach of contract. However, in order to produce Kunpeng 500 and Kunpeng 506, we have imported a large amount of raw materials and a lot of semi-finished products. These must be produced, right? Otherwise, these materials and semi-finished chips will be losses!" Lao Zhang continued.

Franz Quentin nodded. "That's fair, but not much."

The corner of Lao Zhang's mouth twitched: "..."

I cursed in my heart: "Damn it, if it weren't for you being the vice president of Qualcomm, I would slap you back to the United States!"

"In this way, within two months, we will use up all the raw materials and stop production directly. You only have to pay 3.5 months of liquidated damages!"

"Two months..." Franz Quentin fell into deep thought.

In two months, TSMC can produce 4000 million 40-nanometer chips for Xingyi Technology. With these million chips, Xingyi Technology may be able to survive the crisis!
Then why stop production?
"Two months is too long, Mr. Zhang. You don't have to worry about the liquidated damages. We at Qualcomm will bear all of them." Franz Quentin said coldly, "But don't treat us like fools. Of course, we won't go too far and will stop production at the end of the month. We will bear the liquidated damages."

"The end of the month?" Lao Zhang wanted to curse: "There are only 13 days left to the end of the month. We can't use up all the raw materials. It's too late. So, we will stop production at the end of November."

3000 million chips in one and a half months is the limit.

"That's impossible! It will only take a month at most. We will stop production on the 17th of next month, which is enough time for you to use up all the raw materials." Franz Quentin said without question.

Lao Zhang laughed and said, "Even if the raw materials are used up in a month, what will we do with the 2000 million 40-nanometer production lines that we have vacated?"

"We have no shortage of 28-nanometer orders, but we are very short of 40-nanometer orders. How do we calculate this loss?"

"By stopping production three and a half months in advance, we directly lost a large order of 7000 million chips. How do we calculate this loss?"

Franz Quentin fell silent.

He knew that Lao Zhang was going to raise the price and ask for compensation.

Without good compensation, there is basically no chance of stopping production next month.

But this is reasonable, the penalty is for Xingyi Technology, and Qualcomm must also compensate TSMC for its losses.

Franz Quentin sighed and said, "We will give you all Qualcomm's 40-nanometer chips as compensation."

Lao Zhang smiled and said, "Mr. Franz Quentin, Qualcomm's 40nm chips are mainly dual-core chips at present, and the production volume is very small. We originally shared it with Samsung, so it can't be considered compensation."

Franz Quentin was speechless for a moment: "..."

Old Zhang is not easy to fool.

"How about this, all subsequent Snapdragon 800 chip orders will be given to you."

Lao Zhang waved his hand: "As far as I know, not many Snapdragon 800s have been sold. The chips in stock are enough for the time being. Other mobile phone manufacturers have bought Kunpeng 902 and Kunpeng 706. They will not buy Snapdragon 800 in the short term, so there will be no follow-up orders..."

"Does this idiot think I'm a fool? Why is he writing me a bad check?"

Lao Zhang became more and more angry.

Franz Quentin's mouth twitched: "Next, we will release the Snapdragon 805. We can give you more orders for the Snapdragon 805 chips."

"Do you think I, Zhang, am a fool? Your previous cooperation with Samsung made Samsung place an order for Qualcomm chips. I'm afraid that most of the Snapdragon 805 orders were given to Samsung?" Old Zhang said coldly.

The other party completely treated him as a fool!

Seeing that Lao Zhang was angry, Franz Quentin's face changed drastically, and he quickly smiled and said, "I was wrong, it's not Snapdragon 805, it's Snapdragon 801!"

"Snapdragon 800 was unsold, so we launched the new Snapdragon 801 and Snapdragon 805. To be honest, the orders for Snapdragon 805 were given to Samsung. But the orders for Snapdragon 801 chips were all given to TSMC!"

"Only Snapdragon 801? It shouldn't reach 7000 million!"

“…” Franz Quentin wanted to curse, but in order to get TSMC to stop manufacturing Kunpeng chips, he said, “Then add the upgraded version of Snapdragon 400, and next year’s Snapdragon 410, and give them all to TSMC.”

"That's about it." Old Zhang's face looked better. "It's settled then. All orders for Snapdragon 801 and Snapdragon 410 chips will be given to us. We will stop manufacturing Kunpeng chips in a month."

"make a deal!"

The two parties signed the contract quickly.

After seeing Franz Quentin off, Lao Zhang thought again and again and called Wang Yi:

"Mr. Wang, I'm sorry. I'm really sorry. Qualcomm forced us to choose between the two, and we really can't bear it."

Wang Yi was not surprised by this.

If Xingyi Technology does not have a wafer fab and can provide TSMC with a steady stream of chip orders, TSMC will still consider fighting to the end.

But Xingyi Technology has its own wafer fab, and will not have any orders to TSMC next year. So TSMC will not lose Qualcomm, a big customer, for the current order of tens of millions of chips!

"I understand." Wang Yi said calmly.

But he had made up his mind that TSMC would never get a chip order from Xingyi Technology in the future.

On the contrary, once production capacity is sufficient, it will snatch away TSMC’s chip orders!

If Wang Yi doesn't retaliate against this kind of person who has no goodwill, it would be a sign of weakness.

"But we have managed to get a month's time, and we will stop the OEM work after a month. Mr. Wang, we will try our best to meet any requests you have. As for the penalty for breach of contract, we will pay it in full."

Old Zhang knew that Wang Yi was very angry, so he spoke quickly.

"Okay, that's it. In the next month, produce as much as you can. We want as many as you can get!"

"Okay, Mr. Wang, don't worry, I will ask them to maximize their production capacity and try to produce 3000 million chips for you within a month!"

"Okay." Wang Yi hung up the phone calmly.

He then called relevant senior executives to hold an emergency meeting.

"TSMC has already announced the results. It will stop manufacturing in a month and will try to deliver 3000 million chips."

"One month!" Everyone's face changed.

Zhu Changlin frowned, "If we have two or three months, we can still make it work. But one month is too late, even if we cooperate with SMIC."

George also said: "Besides, cooperation with SMIC is not that easy."

"They have several factions within them, fighting for power and having different views."

"Some support cooperating with us, some oppose, and some want to raise the price. It's hard to describe..."

As expected, Wang Yi had a plan in mind, and this was also the problem he was most worried about.

If there are several factions in a company and they all want to be the leader, it will be difficult to deal with.

We can’t rely on SMIC either, we can only rely on ourselves.

The final plan B is to turn passivity into initiative and launch a comprehensive counterattack!

(End of this chapter)