Rebirth 08: Rise from copycat phones

Chapter 279 They are anxious
Xu Shenxue, Bai Qiwen and Ji Chenghe drank tea and chatted about work and occasionally some family matters.

Bai Qiwen said that his daughter seemed to be showing signs of premature love, which made him worried.

Ji Chenghe, on the other hand, said heartlessly that children will always have their own lives when they grow up, and early love is also good... As a result, Bai Qiwen scolded him, my daughter is in the critical period of her senior year in high school.

Then he said that if he had known, he would not have transferred her school. She was already doing well in a public school before, but in order to seek better teaching and treatment, she was sent to an international school.

I don’t know whether the teaching quality is good or not, but my daughter is in a premature relationship. If this continues, her academic performance will deteriorate instead of improve.

After chatting about some family matters, they turned the topic back to work and talked about the subsequent development of some smart terminals.

Bai Qiwen was still talking: "We at Weiku Electronics are also planning to make a Bluetooth headset. The Bluetooth headset market has been booming recently. There are many knockoff Bluetooth headsets in Huaqiang South nearby. However, they all use the Bluetooth 4.0 protocol, and they are not good at using the right materials. The chips are not good either, so the quality is very poor!"

"We are planning to launch a Bluetooth headset priced at RMB 300-400, taking the mid-range route, to see if we can grab a piece of the market!"

Xu Shenxue agreed with Bai Qiwen's choice: "The market for Bluetooth headsets is still very large. This year is only a preliminary outbreak. We have sold more than three million Bluetooth headsets. As the market matures, the Bluetooth headset market will continue to explode next year!"

"Weiku Electronics is entering the market at just the right time."

Ji Chenghe on the side said: "But if you want to sell your Bluetooth headset for three or four hundred yuan, it may be difficult, after all, the brand positioning is a bit low!"

Bai Qiwen said: "This can't be helped. Our brand positioning is set here, but we should be able to make some money. If it really doesn't sell, then we'll see if we can lower the price to around two hundred!"

The two brands, Xiaolan and Weiku, under Weiku Electronics, are mid-to-low-end brands. Their users have limited purchasing power and these people are rarely willing to spend money to buy headphones worth hundreds of dollars.

How should I put it? Nowadays, people who are willing to spend hundreds of dollars to buy Bluetooth headsets are likely to be willing to spend money to buy Zhiyun Bluetooth headsets... If they are not willing to spend this money, they may just go and buy some counterfeit Bluetooth headsets, which only cost a few dozen or a hundred yuan.

Therefore, it is actually quite difficult for Weiku Electronics' Bluetooth headsets to maintain their position at a price point of three to four hundred yuan, which is much more difficult than Zhiyun's Bluetooth headsets selling for one thousand two hundred yuan.

Although Zhiyun's Bluetooth headsets that cost more than 1,000 yuan are selling well, in fact, if the same product is sold by Weiku Electronics, it will be difficult to ensure the same sales volume even if it is sold for 300 yuan.

This is a brand issue.

Xu Shenxue said: "Let's make it first and see the market. Anyway, the market for Bluetooth headsets has already been initially established. By next year, I estimate that many manufacturers will also launch true wireless headsets with Bluetooth 4.0 protocol. Your company, Weiku Electronics, uses our own Bluetooth 4.5 protocol, which naturally has an advantage over theirs. There is still some hope for this!"

Bai Qiwen said: "I think so too. The market has already been opened up by Zhiyun. It would be a pity not to follow suit!"

Weiku Electronics' business strategy largely follows Zhiyun's, and its positioning is to be a substitute for Zhiyun products.

This is true from mobile phones to laptops, tablets, smart watches, and now Bluetooth headsets.

In terms of mobile phones, the core products are Xiaolan MAX, Xiaolan digital series, Xiaolan M and Xiaolan M Youth Edition, with prices ranging from 800 yuan to 3,000 yuan. They also use the smooth Yun OS's own system Lan OS and the same ecosystem.

This gives Weiku Electronics' mobile phone products huge system and ecological advantages compared to other ordinary mobile phone manufacturers.

In the notebook field, Zhiyun's notebooks are mainly priced at high-end prices above 7,000 yuan, while Weiku Electronics' notebooks are mainly priced at mid-range prices of 4,000 to 5,000 yuan. They also follow the ultra-thin business notebook route and their appearance is also quite good.

Although its sales volume is not as good as those of Zhiyun and Fruit's ultra-thin business notebooks, it is still pretty good. It is considered a first-tier brand in the domestic ultra-thin business notebook field... Of course, there are not many companies making ultra-thin business notebooks these days, and consumers don't have many options.

In the current notebook market, the mainstream is still the traditional 14-inch notebook, which is relatively large and thick, and costs thousands or even tens of thousands of yuan.

There were some so-called netbooks a few years ago, but now netbooks have little market and are gradually being abandoned by people.

At the same time, Apple took the lead in opening up the market for ultra-thin business notebooks, and Zhiyun followed closely and did even better.

Driven by these two companies, the market for high-end ultra-thin business notebooks has developed rapidly, with annual sales reaching tens of millions of units.

At the same time, it also stimulated a large number of notebook manufacturers to launch their own ultra-thin business notebook projects. But to be honest, traditional notebook manufacturers are somewhat not used to making such ultra-thin business notebooks.

The notebooks they produce always have this or that, and their appearance is generally more traditional, so the market acceptance is actually not high.

At this time, WeCool Electronics, which also makes mobile phones, came over and crossed over to make mid-range ultra-thin business notebooks. It then brought out some of the characteristics of smart phones, such as a light and stylish appearance with a sense of technology.

Regardless of the performance, the appearance is definitely hard to beat.

Therefore, when Weiku Electronics launched the BlueNotebook in the first year, the annual sales volume reached more than 700,000 units. After continuing to launch new models, the BlueNotebook has gradually become a mid-range first-line brand in the field of ultra-thin business notebooks.

Nowadays, when domestic consumers are shopping for ultra-thin business notebooks that are light, portable, and focus on battery life and good looks, rich people buy Zhiyun notebooks, and a small number of rich people buy Fruit notebooks.

Users with slightly poorer wallets, mainly young users, buy Bluebook laptops or notebooks from other traditional major brands.

By this year, BlueBlue's annual notebook shipments are expected to reach 1.5 million units, which is actually a very good result.

After all, this is a product with an average selling price of more than 5,000 yuan. The shipment volume of 1.5 million means sales of more than 7 billion yuan.

At least it is considered to be relatively good among a number of domestic notebook manufacturers.

Of course, it cannot be compared with Zhiyun. The global sales volume of Zhiyun's notebooks has reached 6999 million units. Moreover, the cheapest Zhiyun notebook costs yuan, and there are models priced over or even yuan. The average selling price is very high, basically around yuan.

The notebook product alone can generate more than 100 billion yuan in revenue for Zhiyun Group, which is equivalent to more than 20 billion US dollars.

Compared with Zhiyun, electronic consumer product companies such as Weiku Electronics, which seem to be very good in China, are very different. The gap is too big.

In addition to laptops, Weiku Electronics' tablets and smart watches are also pretty good.

Tablet computers mainly target the thousand-yuan market. The sales of tablet computers priced around one thousand yuan are not too good but not bad either. Millions of units are sold every year. However, after the initial explosion in the tablet market, the subsequent market growth lacks momentum.

Even the tablets from Zhiyun and Fruit have seen sluggish growth, not to mention tablets from other brands.

Then there is also a smart watch and a corresponding smart bracelet.

Weiku Electronics' smart watch project is different from Zhiyun's smart watch in that it focuses on fashion and sports. Their main target is actually the student market.

The highlights are the GPS positioning function, regional positioning to prevent lost reminders, watch calls and social interaction between children. For this purpose, Weiku Electronics has also developed a social software specifically for watches, so that children can easily add each other as friends and then communicate with each other.

So, as time goes by, Weiku Electronics' smart watches seem to have disappeared from the mainstream market and have become smart watches for students only.

But it cannot be said that their positioning has deviated. In fact, their market positioning is very accurate, avoiding the field of young fashion sports smart watches dominated by Zhiyun... In fact, this kind of fashion sports positioning of smart watches has a great relationship with Zhiyun's brand value.

Previously, other ordinary manufacturers also followed suit and launched smart watches, most of which focused on sports and fashion attributes, and copied Zhiyun one by one, but basically all of them failed...

Without the support of brand value, no one will buy your crappy smartwatch.

Of course, Apple is an exception. This fall, they also released a smart watch that also focuses on fashion technology and sports attributes. It sells quite well, not because of how well they did, but because of their brand. As long as the product is not too badly made and can have 80% to 90% of the success of the Zhiyun smart watch, and then the ecosystem between it and the mobile phone is well built, then there will basically be no major market mistakes.

This is the unique advantage of Zhiyun or Fruit, which is difficult for other manufacturers to learn... To exaggerate a little, Zhiyun or Fruit can sell a rubbish smart watch that has nothing on it and still achieve good sales, but other manufacturers cannot do that because they don't have the brand appeal.

Therefore, if Weiku Electronics wants to gain sales in the smart watch market, it can only look for other market space.

Finally, WeCool Electronics found the student market. What’s more, they really succeeded in making it a success. Students in many schools have started using the Little Blue smart watches.

However, WeCool Electronics has not given up on the sports market. However, they did not use smart watches to enter this market, but instead used relatively cheaper smart bracelets to enter this market.

The main focus is on pure sports and recording heartbeats, and it has achieved certain sales.

From the above-mentioned smart terminal products, it can basically be seen that Weiku Electronics is following Zhiyun's footsteps in all aspects and they do whatever Zhiyun does.

It’s just that Zhiyun produces high-end products, while Weiku Electronics produces mid- and low-end products.

The same is true in the field of Bluetooth headsets today!

A Bluetooth headset that costs three or four hundred yuan is the key project that Weiku Electronics has planned for the next phase.

Some technical issues on the hardware are not a problem, Zhiyun has already found the way. The key Bluetooth 4.5 communication protocol developed by Zhiyun itself is not available and can be used by other manufacturers, but Weiku Electronics is different, they can use it.

Weiku Electronics and Zhiyun Group actually share a complete supply chain ecosystem.

After all, Zhiyun Group holds 30% of the shares of Wecoo Electronics, and the owner of Wecoo Electronics is still Zhiyun Group.

Of course, the money for various technical licenses still needs to be paid, so please be clear about the accounts.

Weiku Electronics has to pay high patent fees and various technical consulting fees to Zhiyun Group every year, or simply purchase core components directly from Zhiyun Group.

In terms of the system and software ecology, the system says that it is free for you to use, but in fact, Weiku Electronics has to pay a certain fee to Zhiyun Group every year to let Zhiyun Software Co., Ltd. under Zhiyun Group help modify and revise the Lan OS system. This can be regarded as a licensing fee to some extent.

In terms of software ecology, the two self-operated shopping malls under Weiku Electronics actually directly apply the ecological content of Zhiyun APP Mall, but they operate them themselves. At the same time, they also have to give a certain channel share to Zhiyun Software every year.

Not to mention the hardware, basically all the spare parts that can be used in the group's supply chain will have the group's spare parts. If the group does not have the corresponding parts, then the products of some companies in the Zhiyun supply chain will also be used.

Weiku Electronics is Zhiyun’s younger brother. This is not just a joke among netizens, but a fact.

In this case, WeCool Electronics can obtain a large amount of mature technology, supply chain product design and assemble various products, thereby seizing the market.

At the same time, Zhiyun can also obtain a lot of profits from Weiku Electronics!

To be honest, Weiku Electronics sells so many products every year, and a considerable portion of the money it earns goes to Zhiyun. In fact, Weiku Electronics even earns less than Zhiyun.

Of course, it is not just Weiku Electronics. In fact, many other smart terminal manufacturers have to supply Zhiyun.

There is no way. If we don’t count some of the same patent licensing fees, the core components such as SOC, memory, flash memory, screen, mobile phone battery, camera components, etc. used in most domestic mobile phones are all owned by Zhiyun, or controlled or strategically invested by Zhiyun.

For a mobile phone produced by an ordinary manufacturer, a considerable portion of its hardware cost and patent cost goes directly to Zhiyun.

Why does Zhiyun strongly support domestic mobile phone manufacturers in various extreme competitions, selling all kinds of core components openly, and almost killing a number of international mobile phone manufacturers... Because in this process, Zhiyun's semiconductor and other component businesses earn more money than domestic mobile phone manufacturers themselves.

Zhiyun not only has the smart terminal business with Zhiyun mobile phone as the core, but also the semiconductor business and electronic consumer product supply chain business are also its major businesses.

This is a global giant company that uses a full industry chain model. It not only sells terminal products, but also sells spare parts, licenses technology, and makes money in many other ways. Its strength is incredible.

----

After Bai Qiwen left, Ji Chenghe and Xu Shenxue continued to drink tea, but this time they were no longer talking about routine business matters or specific products, but some global strategic matters.

"Yesterday I received a public relations report from an American company. Our lobbying efforts in the past two months have not been very ideal. We have been subject to too many restrictions in all aspects. We are almost unable to suppress their trend of comprehensive sanctions!"

“Some lobbying consulting firms that we previously worked with have made it clear that they are powerless. This has little to do with PR funding, but rather the wind direction on their side has begun to change!”

"After all, many of their big companies have some conflicts with us."

"In the software field, some of their Internet companies are very dissatisfied with our monopoly in the AI ​​field and have always wanted us to open source AI. At the very least, they want us to release technology licenses or provide a clear technical route. They have invested too much in AI in recent years, but there have been no obvious results. They are getting a little anxious!"

"In the field of smart terminals, the fierce competition between us and Apple is well known to the world. In the past two years, we have surpassed Apple in the key product of mobile phones. Our sales volume is far ahead of Apple's mobile phones. Apple also has a great sense of crisis."

"In the field of semiconductor design, the W series of mobile phone SOC chips we launched had a serious impact on Qualcomm. Their stock price has fallen sharply recently. In addition, companies such as Texas Instruments and Nvidia have been forced to withdraw from the mobile phone SOC business."

"Our Jiangcheng memory and flash memory are also quite competitive. Of course, this part is slightly better. Our main competitors are South Korea."

"Then we also made PC CPUs. Our self-developed SOP instruction set CPUs were fine, and the other party knew that this was a special project. However, our X86 project still made them feel a huge threat. Recently, Intel has once again increased the price of the CPU chips it supplies to us. Compared with the fruit industry, the price of chips we purchase from Intel is at least % more expensive. If it weren't for the fact that the contract we signed with them last year was still in effect and the penalty for breach of contract was too high, I'm afraid they would have stopped supplying us directly."

"But even if there is no shortage of chips, the supply of chips is greatly restricted. Now the supply is limited in time and quantity every month, and we are not even given the opportunity to reserve chips in advance. This has limited the production capacity of our PC products to a certain extent."

"We also estimate that when the contract between the two parties expires in December next year, our PC products will face the situation of no Intel chips. At that time, we can only use AMT chips or our own chips."

"But AMT is not very optimistic either. They are also quite wary of us... Of course, if we place an order, they probably won't refuse it. It's just that their mobile low-voltage chips are so poorly made that they are not suitable for our PCs, and the brand will be damaged."

At this time, Xu Shenxue said: "We are becoming a competitor of Intel, so they will naturally not look at us in a good way. This is all reasonable. The PC department will have to endure some hardship and control the shipment volume in the next six months. When our own X86 mobile chips are ready around next fall, we won't have to buy their crappy chips anymore. Let Intel or AMT get out of here." "There are also quite a few auxiliary chips and special chips in the semiconductor business. This part may not seem very impressive, but we are continuing to expand and have seized a lot of their chip companies' market share, which has also caused a wave of resistance from a large number of their chip design companies."

"All these factors combined have led to many companies on the other side trying to jointly promote a new round of attacks against us, saying they want to launch an anti-piracy investigation against us, and finally try to impose tariffs on our products alone or even ban the sale."

After hearing this, Xu Shenxue was speechless: "Are they planning to start with anti-dumping? They have used too many templates and just randomly applied them in? Have they lost their minds?"

You can say that Zhiyun is engaging in tax evasion, you can say that Zhiyun's products threaten their security, leak their privacy, etc., but if you say that Zhiyun products are dumped at low prices in the United States... that is pure nonsense.

Everyone in Africa knows that Zhiyun's series of products are genuine high-end goods, very expensive, and the gross profit margin of many products exceeds 50%. If you say that such products are being dumped... that's simply blind.

In addition, Zhiyun's various smart terminal products are not only expensive, but also more expensive in the US market. In any case, they are more expensive than fruit products in the US market.

The 13GB standard version of S16 is priced at only 5299 yuan in China, but in the US market, the AI ​​voice assistant is castrated, some communication frequency bands are blocked, the card is locked (operator contract phone), and in other aspects, a lot of castrations have been made to the US version of Zhiyun phone in order to comply with local laws and regulations. The local selling price is equivalent to about Chinese yuan.

And this price is not the final price. In fact, consumption tax must be added. The tax rate varies in different states. The lowest is two or three points, but the highest may be more than ten points. The final amount spent by local consumers in the United States is basically around five to seven or eight thousand or even six thousand.

The 5GB version of Apple's 16S costs around yuan in the United States.

The historical 5S was about 5 before tax, but the current Apple 6S is actually 6+Plus. Since this phone was released earlier, the cost will increase a lot, and the corresponding selling price will also be more expensive.

Its pre-tax price of 13 yuan is yuan cheaper than the pre-tax price of yuan for Zhiyun S.

Why is there such a price difference? The reason is very simple. Zhiyun mobile phones have to pay tariffs and various other additional taxes and fees when entering the US market. The overall tax cost is higher than that of the US version.

However, Zhiyun’s pricing strategy in overseas markets has always been that I only make money from the offshore wholesale price. I don’t care how much tariff or other taxes you add. Anyway, I will add the same amount to the terminal selling price...

Zhiyun Group will never adjust its pricing system for the market of a single overseas country...

This is an operation unique to global giants. Ordinary companies can’t expect to do it because they can’t learn it!
The only company that can follow Zhiyun is Apple, so Apple phones are also sold at a very high price in the Chinese market, even more expensive than Zhiyun...

Then in other third-party overseas markets, the prices of the two companies are similar, and there won’t be too obvious a price difference…and in some countries with high tariffs, the entry-level 16GB versions of the two companies’ phones can cost up to to yuan.

Under such circumstances, Zhiyun's various smart terminal products are generally 7 to 8 percentage points or even 10 percent more expensive than Apple's competing products in the US market.

If we really want to talk about low-price dumping...fruit is the one that is engaging in low-price dumping in the US market.

Now, those Americans are actually using the excuse of anti-dumping to suppress Zhiyun.

This is simply...arrogant Americans. They probably didn't even modify the draft document and directly used the draft document that was used to suppress other Chinese companies.

Ji Chenghe said: "It is indeed a bit absurd, but it is just an excuse. I guess they will come up with another excuse after they realize what is going on. However, their purpose has not changed!"

"They want to ban sales to us, or at worst impose tariffs on our products."

"I'm afraid it will be difficult for us to deal with this wave. The main reason is that our sales volume after the release of S13 this year was too large, and the sales volume of semiconductor products also increased significantly. They are a little bit forced into a corner."

"According to the analysis of the consulting firm we control, the rhetoric of a total ban on sales is most likely a negotiating tactic. What they really want is a targeted tax increase, starting at a conservative 10%, and possibly even up to 30% or even 50%, forcing our products to completely lose their price competitiveness in the US market."

"It seems that they treat the temporary agreement as a piece of waste paper. The market-for-market deal is bullshit!"

Ji Chenghe can be said to be one of the very few people in the group who knew that Xu Shenxue had reached a temporary market-for-market agreement with those old European and American conglomerates.

After hearing this, Xu Shenxue said, "These people's credibility is not very good to begin with. The temporary agreement and market-for-market are just a pretext for compromise. Don't take it seriously!"

At this time, Ji Chenghe continued: "They also contacted me before, and said that the temporary agreement between them is still valid, but they have made some adjustments and supplements to the temporary agreement!"

Xu Shenxue snorted coldly, "Bullshit adjustments, they are just desperate. If they dare to do this, I will block Apple, Intel, AMT, Qualcomm, Nvidia and the like from coming out. You are talking as if everyone is capable of tripping others up."

"We agreed to exchange markets for markets, so it's fucking market for market. We opened up the market, and now they want to close it? That's bullshit, there's no way such a good thing can happen!"

"I will continue to communicate with them about this matter later. You should also make some preparations on your side and prepare various means in advance. If they really make trouble, we will fight back. Do you really think I am easy to bully?"

After Xu Shenxue finished speaking, he pondered for a moment and continued, "How are our sales in the US market this year? What percentage of the group's revenue does it account for? Fighting is fighting, but it cannot affect the group's revenue."

Ji Chenghe said: "Our group's global revenue comes mainly from our domestic and European markets. In the past two years, we have been vigorously developing Japan, India, ASEAN, South America and other markets. Although the volume of these secondary markets is smaller, the total volume is still very impressive, and the proportion of revenue is gradually increasing."

"Currently, revenue from the U.S. market accounts for about 10 percent of our global revenue, and the proportion is continuing to decline slowly."

"If this part of the US market shrinks, it may cause us some losses, but it won't be a major blow."

"The main reason is that the proportion of our domestic market is continuously increasing. The current domestic economic level is greatly improving, and purchasing power is also increasing year by year. We estimate that in three years, the proportion of our revenue provided by the domestic market is expected to exceed 50%."

Xu Shenxue said: "We need to continue to cultivate the domestic market. In the future, the domestic market will still be the main force. As for the overseas market, we should pay attention to continue to increase market investment in ASEAN, South America and other regions."

"Based on the current and possible future situation, the US market will be lost sooner or later, and it will most likely be lost in the next two to three years. We won't be able to hold on for long."

The competition between Zhiyun Group and many American companies has become increasingly fierce and its scope is becoming wider and wider.

In this situation, a full-scale market conflict will eventually break out sooner or later, and Zhiyun must be prepared in advance.

Of course, this is also the core reason why Xu Shenxue has insisted on working in semiconductors for so many years, especially in the field of semiconductor underlying equipment and consumables... It is to prevent these American companies from turning the table.

But then again, it was precisely because of Xu Shenxue's actions, investing heavily in semiconductor-related fields and trying to break free from the control of old European and American financial groups, that they felt the crisis even more.

If Zhiyun just behaves like a dog and doesn't get involved in semiconductors, but honestly purchases chips from Qualcomm and Intel, memory, screens, flash memory from Japanese and Korean manufacturers, and even imports all core, high-priced, high-profit spare parts and patented technologies, and relies on American companies or Japanese, Korean and European companies controlled by Americans, and Zhiyun only builds a brand and does assembly.

The Americans are too lazy to sanction you and even support you.

After all, under this model, the money Zhiyun earns is not even a fraction of what the Americans earn. In fact, the more Zhiyun's products are sold, the happier they are.

The problem is... Zhiyun is not content with being in the downstream, and has been continuously breaking through upward in recent years, trying to control the most profitable upstream areas.

To put it bluntly, Zhiyun's semiconductor and supply chain parts business is just robbing Americans of their money, and the Americans will definitely not be happy about that!

There are no complicated factors involved in the conflicts and contradictions between the two sides; it is just a simple struggle for interests.

If Zhiyun earns one more cent, the Americans will earn one less cent...

The reason is so simple!
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After October, the smart terminal products under Zhiyun Group continued to sweep the global market, bringing huge revenue to Zhiyun Group.

More revenue and more profits have given Zhiyun Group more money to accelerate its investment in the consumer electronics industry chain and the semiconductor industry chain.

The most core of them should belong to Zhiyun Microelectronics.

On October 20, Zhiyun Microelectronics, a subsidiary of Zhiyun Group, announced an investment of US$2 billion to build a 12-inch wafer factory mainly for the foundry production of CMOS sensors, with a designed production capacity of 25,000 wafers.

CMOS sensors are also an important component of the semiconductor field. For example, CMOS image sensors are the most popular CMOS sensor application in recent years, and cameras on various smart terminals cannot do without them.

Zhiyun's investment company has previously invested in several domestic CMOS sensor companies, but it still lacks in the field of high-precision CMOS manufacturing. However, SMIC next door is doing quite well. Many domestic CMOS sensors in Zhiyun's supply chain are outsourced to them.

However, their foundry level is average and cannot meet the group's foundry needs for high-tech standard CMOS.

As a professional chip foundry under the group, Zhiyun Microelectronics naturally shoulders the task of technological breakthroughs in the field of CMOS sensors, especially in the high-end field.

Therefore, we invested in a CMOS sensor foundry, focusing on the high-end field.

The foundry in the field of CMOS sensors can only be regarded as an amateur investment in Zhiyun Microelectronics. The real business of Zhiyun Microelectronics is the foundry of logic and storage chips, especially the foundry of advanced processes.

Just last year, Zhiyun Microelectronics invested more than 4 billion US dollars to build another ultra-large-scale logic chip foundry in its Shenzhen production base, namely Zhiyun Microelectronics Factory 17... This is also the 17th wafer factory under Zhiyun Microelectronics.

The wafer fab will be used to produce logic chips using advanced next-generation process nodes and even the next-generation process nodes, namely the scheduled 18-nanometer process and the future 14-nanometer process.

The production capacity is expected to reach 50,000 pieces per month.

This is the most technologically advanced, top-level, and most expensive wafer factory currently available.

The investment in this factory is much greater than that in previous wafer factories, almost twice as much.

This is the characteristic of semiconductor investment. The more advanced it is, the more expensive it is, and the investment cost increases by double.

For a 12-inch wafer fab with the same production capacity, if it makes a node above 65 nanometers, the investment may be one billion US dollars, but if it makes a 28 nanometer process node, the investment may double to two billion US dollars.

But if we continue to go down and want to go to 18 nanometers or 14 nanometers, then we will be aiming for 4 billion...

Each generation of process node improvement represents a larger capital investment.

However, even so, Zhiyun Microelectronics did not give up, but continued to invest heavily. Although the investment scale of Factory No. 17 is large and the construction difficulty is high, the construction speed is very fast. Various infrastructure construction projects were completed last year, and this year has been used for the installation and debugging of various equipment.

Many of Zhiyun Microelectronics' various tests of the 18-nanometer process and subsequent technical research and development such as yield improvement are actually carried out in this wafer fab which is still under construction.

To some extent, when this wafer fab is truly completed and can be put into mass production, it means that Zhiyun Microelectronics' 18-nanometer process has reached the stage for commercial mass production.

The two are highly consistent.

In addition to the newly built Factory No. 17 in Shenzhen, Zhiyun Microelectronics announced in early November this year that it will invest more than US$6 billion to build Factory No. 18 at its headquarters in Tongcheng.

The process node of this plant was designed from the beginning to be equivalent to 14 nanometers or even more advanced equivalent to 10 nanometers. In terms of technical specifications, it is even higher than the previous Plant 17... Although the preset production capacity is smaller, only 40,000 pieces, the actual investment is even greater.

The above two chip factories represent the future development direction of Zhiyun Microelectronics.

In order to develop the 18-nanometer process and the subsequent 14-nanometer process, Zhiyun Microelectronics has invested more than 10 billion US dollars in factories alone, not counting R&D expenses and investment in other supporting projects.

This is why there is such fierce competition among chip factories for process nodes, and why there are fewer and fewer players... The more advanced the process, the greater the investment, and gradually many manufacturers are unable to keep up.

Especially after exceeding the 28-nanometer process node, the investment in the research and development of the new generation of processes and wafer fabs is very large.

At this time, there are actually not many chip factories that continue to work hard at the 22nm/20nm stage. There are only a few chip giants, such as Intel, TSMC, Sixin, and Zhiyun.

Many chip factories have slowed down their investment in next-generation process nodes and instead focused their energy on mature nodes such as the 28nm process and 32nm process, striving to mass-produce the 28nm process as soon as possible in order to increase yield, reduce costs, and obtain more orders to make money.

These days, the market demand for the 28-nanometer and even 32-nanometer processes is huge. Various chips are gradually moving towards this process node, and major wafer fabs and foundries are making huge profits by using this process.

Especially TSMC, Four Star and Zhiyun.

Zhiyun's 28-nanometer process has almost monopolized all domestic advanced process OEM orders, and has also received a large number of overseas orders, so that their production capacity utilization rate has reached more than 98%.

The lithography machines on these 28-nanometer process production lines are truly money printing machines. Every lithography process is printing money.

The W607 chip currently sold by Zhiyun Semiconductor adopts the 607-nanometer process. The current supply price is about US$. A -inch wafer can produce about W chips...with an estimated market value of US$.

A photolithography machine can produce more than 2,000 pieces a month and can cut out more than one million chips!

This means that if one of the most advanced DUV immersion lithography machines is in full production, the market value of the chips it produces in a month can reach 50 to 60 million US dollars.

Quite exaggerated.

Although the chip foundry can only get a small portion of the foundry fee from the more than 50 million US dollars, it is still a very large number.

Otherwise, there would be no such thing as a money detector in the lithography machine!

(End of this chapter)