Rebirth 08: Rise from copycat phones

Chapter 317 The World's Largest and Most Efficient Supply Chain
Zhiyun Semiconductor, a semiconductor design company of this level, if taken out alone, its market value would be at least 100 to 200 billion US dollars.

After all, Qualcomm has a market value of tens of billions of dollars, and Zhiyun Semiconductor is larger than Qualcomm.

In addition to owning the world's largest mobile phone SOC business, Zhiyun Semiconductor also has an X86 chip business that is among the top three in the world... although it is a bit of a weak position in the top three, with a market share of only about %.

Most of the X86 chip shipments still rely on Zhiyun's own PC business. The third-party market is relatively small, and the server market is also small, mainly relying on the internal demand of Zhiyun Group and some partner companies.

At the same time, Zhiyun Semiconductor also has the world's second largest desktop GPU business. Although the current desktop GPU business is still dominated by Intel's integrated graphics, Zhiyun Semiconductor's X86 chip built-in integrated graphics and high-performance independent graphics card business also occupy the world's second largest share.

In particular, high-performance independent graphics cards almost occupy 80% of the market share, and in the niche market, that is, the field of AI computing power cards, they have achieved 100% monopoly.

Among them, the AI ​​computing power card brings Zhiyun Semiconductor billions of dollars in revenue each year, becoming Zhiyun Semiconductor's most important business second only to mobile phone SOC.

In addition to the above-mentioned core businesses such as mobile phone SOC, X86 CPU, desktop GPU and AI training card, Zhiyun Semiconductor also has the SOP instruction set chip business, which is of great strategic significance but has relatively low actual revenue and is less profitable.

Zhiyun's self-developed SOP instruction set chips are mainly supplied to Pangu computers, and its server chips are supplied to Zhiyun Group's internal servers, supercomputers, cooperative servers, and supercomputing companies.

In addition, there is an even more important but long-confidential AI chip business. The AI ​​series chips are mainly supplied to Zhiyun and some special institutions for use. They are the core hardware for training AI at present, and are related to a series of important strategic projects... However, due to confidentiality requirements, the project expenditures and revenues of this part of the business are included in the regular GPU business and are not listed separately.

Finally, Zhiyun Semiconductor also has some affiliated subsidiaries with a large number of various auxiliary chip businesses, covering a very wide range, such as the EYEQ series of automotive-grade computing chips.

There are also some conventional chips, which, in addition to being supplied to the group's large number of smart terminals, are also widely supplied to domestic home appliances, smart manufacturing industrial equipment, etc. However, these are miscellaneous and the revenue scale of each item is not large.

The entire Zhiyun Semiconductor has a very large scale, and the shipment volume of various logic chips is also very large.

The W series mobile phone SOC, with an annual shipment volume of 600 million units, is just one of the important products, and not even the most important one.

In addition to the various logic chips and auxiliary chips mentioned above, Zhiyun Semiconductor actually also has storage chip business.

However, with the expansion of the storage chip business, Zhiyun Group officially separated the storage chip business last year and established Zhiyun Storage Technology Co., Ltd.

The newly established Zhiyun Storage Technology Co., Ltd. will focus on the design of storage chips. It is currently the world's second largest storage chip manufacturer and the second largest operating memory manufacturer... It is the market leader, second only to the four-star storage business.

It’s just that Zhiyun Storage is currently just large in size, but it’s actually not very profitable.

The market competition for storage chips is more intense than that for logic chips, and Zhiyun’s storage business does not have any unique technical advantages, and is basically the same as that of Six-Star.

At the same time, Zhiyun's storage chip business continued to engage in a price war with Sixing's storage chip business... resulting in good revenue but poor profits.

There are too many competitors in the storage chip industry today, and the two giants, Zhiyun and Sixing, have never liked so many competitors.

Therefore, both companies are continuing to promote price wars, expand production capacity, and advance technology. They would rather not make money themselves and continue to squeeze the living space of other competitors.

Several other storage chip manufacturers are also gritting their teeth and holding on...

At this time, even taking a step back would mean death. Sixing and Zhiyun would pounce on them in a minute to tear apart their corpses and divide their market share.

The price war in the storage chip industry has been going on for several years and is still ongoing. It will not end unless a few companies go bankrupt.

Because this price war is essentially a joint effort by Four Star and Zhiyun to reshuffle the storage chip market... The two tigers in the storage chip field have gone down the mountain and will not return until they are well fed and well watered.

Therefore, consumers have been very lucky in the field of storage chips in recent years. They can enjoy advanced storage chips at very cheap prices.

However, this also resulted in the fact that Zhiyun's storage chip business seemed to have high revenue, but low net profit, which was a drag on the financial report performance.

The reason why Zhiyun's storage chip business was separated from Zhiyun Semiconductor is because its financial performance was too poor and required sufficient resources for continued support. However, it was already difficult to rely solely on the support of Zhiyun Semiconductor, a subsidiary.

Therefore, it was decided to become an independent subsidiary of the group, with the group headquarters directly implementing various strategies, including financial support, to continue the fierce competition in the second half of the storage chip market.

After leaving behind the Zhiyun storage chip business, Zhiyun Semiconductor's financial performance is actually better... Without the storage chip business that drags it down and loses money every year, Zhiyun Semiconductor is actually more profitable.

If Zhiyun Semiconductor were to be listed on the capital market, it would have a market value of at least US$150 billion.

However, Zhiyun Semiconductor, which is large in scale and has advanced technology, and Zhiyun Storage Technology, which has high revenue but is not profitable and is the second largest in the world, are two important chip design companies, both of which are built on the advanced technology of Zhiyun Microelectronics.

No matter how advanced the chip you design is, you have to make it!

The more advanced the chip, the more advanced the process technology required.

Zhiyun Microelectronics can proudly say that its current process technology has become the second best in the world, second only to Intel.

They are the second wafer foundry in the world to solve the mass production of 14-nanometer process logic chips, and they are only half a year behind Intel.

At the same time, it is ahead of two important competitors, TSMC and Quad Core.

Not only is Zhiyun Microelectronics technologically advanced, it is also the world's second largest semiconductor manufacturer, providing foundry services for the group itself and a large number of other customers with advanced and mature process chips.

This year, they will use the most advanced 603-nanometer process to support the mass production of the S15 chip, and then support the mass production and sales of Zhiyun Group's new generation of flagship mobile phones, the S series.

Zhiyun Microelectronics is the foundation of the huge Zhiyun Group!
Zhiyun Group’s seemingly huge and profitable smart terminal business and semiconductor chip business are all built on Zhiyun Microelectronics!

This is also the reason why Xu Shenxue attaches so much importance to Zhiyun Microelectronics and he visits Zhiyun Microelectronics every once in a while.

Especially for the 14-nanometer process, Xu Shenxue has visited Factory No. 18 five times.

He came once when the construction started, again after the equipment was installed last year, and again in December last year when the 14-nanometer process completed technical certification.

This happened in February this year when we conducted our first trial production and successfully taped out the S603 chip.

Now, Factory 603 is carrying out year-round mass production of the -nanometer process and producing the S chip, and he has done it again.

This shows that Xu Shenxue attaches great importance to the 14-nanometer process and Zhiyun Microelectronics!

He is a very busy man with a lot of companies under his control. In fact, Xu Shenxue is not seen in many of the seemingly important companies throughout the year.

For example, Yihai Technology Group, which has grown into the fourth largest Internet company in China, has been visited by Xu Shenxue more frequently since its establishment, except for the early days when Xu Shenxue visited the company more frequently. After the company grew to a certain scale, Xu Shenxue rarely visited the company.

I haven’t even visited it once this year!

This also made the management of Yihai Technology very helpless... After all, they are the fourth largest Internet company in China, with annual revenue of more than 8 billion US dollars, and Yihai Network, a subsidiary of Yihai Technology Group, is also the world's largest mobile game company.

At the same time, it has also successively received a number of shares of domestic Internet companies from Liuhe Investment to strengthen and establish the group's Internet ecology.

However, the boss of Yihai Technology does not take it seriously.

Because such companies cannot be ranked among the many industries under Xu Shenxue... From a strategic perspective, at best they are just an advertising channel plus cultural output, and then collect some data to train human-computer interaction AI.

In addition, the company also helped Xu Shenxue earn some pocket money to supplement his family expenses... The daily living expenses of Xu Shenxue's family were basically paid from Yihai Technology.

In Xu Shenxue's mind, Yihai Technology is not even as good as a semiconductor factory.

Xu Shenxue would rather travel a long way to preside over the groundbreaking ceremony of a new semiconductor factory than go to inspect the Yihai Technology Group which is only a few kilometers away.

Of course... to be precise, semiconductor factories actually cost more money. Nowadays, the investment in a 12-inch factory with advanced technology starts at four or five billion US dollars.

Such a huge investment, even Xu Shenxue has to take it seriously!

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At the Tongcheng Semiconductor Base, Xu Shenxue inspected the 603th Factory and then looked at the mass production of the S chip.

After returning to Shenzhen, he visited the ninth factory in the Shenzhen Semiconductor Base and inquired carefully about the factory's upgrade and modification. He repeatedly emphasized the need to do a good job in the technical upgrade task and ensure that the 14-nanometer process would be successfully put into production in October.

The 14-nanometer process is the most important process node now and in the next few years. It is the core process node that supports the strategies of Zhiyun Group, Wecoo Electronics, and many other partner companies in the future.

Xu Shenxue attaches great importance to this craft.

The ninth factory in Shenzhen is related to whether the new generation of W906 chips, WZ5000 series CPUs and other advanced chips can be put into production at the end of the year.

It concerns the rise and fall of Weiku Electronics’ new flagship mobile phone and Zhiyun’s PC business.

It also concerns the rise and fall of many strategic partners. A large number of Zhiyun's partner companies are waiting for the 14-nanometer production capacity of the Ninth Factory.

They can no longer count on the 14nm process production capacity of Zhiyun Semiconductor's 18th plant, not even for Zhiyun Group's own PC business. The plant's entire production capacity for the next year will be used to supply chips for S series and A series mobile phones, leaving no capacity for other businesses.

Other business needs will have to wait for the 14-nanometer production capacity of the ninth plant.

Therefore, the Ninth Factory was quite important. Xu Shenxue inspected the factory in detail and gave some encouragement before leaving.

A few days later, Xu Shenxue once again appeared at Weiku Industrial's Shenzhen production base to inspect the mass production and stocking situation of the S15 series of mobile phones.

Since the beginning of June, after the 603th factory began mass production of S15 chips, the S series of mobile phones that have been waiting for chips for a long time have also officially started mass production and stocking.

"At present, our Shenzhen base, Dongguan base and Ancheng base, as well as our partner BYD, have begun mass production of S15 mobile phones."

"More than 200 production bases in the supply chain are also working at full capacity to supply various parts."

"The production of the entire S series of mobile phones will involve 240 production bases in the direct supply chain, and more than 1.5 million people will work hard in the S series supply chain!"

“And the indirect supply chain and indirect employees, that’s even more!”

"The S15 mobile phone will be the largest, most productive and most valuable industrial product in our history, even in human history!"
“At the same time, the supply chain we have established is the largest and most in-depth supply chain ever in human history.”

"Our entire supply chain is controlled from the source of materials. Through the global supply chain communication network provided by Zhiyun Satellite, the air transport network of Zhiyun Airlines, and a large number of cooperative logistics companies, we make real-time adjustments to control the production capacity of each production base, supplier, and the timely transportation of each component, so as to minimize the turnover cost of the supply chain!"

"The inventory cost of the entire supply chain is expected to drop by about 14% compared to the supply chain inventory cost of the S13 phone, and by 15% compared to the S. This will further reduce the manufacturing cost of our S to increase gross profit margin."

"Relying on an efficient supply chain, we are expected to reach our designed capacity in a week, that is, 25 million mobile phones per month, after a month of continuous capacity ramp-up."

"Although the monthly output of S603 chips is only about 603 million pieces, S15 has already entered the mass production stage at the beginning of this month, reaching the designed production capacity, while S will not reach the designed production capacity until the beginning of next month."

"So we also acquired a stock of S603 chips to maintain full production in July, August and even September."

"If the market remains hot after October, we can continue to maintain the production capacity of 603 million units. The remaining S chip production capacity will be supplied by Fab ."

"At the beginning of next month, under the designed production capacity, that is, the monthly production capacity of all S15 mobile phone production lines combined is expected to reach 603 million units, completely consuming the production capacity of S chips."

"By running full production in June, July and early August, we estimate we will be able to stock 50 million phones."

"This will be our largest stocking quantity in history, and it is expected to improve the global shortage of S series mobile phones at the beginning of the launch every year!"

Gu Zhiming, the senior vice president of the group and in charge of the supply chain, confidently introduced the supply chain and production status of S15 to Xu Shenxue. Xu Shenxue was still very confident in Gu Zhiming's ability. He was a master of supply chain. Now Zhiyun's supply chain system was built by him.

Zhiyun Group's supply chain system can be said to be the largest, most efficient, most technologically advanced and most intelligent supply chain in the world.

Zhiyun’s supply chain is not just about logistics and transportation, in fact, it has very high technological content!

It even has a supply chain-exclusive communications network spanning the globe, made up entirely of satellite communications, a service provided by Zhiyun Satellite.

Even if all the submarine optical cables around the world were destroyed overnight, it would not affect the communication operation of Zhiyun's supply chain... because Zhiyun's supply chain communication network is completely independent and directly provided by Zhiyun Satellite's satellite communication network.

To be frank, the military communication networks of many so-called major powers are not as good as the satellite communication technology and scale of Zhiyun Supply Chain.

Zhiyun Supply Chain also has its own airline, Zhiyun Airlines, which owns dozens of cargo planes and has reached cargo cooperation with dozens of shipping companies around the world.

At every moment, there are cargo planes carrying raw materials, spare parts or finished products from Zhiyun supply chain flying in the sky!

Zhiyun Supply Chain also has its own independently developed supply chain management system, which is the world's largest, most integrated and most intelligent.

The system even requires large servers to support it, and can intelligently allocate the production capacity and transportation of spare parts based on real-time sales conditions in various regions and the production capacity of a large number of factories.

Zhiyun's intelligent supply chain system also requires each supply chain company to install various sensing devices on their production lines, and then collect various data in real time and transmit them back to the supply chain management system.

Headquarter managers in Zhiyun's supply chain can even use this system to learn about the real-time production capacity, yield rate, etc. of a certain supplier or a certain production line for a certain component.

Its informationization and intelligence level is quite high!
All the managers in the supply chain at Zhiyun headquarters need to do is supervise, review, and then make the final decision... After all, you can't let the intelligent system sign an order contract directly with the supply chain partners!
We dare not say that Zhiyun’s supply chain is ahead of its time, but it is definitely the limit of what can be done under current technological conditions!

It is completely different from the conventional supply chain system of ordinary enterprises, and the difference is huge.

Because...only such an efficient supply chain system can support Zhiyun's production and sales of more than 300 billion US dollars of smart terminals and semiconductor products each year.

The product is worth $300 billion and the production volume is in the billions. In addition, Zhiyun’s supply chain is very in-depth, directly reaching some raw materials and components, rather than purchasing a subsystem and then assembling it in the traditional sense.

Zhiyun's supply chain model cannot be implemented by relying solely on traditional, backward manual methods.

If we have to manually manage this large-scale supply chain, the complexity will overwhelm the supply chain personnel and lead to a lot of unnecessary additional inventory costs.

Various spare parts are produced by partners and go through an inventory process, a transportation process, and an inventory process after arriving at the assembly factory before they are used on the production line.

When a large number of spare parts circulate in the supply chain, it means huge spare parts inventory costs are generated.

After the product is produced, there is also a process of inventory, transportation, and storage.

This also means that inventory costs are incurred.

The inventory cost of spare parts and finished products may not be a big deal for ordinary companies, after all, they are small in scale and more flexible.

But for a super large enterprise like Zhiyun Group, this means that spare parts or finished products worth tens of billions of dollars are in inventory... Although the cost ratio is not small, the base is large, so the resulting inventory cost is very exaggerated.

Therefore, in addition to stocking up on new products and targeted market expansion every year, Zhiyun Group tries to reduce inventory costs as much as possible at other times.

This is also the main reason why Zhiyun particularly likes to use the air transport mode... Ocean transport is too slow, and no one is willing to let smart terminal products worth tens of billions or even hundreds of billions of dollars float on the sea for several months!

This is no different from throwing money directly into the sea!
----

Zhiyun's supply chain system is Gu Zhiming's masterpiece, and is also the core factor that has enabled him to consolidate the top group of executives at Zhiyun Group over the long term.

It was thanks to this supply chain system that he became the senior vice president of Zhiyun Group, earning an annual salary and options worth tens of millions of dollars.

With such a person in charge of the supply chain, Xu Shenxue can focus on the group's overall strategy without worrying about these messy things.

After a brief tour of the production line, Xu Shenxue also saw the prototype of the S15 series, which was still kept secret.

There is nothing much to say about the S15 standard version and Pro version. They are just upgraded versions of the S14 mobile phone. The overall appearance is similar, and the body still has a glass back cover.

The real big change is the S15 MAX that is planned to be launched this year. This full-screen mobile phone equipped with 3D face recognition is the real killer.

To continue to maintain the image of Zhiyun S series mobile phones as high-end mobile phones representing the trend of technology and innovation in the eyes of global consumers.

The S15 MAX in front of you, with its six-inch screen, will completely usher in the era of ultra-large screens!
Xu Shenxue picked up this mass-produced version of S15Max, turned it on and tried it out, and felt very good.

Thanks to the powerful performance of the S603 chip, the phone operates extremely smoothly without any lag, and opening some built-in apps is incredibly smooth.

The six-inch OLED screen also has very good color display.

At the same time, taking advantage of the characteristics of the OLED screen, the bezel of the entire S15 MAX phone is very narrow, whether it is the chin, the upper part, or the bezels on both sides, they are all very narrow.

After seeing the bezels of the S15 MAX, if you look at the bezels of the standard version and Pro of the S15 mobile phone, you will feel that the bezels of the latter two are relatively thick.

Xu Shenxue tried the phone for a while and then showed a satisfied expression: "This phone is very good and has fully met my expectations!"

"We need to prepare more stocks for mass production of this phone. I have a feeling it will completely take the market by storm and the sales will be very good!"

Ji Chenghe beside him also said: "This S15 MAX will definitely be a hit. Not only is it a full-screen phone, but it also has 3D face recognition technology. These can become the super hot spots of this phone. I have absolute confidence that this phone will be sold all over the world!"

"According to our forecast, the sales volume of our S15MAX should account for about 15% of the sales volume of the entire S15 series, so our SMAX stocking plan is also based on %."

"In fact, according to some of our internal secret surveys, most of the employees who have access to the S15MAX have expressed great interest in this phone, and % of them have clearly stated that they will buy the phone after it is launched on the market!"

"The remaining 15% also expressed their willingness to buy, but they did not buy it because the SMAX is too expensive!"

"Although some employees expressed their dissatisfaction with the phone's notch screen in a secret internal survey, this did not hinder their willingness to buy it!"

"In the multiple-choice survey, the biggest factor in purchasing intention is 3D facial technology, with more than percent of people expressing great interest in the technology!"

"Seventy percent of people said our new OLED screen was one of the reasons they wanted to buy the phone."

"Fifty-three percent of people said that this is our Zhiyun's new flagship and they will buy it directly no matter what."

"Fifty percent of people think that our S15MAX is more sci-fi and fashionable in terms of overall appearance design."

"There are other factors that influence purchase intention, such as expectations for the S603 chip, performance expectations for the new generation of mobile phones, and the need to replace old mobile phones. However, these factors are not directly related to the S15MAX. After all, the S15 standard version and PRO also have similar features."

"Based on our internal secret questionnaire, combined with external consumer surveys, the economic levels of various countries, the brand appeal of our Zhiyun S series phones, and the replacement needs of existing users of our Zhiyun S series phones, A series, and C series phones!"

"We believe that the sales volume of S15MAX phones in the first full year of sales should be able to reach about 15 million units, accounting for about % of the entire S series!"

"But our S15MAX costs more, so the sales price is also higher. The initial price of the domestic version is 7999 yuan, and the high-end version is more than yuan. This will significantly increase the average sales price of our entire S series of mobile phones, further increasing revenue and profits!"

"In addition, compared with the relatively high price of S15MAX, our S15 standard version and Pro continue to implement the pricing strategy of previous years. The price of S15-16GB version continues to be maintained at 5099 yuan, in order to continue to suppress Apple and four-star Galaxy and maintain the sales volume of our S series models."

"The high price of the entry-level version will make some consumers unable to afford it, and then turn to Apple or four-star phones, which will hinder the sales of the entire S series. This is also the main reason why we continue to retain the 16GB entry-level version!"

Xu Shenxue is naturally very clear about this. Although Zhiyun's mobile phones are very expensive, in fact, the relatively cheaper 16GB version is responsible for the majority of sales, whether it is standard or Pro.

Among last year’s S14 series, the best-selling version was the 14GB version of the S16 standard edition.

As for the 64GB version, in the entire S14 series, only about 128% of consumers chose this capacity version, and even fewer chose the more expensive GB version.

It’s not a question of whether the product is good or not, it’s a question of how deep people’s wallets are.

Therefore, for the current new S15 mobile phone, the 16GB version will still be retained. Zhiyun Group cannot continue to raise the price of the entry-level version, which will lead to a decline in overall sales and give Apple and Four Star an opportunity to take advantage.

This is the basic business strategy of the Zhiyun S series. The core logic behind it is a host of issues including market share, capacity of old mobile phones, and brand.

Specifically reflected in the pricing, it would rather make less money, but also suppress the fruit and four-star...

I have the new generation S15 smartphone from the Zhiyun S series. The entry-level version is priced at 5099 yuan. How much can your fruit and four-star smartphones be priced at? More than 5099 yuan? Consumers will curse them to death.

Not to mention the high-end flagships from other mobile phone manufacturers.

If the price is 4,000, you will be criticized to death... The new Zhiyun S series model is only 5,000, and your crappy phone costs more than 4,000?
You are so expensive, I might as well add a few hundred yuan to buy Zhiyun's new S series. Why should I buy your crappy phone?

This is the core factor why S15 continues to maintain 16GB capacity and maintains the price of 5099.

While increasing volume, it also suppressed a large number of competitors, preventing them from breaking through...

In fact, the S series also suppressed Zhiyun's own A series of mobile phones... There is no way around it. The S series is so powerful that even the A series of mobile phones from the same family cannot avoid being suppressed.

Based on market competition demand, the standard version and Pro version with 16GB capacity will still be the main models in the entire S15 series...at least that's what the marketing department with Ji Chenghe as the core thinks.

Although the S15MAX is excellent in many ways, it is limited by its high cost and price. They think that a sales share of % is already optimistic.

To show their sincerity, they even restored the 15GB capacity in the S32MAX as the starting capacity, followed by 64GB and 128GB.

The meaning is very clear, that is, the S32MAX with a main capacity of 15GB, and the subsequent 64GB is relatively cheaper, only 64 yuan, and the gb is also for sales.

However, the price of 128GB version soared directly to 10999 yuan, not because the cost was much higher, but purely to bring the price to more than yuan.

Anyway, they didn’t expect to sell many of the 128GB version priced at tens of thousands of yuan, and they didn’t even have much stock. They just put it up for show to raise the profile of the entire MAX series.

The marketing department of Zhiyun Group made this preliminary judgment based on experience and internal confidential investigations, and formulated a mass production stocking strategy based on this judgment.

As for after it was launched on the market, will this phone sell out significantly and be in short supply, or will it have dismal sales and pile up inventory?

It is actually difficult to make an accurate prediction... After all, the people in Zhiyun's marketing department cannot even use their mobile phones to conduct extensive surveys in advance and make predictions.

This is a brand new mobile phone product and it is also a highly confidential one.

Until now, the outside world doesn’t even know that Zhiyun Group has come up with such a killer weapon... Everyone in the industry knows that Zhiyun Group has a new flagship plan, and will launch a new flagship model this year.

But the outside world doesn’t know what this new flagship looks like or what new technologies it uses.

As for ordinary consumers, they are even less aware.

This is a brand new product that has never been referenced before and is still kept confidential, making it impossible to conduct public market research!
It is actually very difficult to make accurate market sales forecasts!
Ji Chenghe privately told Xu Shenxue that the sales forecast for S15MAX is somewhat metaphysical... It basically depends on the experienced marketing personnel in their department, who make a judgment based entirely on their own market experience and acumen.

But it’s hard to say exactly how!

(End of this chapter)