Rebirth 08: Rise from copycat phones

Chapter 361 Weiku Electronics Launches IPO Plan
Xu Shenxue is also helpless about the continued losses of the Fairy Mountain Holding System.

Semiconductor equipment and consumables are so damn expensive, and as a latecomer, even if you have already followed up some links, if you want to achieve a virtuous cycle, you still have to continue to spend money. God knows when you can turn losses into profits.

Today, Fairy Mountain Holdings is losing more than 8 billion US dollars a year, which actually includes the revenue and profits of its existing semiconductor equipment and consumables businesses, as well as a large number of additional businesses that serve as advanced cash cows.

Moreover, Fairy Mountain Holdings actually received a lot of subsidies... The subsidy funds for this year alone are estimated to add up to more than 5 billion US dollars.

In order to support the semiconductor industry, China provides a lot of subsidies every year.

Among the special subsidies in the field of semiconductor equipment and consumables, Xiannvshan Holdings took the lion's share... There is no other way, Xiannvshan Holdings is the only one in China that does these things, and does them relatively well.

Others are half-baked companies or new startups that saw an opportunity.

Speaking of the subsidies that Xiannvshan Holdings received, there were actually not many cash subsidies. Many of them were transferred through other means, such as reducing taxes and giving you some more popular land.

Anyway, you have no money, but we can give you some land, and then you can develop it and sell it for money... Of course, you still have to pay for the land, and the price is about the same as that of a normal enterprise!
It seems that there is no bargain to be gained, but the problem is that these are popular and scarce plots of land. Even if you get them at a normal price, you can make huge profits after developing them.

This kind of high-quality land is very difficult to obtain, and conventional real estate companies can forget about it...but some real estate shell companies under Fairy Mountain Holdings can get it quietly, without even participating in the bidding!
Because, this is part of the subsidy.

As a result, Fairy Mountain Holdings was forced to act as a real estate developer in order to recover funds... It can earn nearly US$4 billion a year by selling houses.

They have also calculated that after Fairy Mountain Holdings takes over these lands for development, it can probably earn this amount a year. Combined with tax refunds and other cash subsidies, Fairy Mountain Holdings can probably get about 5 billion US dollars in subsidies a year.

The company's own revenue, subsidy income, and some cash cow businesses that Xu Shenxue specially assigned to Fairy Mountain Holdings... With support from multiple parties, Fairy Mountain Holdings actually has a considerable annual income, at least two to three hundred billion US dollars in revenue.

But they spend more!

This year, the company still expects a loss of more than 8 billion US dollars, and last year it lost more than 10 billion US dollars!
Why such a huge loss?

Because it's not just one company that's losing money, but more than 200 companies under Fairy Mountain Holdings are losing money together... If you spread it out, the loss of each company is actually not that much, and some are even making money. For example, Gulf Technology has now turned a profit.

However, there were too many other subsidiaries that were losing money. One lost hundreds of millions of dollars, and another lost tens of millions of dollars. When added up, the total loss becomes the current loss of more than 8 billion dollars.

The research and development of semiconductor equipment and consumables, as well as the subsequent manufacturing process, are all extremely expensive.

In order to meet the needs of semiconductor manufacturing, all kinds of top-level equipment are needed. It is very expensive to develop and manufacture, and the shipment volume is very low... Some equipment only sells a few hundred units a year, and even if it is sold at a higher price, it is difficult to recover the cost.

Not to mention, in order to participate in market competitiveness, the various semiconductor equipment and consumables under the Fairy Mountain Holding System can be sold too expensively.

Otherwise, the wafer fab will import equipment...

Even if Zhiyun Microelectronics could avoid importing products, they would not be able to afford the high prices.

If Zhiyun Microelectronics is required to bear the additional R&D costs of these semiconductor equipment and consumables, its costs will increase significantly, and it will not be able to compete with TSMC, Four Star, UMC and other wafer fabs in the chip foundry field.

Even for self-made chips in non-foundry fields, the cost of chips will increase due to the sharp increase in chip manufacturing costs, which will in turn push up the cost of various semiconductor products and even smart terminal products.

This will affect a series of industries!
Therefore, Zhiyun Microelectronics cannot accept the additional high costs, and Xiannvshan Holdings can only absorb this cost itself.

Moreover, foreign manufacturers have already spread out their R&D costs, and can still make several million dollars from a piece of equipment worth 10 million dollars.

But for Fairy Mountain Holdings, a new entrant that has spent hundreds of billions of dollars in five years on various R&D projects and building new production lines, equipment priced at 10 million US dollars seems to make a lot of money... But if the astronomical R&D costs are taken into account, it would be a huge loss.

If this happened in any of those large listed companies, with such losses, the stock price would have collapsed long ago.

Fortunately, Xiannvshan Holdings is not a listed company. It only needs to be responsible to Xu Shenxue and its superiors, and not to any other shareholders, investors, etc.

Xu Shenxue said, "It's just a mere 100 billion US dollars, I can still afford it...but it will hurt a little!"
Not only is Xu Shenxue feeling the heat, but he is also feeling the pain from the annual subsidies from above… In the field of semiconductor equipment and consumables alone, there are subsidies of several billion each year… Year after year, when will it end?

The superiors asked Xu Shenxue how long the subsidies would end so that the semiconductor company could have the ability to generate revenue on its own and survive.

Xu Shenxue said tactfully... How can we stop the subsidies for the semiconductor industry? We can't stop it. At most we can strive to reduce subsidies in the future.

After all, the United States still provides a large amount of semiconductor subsidies every year. As a new player that entered the market later, Fairy Mountain Holdings has no point in playing if it doesn’t have subsidies... I can’t afford it even if I’m the richest man in the world!

Therefore, the subsidies cannot be stopped. At the same time, Xu Shenxue himself invests billions of dollars every year and uses Zhiyun Group and Weiku Electronics to provide large orders for support.

After all, Fairy Mountain Holdings is too important...it has a semiconductor and consumer electronics industry chain worth trillions of dollars behind it.

Xiannvshan Holdings is the core link in Xu Shenxue’s many business empires. It can even be said to be the cornerstone of all his businesses, including Zhiyun Group, Weiku Electronics, Hailan Automobile, Xiaojiang Technology, Yihai Technology and many other companies.

Because all of the above-mentioned companies cannot do without the support of chips.

Whether it is various consumer-grade chips such as CPU/GPU, storage chips, etc. required by smart terminals, or the EYQ series computing chips required by Hailan Automobile.

It even supports the AI ​​computing chips needed in the AI ​​technologies of many important projects of Zhiyun Group.

These industries are inseparable from high-performance advanced chips!
Not to mention the field of national defense AI, which also cannot do without advanced chips.

Almost all of these chips are produced by Zhiyun Microelectronics.

Zhiyun Microelectronics is the largest semiconductor manufacturer in China and one of the top three in the world. It also needs the support of various top-level semiconductor equipment and consumables.

Fairy Mountain Holdings is an investment group engaged in semiconductor equipment and consumables!
It is not a company but an investment group. Under the entire Fairy Mountain Holdings, there are more than two hundred companies engaged in different fields of semiconductor equipment and consumables.

Gulf Technology, which Xu Shenxue often visits and pays more attention to, is just one of the more than 200 companies. It is only because of its large scale and the fact that it is engaged in the research and development and manufacturing of some major equipment such as lithography machines and etching machines, that it appears to be more famous.

But in fact, there are a lot of companies in the Fairy Mountain Holding System that are no more important than Gulf Technology!
For example, Huadong Precision Electronics, which is engaged in the field of thin film deposition equipment, originated from an existing domestic precision equipment manufacturer. However, their main business is other precision equipment, and they also produce thin film deposition equipment.

However, the manufacturer's strength was actually very weak at the time. The company's products were mainly thermal chemical vapor deposition equipment (APCVD) that was several generations behind, and could only be barely used for micron-level semiconductor production... In fact, no one wanted it.

When Xiannvshan Holdings acquired the company, it only spent more than 80 million yuan in total, and most of this money was actually used to acquire the company's other businesses...its APCVD business was considered a bonus.

After acquiring the company in full, Xiannvshan Holdings reformed the company. In addition to continuing to operate conventional precision equipment, it invested heavily in the research and development of thin film deposition equipment.

Because thin film deposition equipment is one of the most critical core equipment in the chip manufacturing process.

In a wafer fab that costs billions of dollars, about 80% of the investment is used for equipment investment, and most of the remaining 20% ​​is actually used for the factory's electromechanical systems and clean room systems.

If you add the two together, in fact, the huge investment of a wafer fab, or even more than 90% of the investment, is spent on equipment.

As for the design and civil engineering facilities, these actually don’t cost much money...The above is still about the situation abroad.

If it were domestic, the ratio would be even more exaggerated.

When Zhiyun Microelectronics invests in a wafer fab, basically 95% of the money is used to purchase various equipment, and only 5% is used in areas such as design and civil engineering facilities.

There are a lot of different equipment needed here!
There are three types of equipment that account for the largest investment:
Photolithography equipment.

Etching/stripping equipment.

The above two are also the main product areas of Gulf Technology.

Then there is the thin film deposition equipment. The research and development and production tasks of this equipment are undertaken by East China Precision Electronics in the Xiannvshan Holding system.

In addition to the three key equipment mentioned above, a large number of other equipment are also needed in the wafer factory.

Mechanical and electrical equipment and clean room equipment are mainly supplied by other domestic companies.

Some of the heat treatment equipment and ion implantation equipment are supplied by other domestic companies, but the core equipment is developed by companies under Xiannvshan Holdings.

Silicon wafer manufacturing equipment is used for cutting silicon wafers, and you need to make it yourself.

Process control equipment is also very important...but there is no substitute in China, so Xiannvshan Holdings has to do it directly.

Cleaning/CMP equipment is also indispensable, but Xiannvshan Holdings still needs to produce it itself.

Then there are the packaging equipment and testing equipment... Well, needless to say, you have probably guessed that Fairy Mountain Holdings also needs to do it itself.

Among the large amount of semiconductor equipment required for the entire wafer factory, only the electromechanical and clean equipment used in the factory can be provided by other domestic companies.

The rest must either be imported or made by Xiannvshan Holdings itself... Some of the equipment is actually available domestically, but they are too backward and are basically still at the level of producing micron-level chip technology, which cannot meet the production needs of modern chips at all.

Then there are the various consumables needed in wafer fab production, with a focus on photoresist, special gases, and silicon wafers.

This was the scene before Xu Shenxue got involved in semiconductors: there was nothing he wanted...he had to make everything himself.

Of course, although many things in China are backward, there is still some foundation, which also makes it convenient for Xiannvshan Holdings.

At the same time, although the country lacks these ready-made semiconductor equipment or consumables, it still has an industrial foundation... The reason why no one did it before was because there was no market: who can you sell it to after you make it?
But Xiannvshan Holdings is different. As long as they can produce it, no matter how advanced the model is, Zhiyun Microelectronics will grit their teeth and purchase it for use.

Therefore, Xiannvshan Holdings has carried out targeted research and development on various equipment needed in the semiconductor manufacturing field.

In addition to equipment, there are also consumables, such as photoresist, special gases, silicon wafers, polishing liquid and polishing pads, packaging materials, etc.

By the way, before Xiannvshan Holdings entered the semiconductor consumables field, the domestic semiconductor consumables field was as miserable as the semiconductor equipment field. The domestic production rate was not zero, but it was almost zero, and the technical content of a few semiconductor consumables was extremely low.

Therefore, various consumables are also the key investment areas of Xiannvshan Holdings.

In the past few years, Shangxin Technology, a subsidiary of Xiannvshan Holdings that is mainly responsible for the research and development and production of silicon wafers, has invested more than tens of billions of US dollars in the research and development of advanced silicon wafers and capacity expansion.

At present, we have achieved a good silicon wafer production capacity. We are able to produce 800,000 eight-inch silicon wafers and 400,000 eight-inch wafers per month. At the same time, hundreds of thousands of twelve-inch wafers are under construction.

Among the 12-inch silicon wafer product line, high-end products can already be used to produce chips equivalent to seven-nanometer process, but the production capacity is still very low. Currently, Shangxin Technology is increasing investment to build a factory to produce high-end 12-inch silicon wafers.

The investment scale of this type of factory is also very large. A factory can easily require a huge investment of tens or even hundreds of billions of dollars. It is a typical high-tech and heavy asset investment.

The situation is similar in the field of photoresist. Before Fairy Mountain Holdings invested in this field, the domestic photoresist industry was almost zero.

Subsequently, Xiannvshan Holdings invested in and established Huasai Electronics, which focuses on the research and development and production in the field of photoresists. It first independently developed g-line and i-line photoresists with relatively low technical content, suitable for six-inch production lines, and used for 250-nanometer processes and above.

Subsequently, KrF photoresist suitable for eight-inch production lines and used in 130-250 nanometer processes was developed.

The above two types of photoresists have captured a lot of domestic market share because of their low price and good quality, and with the deliberate support of Zhiyun Microelectronics.

Then there are the current main photoresists, which are suitable for 55-inch production lines, ARF photoresists for 90-7 nanometer processes, and ARFI photoresists suitable for 45- nanometer processes.

The photoresists for these two process nodes also belong to important markets. Huasai Electronics has solved the patent issues of ARF photoresist and can produce and commercialize it, and has begun to seize the domestic market.

As for ARFI photoresist, although we can produce it ourselves and actually secretly supply it to Zhiyun Microelectronics for use, we are still restricted by patent issues and cannot do it openly. In addition, the output is relatively low, and a considerable part of it still needs to be imported.

As for the more advanced photoresist prepared for EUV lithography machines, Huasai Electronics is still in the research and development stage. It has achieved many results and produced some samples, but it is still some distance away from maturity and stability.

Then there are electronic gases, including general gases and special gases. Before Fairy Mountain Holdings entered this field, only about 20% of the types of gases that could be manufactured domestically could meet the needs of the semiconductor field, and the domestic production rate was about 15%... But this only talks about the types of gases, and does not say that these domestically produced gases can be used in the semiconductor field.

The gases needed in the semiconductor manufacturing field are all high-purity gases, which are ultra-high-end products in the gas industry and have extremely high premiums. However, before Xiannvshan Holdings entered this field, the domestic production rate of the electronic gases used in these semiconductors was zero.

Therefore, in order to avoid being strangled, Xiannvshan Holdings started to work hard on special gases by setting up its own company, acquiring some companies, or simply cooperating with other enterprises.

In the gas field, most of them look for top domestic companies to cooperate in research and development, and some even look for foreign companies to form joint ventures.

In fact, many of the companies that Fairy Mountain Holdings cooperates with are foreign-funded enterprises... They are also jealous of the Chinese semiconductor manufacturing market behind Fairy Mountain Holdings, especially the huge orders from Zhiyun Microelectronics.

Therefore, Xiannvshan Holdings actually has quite a few joint venture subsidiaries, covering various fields of semiconductor equipment and consumables, but they are all dominated by Xiannvshan Holdings, and the other parties mainly provide technology, patent authorization, and production experience.

Semiconductor equipment in the left hand and semiconductor consumables in the right hand... This allows the Fairy Mountain Holding System to support China's semiconductor equipment and consumables sectors.

We have achieved full localization of our 28-nanometer process equipment, most of our 14-nanometer production line equipment, and part of our -nanometer production line equipment.

In the field of consumables, the 28-nanometer production line has been fully localized taking patents into consideration. If patents are not taken into consideration, the -nanometer process can be fully localized... This is mainly because the patents have blocked the issue of photoresist, making it impossible to use it publicly for commercial purposes.

The existence of the Fairy Mountain Holding System is also the main reason why the American consortium has been slow to blockade Zhiyun Group in the field of semiconductor manufacturing equipment and consumables... Xu Shenxue has them all, at most they are slightly worse, but they can be used!

What's the point of blocking it like this? It's better to buy more and make more money.

But this also comes at a price. In order to forcibly support Fairy Mountain Holdings, Xu Shenxue has to pay a large sum of money every year.

Therefore, Xu Shenxue also hopes that Fairy Mountain Holdings can think of more ways to be self-reliant as much as possible... Otherwise, if the losses continue every year, Xu Shenxue will not be able to bear it.

To this end, Xu Shenxue also convened the management of Xiannvshan Holdings and the management of major subsidiaries to see how to become self-reliant.

However, at the beginning of the meeting, Xu Shenxue set one thing, that is, the research and development funds needed for technological advancement must be guaranteed and must continue to increase.

The people at Fairy Mountain Holdings were speechless about this... In the Fairy Mountain Holdings system, the biggest expense is R&D investment. If R&D investment is not cut down, there won't be much money left even if they save money in other areas.

Even some other areas that seem to cost money would actually result in greater losses if savings were made... because some other areas that cost money are profitable.

For example, the investment in Shangxin Technology's silicon wafer factory seems to be tens or even hundreds of billions of US dollars, but in fact Shangxin Technology did not pay for it itself, but instead sought loans from local banks, with very low interest rates.

Moreover, silicon wafer fabs are also very profitable. As the semiconductor market continues to be hot, the demand for silicon wafers continues to increase, and prices are also rising at any time. Investing in silicon wafer fabs is also very profitable now.

For this type of project, the loan is directly sought, and then the factory is built up. The loan is repaid after production and profit are made, and at the same time, a generous profit can be obtained to subsidize the company.

You can't cut off money-making projects!
After much discussion, Xu Shenxue finally fell into deep thought after looking at the results of the meeting: According to the meeting discussion, even after cutting some so-called "unnecessary expenses", it is estimated that the company will still lose at least 5 billion US dollars next year!

It seems that saving money alone is not enough, and the only way is to find ways to make more money.

Xu Shenxue was thinking about letting Xiannvshan Holdings develop more side businesses, getting some orders from companies such as Zhiyun Group, Weiku Electronics, Hailan Automobile, and Yihai Technology, and adding more cash cow businesses.

With so many orders from so many companies, it should be possible to fill the $5 billion hole.

With many questions, Xu Shenxue left Fairy Mountain Holdings and returned to Zhiyun headquarters. He summoned the heads of many companies and began to explore what business could be done for Fairy Mountain Holdings to alleviate the huge financial pressure on the Fairy Mountain Holdings system.

Fortunately, Xu Shenxue has many companies under his control and a lot of orders of various kinds... If he put some together here and there, it would be almost enough.

Especially on the Zhiyun Group side, several large orders were placed for smart terminal businesses. In order not to damage the integrity of the supply chain, these orders were transferred together with the shares of the supply chain subsidiaries/grandchildren and strategic cooperation enterprises.

This actually allows Zhiyun Group to further slim down, avoid being trapped by these non-critical spare parts businesses, and focus more on semiconductor design and manufacturing, and smart terminal fields.

At the same time, in order to reduce the pressure on Fairy Mountain Holdings, Zhiyun Group also raised the purchase price of Fairy Mountain Holdings' system products through its subsidiary Zhiyun Microelectronics. Although the cost of Zhiyun Microelectronics will be higher, the cost can still be controlled within a certain range by relying on its overall competitiveness.

By combining multiple means, Xu Shenxue finally filled the huge loss hole in the Fairy Mountain Holding System!

If nothing unexpected happens, Fairy Mountain Holdings will enter a virtuous cycle next year and will no longer need to inject large amounts of additional funds from its own pocket every year.

However, Xu Shenxue needs to spend money in many areas, and the semiconductor equipment and consumables field of Xiannvshan Holdings is only a part of it.

Xu Shenxue also has to do a lot of other things, all of which are very expensive.

So in order to raise funds, Xu Shenxue also considered listing the two relatively mature companies, Wecoo Industrial and Wecoo Electronics, to cash out. One of these two companies is an electronics OEM company, and the other is a smart terminal company, and both companies have entered the mature stage.

It is just right for cashing out after listing.

As for another major company, HaiLan Automobile, although its revenue and profits are very good and it has been valued at over 100 billion US dollars by external parties, Xu Shenxue thinks it is still too low!
The new energy market has not yet reached the point of a big explosion, and it would be a loss to sell shares or go public now. Xu Shenxue prefers to wait for about two to three years until the new energy market has completely exploded before starting the listing operation of Hailan Automobile.

Similarly, Yihai Technology is also in a stage of rapid growth. Its subsidiary Jump Video is conquering the world, thereby driving the rapid development of various businesses such as games and advertising. It would be too unprofitable to go public now, so we have to wait a little longer.

When Xu Shenxue came up with the idea, he ordered his subordinates to start the listing procedures for Wecoo Industrial and Wecoo Electronics.

The fact that these two companies were going public immediately attracted a lot of people's attention. When a large number of investors heard the news, they all came running over with drooling.

Weiku Industrial is a leading domestic OEM company, the exclusive OEM factory of Zhiyun and Weiku Electronics, and the main OEM factory for a large number of other domestic smart terminal manufacturers. The company's annual revenue and profits are very high and stable, and it is a very good investment project.

WeCool Electronics is even more powerful. It is the fourth largest mobile phone manufacturer in the world and the second largest mobile phone manufacturer in China, with annual shipments exceeding 200 million units. It has built a complete smart ecosystem, with annual revenue of hundreds of billions of dollars and profits of tens of billions of dollars. It is also one of the top high-tech companies in China.

The most important thing about the above two companies is that they are directly connected with Zhiyun Group and Xu Shenxue!
Xu Shenxue's name alone, combined with the connection to Zhiyun Group, can add a lot of value to the two companies.

You know, in the capital market, there is even such a thing as Zhiyun stocks... Many companies related to Zhiyun will be noticed by investors, and then their stock prices will be pushed up.

Now, Weiku Electronics, as a legitimate younger brother of Zhiyun, is going to go public. Not to mention the capital, even ordinary people are paying close attention to it!
(End of this chapter)