Rebirth 08: Rise from copycat phones

Chapter 503: Three Trillion Dollars and Solid-State Batteries

The month of April for Zhiyun Group can be said to be relatively calm. There were no blockbuster product launches and no major events.

The only factor that caused the stock price to fluctuate was the change in the person at the helm of the smart terminal business unit. After Wang Lintu took over as senior vice president of Zhiyun Group and president of the smart terminal business unit, investors began to calm down.

This kept Zhiyun Group's stock price calm in April.

But what outsiders saw was just calmness. In fact, many things still happened inside Zhiyun Group.

The most important thing is that the 1003th factory has officially started large-scale production, which has brought the second-generation seven-nanometer process production capacity of pieces per month to Zhiyun Group. The initial production capacity of this process will be used entirely for the production of a new generation of S chips.

It is worth noting that this generation of S1003 chips will be divided into two versions. One is S1003A. This chip actually continues to be manufactured using the first-generation seven-nanometer process. Its performance has been improved compared to S903, but the improvement is not very significant.

The S1003 will use the second-generation nm process.

These two versions of the chip actually have the same design and the same core architecture, but the performance is different due to differences in process. Since the S1003A has a slightly worse process, it needs to be frequency-reduced to a certain extent, otherwise the power consumption will be too high and the heat dissipation will not keep up, which will also consume more power.

After the frequency is reduced, the overall performance will be slightly worse.

The reason for distinguishing between the two versions is mainly because the current second-generation 7-nanometer process production capacity of the 28th Factory is only 30,000 pieces, and it has not yet reached its peak production capacity. The current output is only about 20,000 pieces... Relying solely on the initial monthly production capacity of 20,000 pieces, plus the yield rate will result in a lot of losses in the production capacity of these 20,000 pieces.

This also means that the second-generation seven-nanometer process can no longer meet all the chip requirements of the new generation of S19 series mobile phones.

The S series of mobile phones are super single-product mobile phones with annual shipments maintained at around 250 million units, and the vast majority of the shipments in that year are new models. The sales of old models are relatively low, which leads to a huge demand for production capacity of new chips.

Today's production capacity of just 20,000 pieces equivalent to eight inches is not enough!
Then there is an A-series phone that also uses an S-series chip, and a tablet that will be launched on the market next spring.

There is another reason. With the advancement of process technology, the cost of chips is getting higher and higher. However, the prices of Zhiyun Group's mobile phones, especially the entry-level S series standard version mobile phones, are not easy to increase.

Random price increases will lead to a shrinking market share.

How to do?
Control chip costs and continue to use the first-generation seven-nanometer process, whose costs have dropped a lot!
Therefore, due to insufficient production capacity, cost control and other reasons, this generation of S series chips is divided into model A and model B. Although the design is the same, because model A needs to be downclocked, the performance difference is about 15%.

However, even so, the performance of the low-end version of S1003A is still about 903% stronger than the previous generation S.

The low-end A model will be used in the S19 standard version and S16 Pro version. In addition, the A19 mobile phone, which is expected to be released next spring, will also use the S1003A chip. Then the Zhiyun tablet computer, which will also be released next spring, will also use this S1003A chip.

The high-end version of the S1003B chip will be used in the S19 Max and S19Max Pro models. The cheapest S19 Max costs yuan. The use of advanced chips in such higher-priced models can fully withstand the slight increase in chip costs!
This year's distinction between high-end and low-end chips is also to better control the costs of subsequent mobile phone and tablet computer chips!
As chip technology continues to improve, costs are also rising. In order to control costs and ensure the hardware profits of its products, Zhiyun Group can no longer use the top chips in its entire S series and A series, as well as the new tablet computers of that year...

In this case, a certain combination of high and low becomes a better choice.

The S1003A/B chip began to be put into large-scale production in April. Zhiyun Group did not make any large-scale publicity for this news, only some formal news reports.

But people in the industry and even ordinary people know about it.

After all, there is such a large Factory 28 in Zhiyun Microelectronics' Shenzhen base. Anyone who is interested can find out, without any professional information gathering skills, that this world's top semiconductor factory has already started production.

As for what products will be put into production, people in the industry can basically guess with their eyes closed that it will definitely be the S series chip for the new generation of S series mobile phones. Even the product number is 1003% likely to be S... This is an old tradition of Zhiyun Group.

The most advanced semiconductor factories produce the most advanced chips, and the most advanced chips are used in the flagship S series mobile phones of the year. The product numbering also has continuity, so there is basically no secret.

The news that the 28th Factory has started large-scale production can actually be found in some regular news reports.

The news of the factory's start of production was reported in the 7:30 news in early April.

The tone of the report is this: Recently, the Shenzhen base of Zhiyun Microelectronics, a leading semiconductor company in my country, took the lead in the world to put into production the second-generation 300-nanometer process. It is reported that this process uses my country's first commercial mass production HEUV-B lithography machine with all domestic intellectual property rights. This lithography machine is also the world's first EUV lithography machine to be put into commercial production, with world-leading level! "

"According to Ding Chengjun, senior vice president of Zhiyun Group and president of Zhiyun Microelectronics, Zhiyun Microelectronics' second-generation seven-nanometer process is the most advanced chip manufacturing technology at present and is at the world's leading level."

"At the same time, the production base also uses a large number of domestically produced advanced equipment and consumables. The overall domestic production rate has reached more than 70%. It not only fills many domestic gaps, but also creates hundreds of original and internationally leading technologies!"

At the end of the report, the S series mobile phones were advertised: "It is reported that the production base has begun to produce the latest mobile phone chips that Zhiyun mobile phones are expected to use. Consumers can expect to see Zhiyun mobile phones equipped with the most advanced and internationally leading chips in August!"

The 7:30 news channel has always been praising Zhiyun. Every year when Zhiyun Group launches any major product, they will find various opportunities to give Zhiyun free advertising!

Either an inspection by a big shot, or the introduction of new products or new technologies, etc.

This makes many companies envious and jealous!
But there is no point in being envious. If you have the ability, you can also create such a large industrial chain and create tens of millions of jobs. Then others will still praise you to the sky at 7:30!
In addition, some industry or technology media platforms have also followed up with reports.

The coverage focuses on the HEUV-300B lithography machine, S1003 chip, and the annual blockbuster product S19 series mobile phones.

Guess the performance and other features of the new generation of S19 mobile phones.

After all, news related to the S series of mobile phones has always been a guarantee of traffic!
The main reason is that there are too many S series mobile phone users in China, and people are more or less interested in the news related to the mobile phones they are currently using.

In April, in addition to the 1003th factory going into production, the S chip began mass production.

Weiku Industrial Group, the official OEM of Zhiyun Group, has also started organizing the preliminary trial production of the S19 production line. However, this trial production is mainly to solve many potential problems of the production line and prepare for the large-scale mass production starting in June.

The S series mobile phone project department in Zhiyun Group's intelligent terminal division also needs to conduct various practical tests on the many S series mobile phones produced in the early trial production to see if there are any potential problems. If there are any problems, they need to be modified urgently and the problems should be solved before large-scale mass production in June.

As a super single product with annual sales of more than 200 million and contributing more than 200 billion US dollars in revenue to Zhiyun Group, the S series of mobile phones cannot be overemphasized.

So even though the research and development of the new S series mobile phones has been completed and they are theoretically perfect, before large-scale mass production and stocking, Zhiyun Group's technical department will still conduct repeated and detailed tests to ensure that there are no problems.

After all, the battery fire incident that broke out in Four Star two years ago has brought about a huge negative impact, which still affects major smart terminal manufacturers: quality safety and design defects must never occur!
Once it happens, it will be a huge disaster!

Zhiyun Group now has a dedicated battery safety review department that specifically reviews the battery safety issues of various products.

From battery design to production and installation, the battery safety review department will be deeply involved in conducting various tests and evaluations.

If a Zhiyun phone had a battery fire, it would not be a big deal in China. With Zhiyun Group's influence in China, to be honest, even if the phone exploded, they could suppress public opinion and then urgently mobilize various means to recall and replace the phone to minimize the negative impact.

In this case, even a number of domestic competitors will most likely stand aside and watch Zhiyun save itself, without daring to take any action to add insult to injury... Do you think you can win if Zhiyun falls?
If Zhiyun fails, all these domestic manufacturers will lose half their lives!

For China, Zhiyun mobile phone has never been a single mobile phone product, but represents the entire advanced smart terminal industry chain!
The main engine of the train is broken, and you still expect the cars behind to be fine?

impossible!

So the problem is not big domestically, but abroad... the problem is serious.

If a Zhiyun phone exploded and caught fire, Apple's Cook would dance striptease for three consecutive days to celebrate.

The four-star son of the Li family can just wave his hand and award the national girl group to the management and technical personnel under him, and say: I'm happy today, have fun!
The stock prices of a large number of related companies such as Qualcomm and TSMC will soar like a rocket.

Because this will lead to negative news about Zhiyun worldwide, countless people will come out to smear it, and the sales of various smart terminal products under Zhiyun will plummet... It will be even worse than the four-star battery fire that year!
Therefore, Zhiyun Group will never allow any serious quality or safety issues to occur in its products.

But it is not easy to do this!

In the next two or three months, testers from Zhiyun Group's smart terminal division will continue to work hard to search and eliminate any possible quality risks.

In this way, when the press conference is held in August, Xu Shenxue will be able to present the most perfect and top-level smartphone to consumers around the world.

However, Xu Shenxue didn't need to intervene too much in these matters. Over the years, Zhiyun Group had formed its own set of work processes. As long as they were done step by step, there would be no mistakes...

Xu Shenxue himself said that after visiting Factory 28, he turned his attention to other areas.

We need to pay close attention to the virtual equipment business and also keep an eye on the robotics business. Although the scale of these two businesses is already relatively large, they are still in the market cultivation stage.

At the same time, these two businesses also represent the future of Zhiyun Group... A large part of Zhiyun Group’s current stock price is supported by the prospects of these two businesses.

Zhiyun Group's stock price has risen sharply, mainly through four periods. The first period was relying on the smart terminal business. The success of the smart terminal business allowed Zhiyun Group's market value to soar from more than 200 billion US dollars at the beginning of its listing to more than 1 trillion US dollars.

The second period was when Zhiyun Group launched its intelligent robot business and opened up its second core business segment.

Although the intelligent robot business was still losing money in the early years and is expected to be profitable only this year, it has pushed Zhiyun Group's stock price from around US$1 trillion to US$1.78 trillion... A group of investors are also dreaming the same dream as Zhiyun Group's executives: they dream of Zhiyun robots becoming part of the family and every family buying one.

The third period was the release of two large-scale generative AIs, Yun AI and GTAI2, accompanied by various artificial intelligence applications such as intelligent robots, which triggered a global wave of artificial intelligence and promoted the market explosion of a series of computing chips such as APO series server computing power cards and PX series terminal computing power chips... The extremely high gross profit margin of computing power chips and the huge market potential in the future have driven the third round of rapid increase in Zhiyun Group's market value.

This directly increased Zhiyun Group’s market value to over 2 trillion yuan, reaching 2.5 trillion US dollars.

The fourth period was when Zhiyun Group officially released its virtual device in December last year. This virtual device did not have much impact on the stock price at the beginning, but as more and more people experienced the virtual world, the sales of virtual devices continued to increase, gradually proving the huge potential of virtual devices. After that, Zhiyun Group's stock price ushered in a sustained rapid rise since January this year.

By April, Zhiyun Group's market value had reached 2.8 trillion US dollars, and it was still growing. Looking at this momentum, as long as the virtual equipment business continues to maintain a positive growth rate, it will only take a year or two to break through the 3 trillion US dollar mark.

Zhiyun Group's market value of 30,000 is not easy to come by. After all, Zhiyun Group is different from fruit and other Internet companies that are in the asset-light industry. Zhiyun Group is also a semiconductor manufacturing and design company, and its annual investment in the semiconductor field is huge!
At the same time, Zhiyun Group's various R&D investments are also huge, and there are countless R&D projects.

Such huge R&D investment and asset expenditure have seriously dragged down Zhiyun Group's net profit ratio. In terms of return on assets, it is actually not as good as fruit.

If the return on assets is not good, it will be difficult for the market value to rise... Sixin Electronics is a typical example. It is the world's third largest company in the field of smart terminals and has the world's second largest semiconductor production capacity, but its market value is only more than 200 billion US dollars.

It is not as high as the market value of Vico Electronics, which now has a market value of 300 billion US dollars.

Although WeCool Electronics has lower revenue and profits, it is a serious light-asset enterprise without any physical factories.

They don't make big investments in research and development of chips, screens, etc. They just focus on assembly design and marketing. In terms of technology, they make some small innovations at most, such as changing the appearance, fixing the system fonts and themes, etc.

Weiku Electronics has only about 10,000 technical R&D personnel at most, and its R&D expenses are extremely limited.

In comparison, Zhiyun Group has more than 600,000 R&D personnel...Weiku Electronics' R&D personnel are not even a fraction of Zhiyun Group's R&D personnel, and its R&D investment is not even a fraction of a fraction!

But even though WeCool Electronics makes little money and doesn’t seem to have any core technology, its capital expenditure and R&D expenditure are also low, and most of the money it earns is net profit for shareholders!
Its nature is somewhat similar to that of Internet companies, so Weiku Electronics' price-to-earnings ratio is relatively high, resulting in a high market value.

As an asset-heavy, R&D-intensive company, Zhiyun Group has always had a relatively low price-to-earnings ratio, and it is actually very difficult to increase its market value.

In the early years, it has been hovering around 15 times, and in recent years it has exceeded 20 times and is hovering around 22 or 23 times.

This year, after seeing the huge potential of virtual equipment, some investors have raised their estimates of Zhiyun Group's price-to-earnings ratio, which is expected to reach around 25 times.

This increase in price-to-earnings ratio is not only due to the potential of virtual equipment, but also related to the growth of other existing businesses of Zhiyun Group.

This year, Zhiyun Group's robotics business has also begun to contribute substantial profits, and investors have seen the huge profit potential of the robotics business in the future.

Although the sales volume of Zhiyun Group's smart terminal business has not increased, the average selling price continues to rise, and profits have also increased. At the same time, the new brand "Xinyun Mobile Phone" has also made up for the shortcomings of the C series mobile phones, which has also made investors more confident in Zhiyun Group's smart terminal business.

In the semiconductor business, various traditional chip businesses continued to be stable. Although there was not much growth, they did not fall either. At the same time, with the large-scale application of the 7-nanometer process, it also brought greater revenue to chip foundry and various chip industries of the group.

Of course, the most crucial thing is the super high net profit brought by the continued rapid growth of computing power chips... Let’s not talk about whether other companies make money from artificial intelligence, but Zhiyun Group is making a lot of money from selling computing power cards... The APO series graphics cards have a gross profit of 90%, which is scary to think about!
Although the total revenue seems not large, only a few hundred billion US dollars, it is a lot of profit!

By selling $50 billion worth of computing power chips, Zhiyun Group can earn $45 billion in gross profit, which is terrifying... In the past two years, Zhiyun Group's profits have increased significantly. Last year, its net profit exceeded $100 billion, and this year's net profit is expected to be even higher, mainly from this computing power chip business.

Computing chips are so profitable... Many business schools and companies are studying the relationship between Zhiyun Group's artificial intelligence business and computing chip business.

Many people then thought that when Zhiyun Group made GTAI, an artificial intelligence, open source so that companies around the world could use GTAI2 for free, it seemed like an act of taking advantage of the situation and doing good deeds, but in fact it was the most ingenious business case of Zhiyun Group in recent years.

By open-sourcing GTAI2, a global computing chip market worth tens of billions or even hundreds of billions of dollars a year was created out of thin air... and it's a super high-profit market at that... What a profit!

In addition to the extremely high profits in the computing chip field, Zhiyun Group has been planning for many years. As Zhiyun Group's inventory increases, the company's software and Internet businesses have also contributed more and more revenue.

Zhiyun APP Mall, as well as advertising, cloud computing and other businesses, can bring considerable revenue to Zhiyun Group every year.

Taking all these businesses into consideration, investors are very satisfied with Zhiyun Group's situation this year and in the future.

If investors are satisfied, the market value will naturally be higher!

However, whether the three trillion US dollar mark can be broken this year will still depend on the actual operating conditions later this year.

Xu Shenxue himself doesn't pay much attention to the company's stock price. Anyway, as long as it doesn't fall too much, it will basically have no big impact.

If the stock price falls too much, Xu Shenxue will have a lot of ways to boost the stock price, such as launching a share repurchase plan.

Zhiyun Group has more than 300 billion US dollars worth of cash and cash equivalents in its account... The foreign exchange reserves of most countries in the world, including those so-called developed countries, are not as much as Zhiyun Group's cash reserves!
Brazil, which ranks tenth in the world in foreign exchange reserves, has only over 300 billion US dollars in foreign exchange reserves.

Germany, a developed country, has foreign exchange reserves of only over 220 billion US dollars, while France, next door to Germany, has only over 180 billion US dollars.

If Zhiyun Group is also included, it would probably rank tenth!

At the same time, Zhiyun Group’s revenue is too huge. It is expected that its revenue this year will reach more than 600 billion US dollars. What does this mean?
Among all countries in terms of GDP this year, the country ranked 21st in the world has a GDP of only 600 billion US dollars!
This is what makes Zhiyun Group so special!

It’s just that the scale is larger and the impact is greater, so many things need to be done with greater caution.

Especially in the two core new businesses of intelligent robots and virtual devices, there must be no mistakes. Once a mistake occurs, it means that Zhiyun Group's huge investment of hundreds of billions of dollars in these two fields for many years will come to nothing, and it will also implicate a large industrial chain.

For example, Zhiyun Microelectronics is ambitiously expanding its 7-nanometer production capacity. In particular, it is preparing to expand its production capacity by an additional 5 pieces this year in addition to the expected 3/-nanometer production capacity of pieces, while also expanding its huge D packaging capacity.

This is another huge investment plan with an expected investment of over 100 billion US dollars.

It is because of the rapid growth of these two new businesses, especially the huge demand for a series of high-end chips such as the APO series graphics cards from virtual devices.

Even if the sales volume is one million virtual devices a year, if calculated based on a medium configuration and two APO5000 graphics cards, that would mean a demand of two million APO5000 graphics cards... This is much larger than the purchase volume of large companies like Google, Facebook, and Tencent, and even much larger than the AI ​​graphics cards used by Zhiyun Group to train its own artificial intelligence.

It is very rare for these large enterprises to purchase hundreds of thousands of graphics cards a year, and millions of graphics cards is impossible: they can't afford it!
In the field of industrial products, the enterprise market has always been a small market compared to the consumer market.

Take automobiles for example. Automobile companies can only achieve world-class scale by selling civilian consumer-grade cars. If they sell engineering vehicles or something like that, that’s the best they can do... After all, the global market size for engineering vehicles is there, and they can’t make it too big.

The same goes for graphics cards!
Not to mention the dedicated large-scale data processing chips such as ZY38 in virtual devices and robotic devices. These chips are actually very large in size and require a lot of chip production capacity.

In addition, the virtual device also requires X-series consumer-grade graphics cards, WZ320 server CPUs, and conventional memory, flash memory and other high-end hardware.

The market demand for these high-end hardware was actually very small before, but with the advent of this virtual machine device, a large amount of market demand has appeared out of thin air.

In order to meet this market demand, Zhiyun Microelectronics needs to expand the production capacity of various high-end chips on a large scale.

Zhiyun Microelectronics is ambitious to continue expanding its 7/5 nanometer process production capacity. As a core supplier, Xiannvshan Holdings also needs to cooperate to increase the production capacity of a series of semiconductor equipment and consumables such as EUV lithography machines.

Behind Fairy Mountain Holdings is a large number of supply chains of cutting-edge technologies.

With each link connected to the next, the impact on the industrial chain is huge!

Under such circumstances, Xu Shenxue is very cautious and pays close attention to these two new businesses. He wants to ensure that these two businesses can move forward according to the strategic route he has set, without any accidents in the middle!
In particular, the flagship intelligent robot Yun Robot X4 will be launched in May; and the low-cost virtual device Yun VW Youth Edition will be launched in June.

The former is to increase the influence of intelligent robots, and further promote people's recognition of robots through various high technologies, laying the foundation for mass-produced robot models.

The Yun VW Youth Edition lowers the price of virtual machines, expands the market capacity of virtual devices, and increases production and sales to reduce overall costs.

Just when Xu Shenxue was preparing for the two core products, good news suddenly came from Hailan Automobile.

The battery research and development department of Hailan Automobile has achieved a huge technological breakthrough, and the new solid-state battery it developed has the feasibility of commercial mass production!
After learning about this report, Xu Shenxue immediately took his men to Hailan Automobile.

Solid-state batteries are nothing new. Many manufacturers are developing them, and there are a large number of different types of solid-state batteries in laboratories.

But...all of them cannot be mass-produced commercially due to technical and cost issues.

For the current battery industry, solid-state batteries themselves are not a problem. Many manufacturers can actually produce laboratory samples. The problem lies in commercial mass production while controlling costs!

What Hailan Automobile has reported now is a cost-controlled solid-state battery that can be used for commercial mass production!
When Xu Shenxue heard about this thing, he immediately understood its huge commercial value!
He didn't even think of Hailan Automobile at first, but thought of Zhiyun Group's intelligent robots!
Zhiyun Group's intelligent robots also require the use of high-density, large-capacity batteries, and have very high requirements for battery safety and charging performance.

Semi-solid batteries were used before, but there are always some defects. After all, strictly speaking, semi-solid batteries still belong to the category of liquid batteries.

At the same time, due to the limitation of battery energy density, the pure electric endurance of intelligent robots is not enough. For this reason, the robot's research and development team has to limit a large number of robot movements.

So many people say that Zhiyun Group’s robots are very lazy. They usually don’t move if they can, and even if they move, they move as little as possible!
There are even limits on power output. Unless in special circumstances, the robot will not use the extreme power output mode.

All this is to save electricity!
The insufficient pure electric battery life is a major factor affecting the sales of Zhiyun robots... It also affects the purchasing choices of many people. Many people want to buy bipedal models, but after considering the battery life, they often choose to buy cheaper wheeled models!

Because the movement range of the wheeled model is much longer than that of the bipedal model!
Driving the wheels for maneuvering saves much more energy than driving the feet for maneuvering!
However, if we have solid-state batteries, it will bring huge new changes!

That is a completely new type of battery with greater energy density and better safety than existing semi-solid-state batteries!
In Xu Shenxue's opinion, this thing is not only suitable for use in electric vehicles, but also for robots!
Even considering the high initial cost of solid-state batteries, the best candidate for installation at present is not Hailan Automobile, but Zhiyun's robot!

So as soon as Xu Shenxue got the news, he ran over to see.

Hailan Automobile's CEO Bao Yongyan also attached great importance to it. After receiving the news, he reported it to Xu Shenxue immediately, and then personally waited for Xu Shenxue to come for inspection.

After Xu Shen learned it, Bao Yongyan accompanied Xu Shen to the battery research and development department of Hailan Automobile, and then saw the solid-state batteries mentioned in the report that can be commercially mass-produced in the laboratory!
(End of this chapter)