Rebirth 08: Rise from copycat phones

Chapter 529 Popular Virtual Equipment

Late June, Shenzhen, Zhiyun Group headquarters.

In the small conference room, Xu Shenxue and senior management of Zhiyun Group gathered together.

This is a small meeting with only about ten people attending. Although the number of people is small, it is a decision-making meeting that determines the real business direction of Zhiyun Group.

Except for the boss Xu Shenxue, all other participants present were senior management at the level of senior vice president of the group.

"As of June 1, the group's global revenue in the first five months of this year reached US$275.3 billion, an increase of 18.6% over the same period last year!"

"According to this situation, our total revenue this year is expected to exceed US$700 billion. Based on the business development of each division of the group, our marketing department estimates that this year's revenue is expected to reach US$720 billion."

After listening to the revenue data and forecast data, Xu Shenxue nodded slightly to show his approval!
Although it seems that the revenue in the first five months of this year was only more than 270 billion US dollars, the average monthly revenue seemed to be only more than 50 billion US dollars, and if the twelve months were counted, it was only a little over 600 billion US dollars.

However, Zhiyun Group's revenue has always been less in the first half of the year and more in the second half of the year.

This is mainly due to the S series of mobile phones in the core smart terminal business, which were released in August and were shipped intensively in the months after the release, which can bring in a lot of revenue.

The first half of the year is the off-season for sales of S series mobile phones.

The sales volume of the S series mobile phones also directly and significantly affects the revenue changes of Zhiyun Group every quarter!
Because the sales of the S series phones are so huge, with annual sales of around 250 million units...

The annual sales of S series mobile phones increased significantly before 16. The most obvious change was the release of S15MAX in 15, which ushered in the era of 3D face recognition and full-screen mobile phones.

Then in 16, the S16 series of mobile phones was released, and 16D face recognition technology was also adopted in the entry-level model such as the S3 standard version. This move made the S16 series of mobile phones popular all over the world that year, and further pushed the annual sales of the S series mobile phones to exceed million units.

However, after the S series mobile phones exceeded 16 million units in sales in , there has not been much change. In recent years, the annual sales volume has fluctuated around million units... It feels like it can't go up, but it can't go down either.

At the same time, sales of C series phones continued to decline, sales of A series phones have been average for a long time, and although the SX and SXL series have seen good growth, sales of the C series have fallen too sharply, and even sales of the A series have fallen. The growth of the SX/SXL series alone could not hold up... Therefore, after entering 16, Zhiyun Group's overall sales of smartphones, after reaching a peak of 17 million units, have declined in the following 18 and years.

In 18, Zhiyun Group’s mobile phone sales volume almost fell below million units…Based on last year’s trend, Zhiyun Group’s mobile phone sales volume will probably continue to fall, and it is foreseeable that it will fall below million units this year.

This is an important reason that forced Zhiyun Group to completely abandon the C series and instead launch a new sub-brand "Xinyun".

Fortunately, the Xinyun brand has achieved considerable success with good sales, helping Zhiyun Group's mobile phone business to stabilize annual sales of 300 million units.

It is even expected that sales will return to 310 million units this year.

This is the situation of the mobile phone business. From this situation, we can judge that the smartphone market has entered the stock market and competition is gradually increasing.

This situation of 'stock market' also occurs in the fields of smart terminals such as notebooks, tablets, smart watches, etc. It is difficult for sales to continue to grow significantly, and it is good enough to maintain the current sales volume.

The entire smart terminal business has entered the stock market and can no longer grow - this is also the main reason that directly drove Zhiyun Group to develop a large number of robot businesses, virtual machine businesses, and computing power card businesses.

Since the smart terminal business can no longer grow, we need to find one or more growth points for revenue and profits.

These new businesses performed well and brought huge revenue and profits to Zhiyun Group, driving a substantial growth in Zhiyun Group's revenue and profits, especially the impressive profit growth.

Ji Chenghe continued, "The profit statistics for the first five months of this year are 65.3 billion US dollars, an increase of 37% compared to the same period last year. Our profit growth is very large, which is mainly due to the rapid growth of the computing power card business!"

Compared with last year, the revenue growth was only 18.6%...but the profit growth reached 37%. The reason for this seemingly unreasonable situation is that Zhiyun Group's computing power card business continued to explode this year, contributing huge and super-high profits.

Assuming that a computing power card worth 50 billion US dollars is purchased, Zhiyun Group can earn more than 40 billion US dollars from it... This profit margin is too high.

This also led to Zhiyun Group's extremely high profits in the first five months of this year, and it is expected that the profits this year will also be very exaggerated.

Ji Chenghe pointed to the revenue and profit situation on the PPT and continued to introduce it to everyone: "In the first five months, the operating conditions of most business units have been stable and rising!"

"In the first five months of the Smart Terminal Division, the sales of the S series of smartphones have not changed much compared to the same period last year. The sales of the A series of smartphones have stabilized due to the implementation of the full-screen fingerprint unlocking technology, and have increased slightly compared to last year!"

"We have completely given up on the C series of phones this year. At the press conference in March this year, we officially announced to the outside world that we would stop producing the C series of phones and replace them with a new brand, 'Xinyun.'"

"In the first five months of this year, the sales of Xinyun phones continued to grow, thanks to the rapid sales growth of Xinyun phones and the continued efforts of the SX/SXL series of phones. Therefore, the sales of our entire smartphone business increased by 5.6% compared with the same period last year."

"In the second half of this year, we will release a new generation of S19 series phones. By then, our smartphone business will see a significant increase in revenue. In order to stabilize sales and maintain technological advantages, we have also adopted a large number of new technologies in the S19 series phones."

"Including the second-generation 7-nanometer SOC chip!"

"The new generation of 10C process operating memory chips, which are manufactured using EUV lithography machines as core equipment, have performance indicators that are already leading the world. Our core competitor in the memory field, Four Star, currently lacks EUV lithography machines and is not mass-producing the same generation of memory chips!"

"There is also the seventh-generation flash memory chip, which is also manufactured using EUV lithography. The number of stacked layers reaches 19. This is currently the most advanced flash memory chip in the world, and the S phone will be the first phone to use this chip!"

The flash memory field has developed very rapidly in recent years. Many flash memory manufacturers such as Zhiyun Group, Sixin, and Toshiba are working hard to stack the number of layers, but Zhiyun Group still has the best technology in this field.

Last year, Zhiyun Group launched a 138-layer flash memory chip. At that time, other manufacturers' top products had only more than 90 layers.

This year, it is estimated that other manufacturers will launch flash memory products with more than 100 layers, but Zhiyun Group has launched a seventh-generation product with more than 150 layers... continuing to maintain its technological leadership.

Of course, this kind of advanced flash memory product is not actually aimed at the general market. Part of it is supplied to the enterprise market... Top high-tech companies and Internet companies have a great demand for high-performance flash memory and are willing to spend money to purchase the most advanced flash memory chip products.

As for terminal products, they are generally used in a few high-end products. For example, the top-level advanced flash memory products of Zhiyun Group are generally supplied to its high-end smart products. As for the seventh-generation flash memory chip, only this year's S19 MAX series of mobile phones will use it. The standard version can only use last year's flash memory chips.

It is worth mentioning that other flash memory product manufacturers have also emerged in China. Some of the better ones can even achieve 64 layers, and early technology products such as 32 layers can also be mass-produced... The emergence of these domestic flash memory chip manufacturers has also filled the mid- and low-end market to a limited extent.

Therefore, in the past two years, domestic products with very good cost-effectiveness have appeared in the domestic solid-state hard drive market... Solid-state hard drives have truly entered thousands of households, and you can assemble a computer worth one or two thousand yuan with a domestic entry-level solid-state hard drive.

As for Zhiyun Group’s flash memory products…their products are too expensive, especially the Zhiyun-branded solid-state drives, which are high-end and have great technology, but they are expensive!
As for Jiangcheng Storage, which is positioned as a mid-to-low-end product in Zhiyun Group, the price of this brand of solid-state hard drives is actually not low. It is still in the mid-range price route. Although it is called mid-to-low-end, it is not a low-priced product in the true sense. It can only be said that the price-performance ratio is slightly better than that of Zhiyun brand and four-star brand.

After all, Zhiyun Group wants profits and style, so its entry-level products are mainly 64-layer products... As for the 32-layer products, they have long been abandoned. People no longer sell such low-end products, and they think that they occupy the production line despite the low profits.

For the same production line, they prefer to produce the more profitable sixty-four-layer and ninety-six-layer main products, which are easy to sell anyway.

With limited production capacity and no worries about product sales, it is natural to produce mid- to high-end products with higher prices and higher profits.

As for the ultra-high-end products, they have 138 layers, and the newly emerging 156 layers...these two types of chips are extremely expensive, and the overall sales volume is not large.

However, there is still a very large market space for the real entry-level low-end products such as the 32-layer flash memory. After the domestic flash memory chip manufacturers enter the market, they can still make a living in this entry-level market... Many consumers who are short of money also rely on the 32-layer flash memory chips of these domestic flash memory chip manufacturers to use solid-state drives.

By the way, when buying a solid-state drive, in addition to capacity, please be sure to pay attention to the other technical parameters of the drive to see what technical standards the flash memory chip inside is.

After all, the performance gap between the third-generation Zhiyun flash memory chip and the sixth-generation Zhiyun flash memory chip, especially the gap in reading and writing data speed, is huge.

----

Although the smart terminal business is still the core business that supports the group's main revenue and profits in today's Zhiyun Group, as the smart terminal business enters the inventory era, this business has lacked the room for continued substantial growth.

But the other new businesses have very bright prospects.

Ji Chenghe said: "Among our new core businesses, the intelligent robot business has developed extremely rapidly. Sales in the first five months of this year have reached 1.1 million units, and annual sales are expected to reach 2.5 million units!" "The main sales force is still the C series robots, accounting for 70% of sales. In addition, the sales of the B series robots are also good. The sales of the flagship X series and the special robots E series and F series are relatively small!"

"This year, the sales of our C series robots have continued to increase, and we have begun to enter more emerging markets. We have also begun to promote robots in ASEAN and South America, and mainly promote the relatively cheap C series robots!"

"Of course, due to the economic level and limited overall consumption capacity of emerging markets, the sales volume provided to our robot business is still relatively limited. The main markets for our robot business are concentrated in the domestic market and developed countries such as Europe, the United States, Japan, South Korea and Australia."

"In the domestic market, due to the large population, the huge brand appeal of our Zhiyun Group in China, and the strong demand for elderly care, child care, youth education and counseling, our robot sales are very large. We expect sales in the domestic market this year to reach 800,000 units."

"In developed countries such as Europe, America, Japan, South Korea and Austria, our robots are very popular among the local middle class because of the high income level, strong consumption power and high salaries for local human services!"

"After all, these local middle-class families, with their income level, cannot afford to hire a nanny or tutor all year round. However, with their income level, it is really not stressful for them to buy our robots, and the subscription fee for the robot's advanced functions is not a big burden for them!"

"These factors have led to greater sales of our robots in developed countries!"

Zhiyun Group's robot sales are mainly concentrated in some middle- and high-income groups... If you say they are rich, they are not rich enough to hire a nanny or part-time worker/caregiver, or tutor all year round. But if you say they are poor, they can actually afford a Zhiyun robot of more than 100,000 yuan... At least if they use a loan to buy it in installments, the pressure will not be too great.

How to put it, even in China, most families can afford a car worth more than 100,000 yuan, but not many families can afford to hire an hourly worker for several thousand yuan a month!
The main market for Zhiyun robots is these middle-class and above families!
Families who have some money but cannot afford a nanny... If they can afford a nanny, it would be easier and less troublesome to hire a nanny, and there is no need to get a robot.

If you can hire a tutor all year round, there will be no need for a robot to help your children with their homework.

Families that are neither rich nor poor are the main users of Zhiyun C series robots, and the C series is Zhiyun robots' main mass-market product. The number of middle-class families is much greater than that of rich people.

As for the high-end B series, which sells for three or four hundred thousand yuan, its sales share is actually very low, accounting for less than 15% of sales.

As for the S series, which starts at 800,000 yuan and the high-end model costs more than 1 million yuan, the sales volume of this version is almost negligible. This thing is a toy for rich people and is of the same nature as sports cars. Few people buy it.

This is why the new generation flagship robot released at the joint press conference in May was used as an advertising product within Zhiyun Group... Not many of these things can be sold, and the reason for continuing to develop the flagship series is purely to demonstrate strength, show off skills for advertising, and then drive sales growth of the C series of robots.

When Ji Chenghe introduced the robotics business, he focused on the C series. He also mentioned that the robotics research and development department is currently developing C series and B series robots equipped with solid-state batteries, which are expected to be released in December this winter.

"Starting next year, as the C-series robots adopt solid-state batteries and their endurance is greatly improved, the sales of our robot business are expected to increase significantly. I predict that it will not be a problem to exceed three million units next year!"

Afterwards, Ji Chenghe talked about the virtual equipment business that was only started this year. This virtual equipment business is also the new business that Zhiyun Group attaches the most importance to this year.

The virtual equipment business brings not only hardware sales revenue, but also huge software and Internet revenue.

"At present, the sales of our virtual equipment are still in short supply. How many we can sell depends entirely on our production capacity!"

"The production capacity is limited by the high-performance screen production capacity of VR glasses and the production capacity of APO4600 and APO5000 graphics cards."

"We have started to gradually solve the production capacity of VR screens in June, and the increased production capacity will be released in July with the release of new models."

“But we also encountered the production capacity limitations of APO graphics cards!”

"The core components of our virtual device's computing center are the APO5000 graphics card and the APO4600 graphics card. Both graphics cards use 3D packaging technology, but our 3D packaging technology production capacity is extremely limited!"

"We are now using it for our own use, and major customers are looking to buy APO5000 and APO4600 graphics cards, but our production capacity can't keep up!"

"In the server computing power card market, our two graphics cards are already in short supply. If we add the huge demand for computing power cards for virtual devices, these two graphics cards will be even more scarce."

"In fact, even though the screen production capacity has increased since this month, we are still forced to limit the production capacity of virtual devices due to the graphics card production capacity limit. If we continue to expand the production capacity, we will not be able to supply these two graphics cards to customers on time as per the contract."

When Xu Shenxue heard this, he frowned slightly... When virtual equipment was first developed, no one actually thought too much about the production capacity of graphics cards.

After all, virtual devices are very expensive, and many people think that sales will not be too high. So even if the production capacity of graphics cards is tight, there will still be some if we squeeze them out, after all, they are not used much.

Who would have thought that selling a virtual gaming device would be limited by the 3D packaging capacity in the semiconductor manufacturing industry...

The main reason is that virtual devices are too popular now. The monthly production capacity of virtual devices has reached more than 30,000 units, but there is still a shortage of supply.

At the same time, the total planned production capacity of the screen production line is expected to reach 100,000 pieces in July, which is expected to meet the production needs of 50,000 virtual devices... By then, the graphics card production capacity will be even more troublesome.

VR screens can meet the production needs of 50,000 virtual devices, but the production capacity of graphics cards cannot keep up...

Based on the planned monthly production capacity of 50,000 virtual devices, more than 100,000 graphics cards will be needed.

The entry-level version of the virtual device uses two APO4600 graphics cards, the high-end version of the 5000 million version uses two APO500 graphics cards, and the flagship version of the million version uses four APO graphics cards.

The main sales volume is the entry-level version priced at RMB 800,000, which accounts for about 80% of sales. The high-end version accounts for about 8%, and the flagship version accounts for about 12%!

That’s right, the flagship version sells more than the high-end version...because these two versions are purchased by the rich second generation and the first generation of entrepreneurs, and they have no shortage of money, so many people tend to buy the flagship version directly.

Therefore, the high-end version, which is neither good nor bad, became the one with the lowest sales!

According to this sales ratio, and the monthly production capacity of virtual equipment is calculated at 5000 units, then 4600 APO graphics cards and APO graphics cards will be consumed every month, which means million graphics cards per year!

This has exceeded Zhiyun Group's current supply capacity of these two graphics cards.

Because both of these graphics cards use 3D packaging, and the 3D packaging production capacity is unlikely to increase further this year, the most recently completed 3D packaging factory will not be completed and put into production until the turn of spring and summer next year.

It’s not that Zhiyun Group’s APO5000/46000 graphics cards have limited production capacity, but it is impossible to use all of this capacity on virtual devices.

The APO5000 and 4600 graphics cards that Zhiyun Group currently sells are for the global market... A large number of companies involved in artificial intelligence are eagerly waiting for these two graphics cards.

Moreover, many orders were signed last year or even longer ago. Zhiyun Group needs to comply with the contract and deliver the goods within the delivery period agreed in the contract unless there are force majeure factors such as natural disasters.

Therefore, a considerable amount of production capacity cannot be diverted.

What to do? In this regard, Zhiyun Group's response strategy is to increase the production capacity of APO3 graphics cards using 2.5D packaging technology since the two graphics cards using 4500D packaging technology are not enough.

Compared with the serious shortage of 3D packaging capacity, 2.5D packaging capacity can at least squeeze out some capacity.

With more APO4500 graphics cards, Zhiyun Group is preparing to launch virtual devices using APO4500 graphics cards to the market to circumvent the problem of severe shortage of 3D packaging production capacity. By the way, it can also lower the selling price of virtual devices and expand market capacity.

This is the Yun VW Youth Edition plan...not only to reduce prices, but also to alleviate the insufficient production capacity of APO5000/4600 graphics cards.

As the saying goes, 3D packaging capacity is insufficient, so 2.5D packaging capacity is used to make up for it...

Anyway, in the consumer terminal market, no one cares that the computing power cost of the APO2.5 graphics card using 4500D packaging technology is higher... Hundreds of thousands of virtual devices have been purchased, and the electricity bill for playing games is nothing!
Only some large high-tech companies that are engaged in artificial intelligence and have computing centers with tens of thousands or even hundreds of thousands of graphics cards will pay attention to the power consumption of graphics cards and computing power cost centers.

As for individual users... they just want the game to be smooth and have good graphics. They don’t care much about power consumption, let alone computing power costs.

This gives the Yun VW Youth Edition huge market space and value!
In this case, the release and launch of the Yun VW Youth Edition virtual device using the APO4500 graphics card is also an important issue that needs to be discussed in today's meeting!

Xu Shenxue is very concerned!
(End of this chapter)