Rebirth 08: Rise from copycat phones

Chapter 668 The Era of Quantum Computing Without Backups!
In early June, Zhiyun Group officially announced details of its 'Zhiyun Quantum Integrated Computing Power System' at a routine press conference.

One key statistic is particularly striking: the system's order volume has exceeded $800 billion!

More than 350 customers from over 20 countries around the world have placed orders for Zhiyun Quantum Integrated Computing System with a total order value exceeding $800 billion.

According to Zhiyun Group, these orders are expected to be completed in batches over three years, averaging more than $260 billion per year.

This is a rather exaggerated number.

This year, Zhiyun Group has achieved significant additional revenue growth thanks to the commercial application of superconducting quantum computers.

Furthermore, with revenues from other businesses within the Zhuyun Group also growing, analysts believe that Zhuyun Group's revenue will historically surpass one trillion US dollars this year.

Zhuyun Group's revenue has always been impressive, with a high growth rate. Last year, its revenue reached more than $800 billion. This year, it is benefiting from the growth of the computing equipment market driven by superconducting quantum computers, as well as the revenue growth of its robotics, virtual equipment, software, and internet businesses.

There is a very high probability that this year's revenue will increase by more than $100 billion!
The computing equipment business, including superconducting quantum computers, APO series computing cards, and various terminal computing chips, such as the EYQ chip and ZY series chip sold to Hailan Auto, and the PX chip, EYEQ chip, LC chip, and other superconducting quantum computers and computing chips used for artificial intelligence supplied to other companies, has become the most important core business of Zhiyun Group, generating a huge amount of revenue.

Third-party analysis firms believe that Zhiyun Group's revenue from its computing equipment business is expected to exceed $350 billion this year. This revenue figure excludes internal use and refers only to sales to external parties.

The costs incurred in building their own computing centers are operating costs and do not generate actual revenue.

Furthermore, various semiconductor products used in the company's own business robots, virtual equipment, and other exported products are not counted as revenue twice.

The revenue generated from the sale of computing power equipment alone is estimated to reach $350 billion... with superconducting quantum computers playing the biggest role in this.

It is worth noting that the gross profit margin of this business is particularly high; a typical example is APO graphics cards, which have a gross profit margin of over 80%.

Furthermore, third-party analysis agencies estimate that Zhiyun Group's smart terminal business segment will generate revenue of around $300 billion.

This means that, among the various business segments of Zhiyun Group, the revenue contribution of the computing power segment has surpassed that of the smart terminal business segment for the first time, becoming the most profitable business segment in Zhiyun Group.

At the same time, the 'Zhiyun Quantum Integrated Computing System' has officially replaced the S series mobile phones, becoming the world's highest-grossing single industrial product.

Just last year, the best-selling single industrial product on Earth was the Zhiyun S series mobile phone.

Zhiyun's S-series mobile phones, including the S series, SX/SXL, generate approximately $220 billion in revenue annually. This is the best-selling, highest-grossing, and even most widely covered single industrial product in human history.

Relying on the Zhiyun S-series smartphones, Zhiyun Group has developed a series of smart terminal hardware product businesses, such as the A-series smartphones, the independent brand Xinyun smartphones, as well as computer businesses, tablet businesses, smartwatches, AI glasses, VR glasses, smart home products, spare parts businesses, after-sales repair services, and other businesses.

These hardware businesses generate over $80 billion in revenue annually.

All of the smart terminal businesses combined generate approximately $300 billion in revenue… This massive revenue has made this series of businesses a core business within the Zhuyun Group for a long time.

In addition, there are the software and internet businesses generated by the aforementioned smart terminals, with the bulk of the revenue coming from the app stores on each terminal... Zhiyun's tax is also world-renowned, followed by the advertising business in the app stores, which is also very profitable, and finally content services. Zhiyun Group does not produce any content itself; they only provide traffic entry points and then share the revenue.

Zhiyun Music, Zhiyun Video, and Zhiyun Reading are typical examples. They connect with different content providers in different regions around the world to provide digital content services to local consumers and then receive a commission.

Tax collection is very profitable. Just by relying on software and internet businesses in the field of smart terminals, Zhuyun Group can earn about seven or eight hundred billion US dollars in revenue every year.

If we add the revenue from software and internet services related to virtual devices and intelligent robots, plus the revenue from cloud computing services, the entire software and internet business unit of Zhiyun Group is projected to generate approximately $120 billion in revenue this year, with an extremely high gross profit margin.

If Zhiyun Group's software and internet business revenue were listed separately and placed among a group of internet companies, it would actually rank third globally, only slightly behind Amazon and Google.

Amazon's high revenue is because it is essentially an online supermarket, with most of its revenue coming from its own stores.

The revenue figures in the retail industry are particularly exaggerated. For example, Walmart's revenue is even more exaggerated, reaching more than 500 billion US dollars. At first glance, it seems very impressive, but in reality, its profit is only more than 13 billion US dollars.

The retail industry is characterized by its exaggerated revenue figures, while the profit figures appear quite low in comparison.
Therefore, when looking at a company's revenue, it is important to distinguish between industries and not to generalize.

Google's revenue is also very high, and their profits are also high... So strictly speaking, although Google's apparent revenue is not as high as Amazon's, Google is actually the number one internet company. It may seem to have only more than 200 billion US dollars in revenue, but its net profit is more than 70 billion US dollars.

This is also why Google can afford to purchase the Zhiyun Quantum Integrated Computing System on such a large scale... they're loaded.

According to external analysts' estimates, Zhiyun Group's three major business segments—computing hardware, smart terminals, software, and internet services—can contribute $770 billion in revenue.

Then, Zhiyun Group also has two new core businesses, namely intelligent robots and virtual equipment.

The intelligent robot business is expected to contribute more than $80 billion in revenue this year. This business has also grown rapidly this year, partly due to the positive impact of the lifting of restrictions in the US market, which directly boosted robot sales in the US market.

Another factor is the application of state-of-the-art batteries, which completely eliminates the risk of battery spontaneous combustion in robots and directly doubles their battery life. The robot's battery life has a particularly large impact on sales.

The last, seemingly insignificant but actually very important reason is that years of continuous advertising have led more and more middle- and high-income families in economically developed regions to accept the concept of 'home robots' and include purchasing home robots in their options for major household purchases.

These three factors have significantly boosted the sales of Zhiyun Group's intelligent robots, leading to substantial revenue growth. Meanwhile, with the continuous increase in production and the continuous reduction in hardware costs, the gross profit margin of the robot hardware business is also gradually increasing, reaching nearly 40%.

That's no easy feat!
The revenue contribution from virtual devices is even greater. Many analysts have boldly predicted that Zhiyun Group's sales of virtual devices this year could reach six million units with an optimistic estimate, or at least five million units with a conservative estimate.

In the virtual device market, low-end models account for the vast majority of sales, with 95% of sales coming from the youth version models priced between 200,000 and 300,000 yuan. As a result, the average selling price of the entire virtual device market is actually around 230,000 yuan.

However, even based on a conservative estimate of five million units sold and an average price of 230,000, the revenue generated for the Zhiyun Group would still exceed US$150 billion.

However, within the Zhiyun Group, the gross profit margin for virtual devices is very low, mainly because the cost of various hardware components is too high, especially computing chips.

For example, when purchasing APO graphics cards internally, the price must be based on the market price. At most, the semiconductor department will give you an internal discount. This means that if the virtual equipment department uses an APO6000 graphics card, the cost will be calculated to be over 300,000.

The current virtual device business primarily serves two purposes: driving the development of the virtual world and generating sales for the semiconductor sector... but it doesn't generate much profit for itself.

The five major sectors mentioned above—computing equipment, smart terminals, smart robots, virtual equipment, software, and the internet—contribute revenue that can reach the level of one trillion US dollars.

In addition, Zhiyun Group also has a conventional semiconductor business, mainly selling W-series chips, x86 instruction set server CPUs, various memory and flash storage chips, consumer-grade GPU chips, and a host of other conventional chip businesses. The sale of various non-computing-power chips and conventional semiconductors also brings Zhiyun Group three to four hundred billion US dollars in revenue annually.

There's also the semiconductor foundry business, which generates over ten billion US dollars in revenue... Although Zhiyun Microelectronics is the world's most technologically advanced and largest semiconductor manufacturer, most of their semiconductor capacity is actually for internal use, with relatively little capacity for outsourcing, resulting in low revenue from outsourcing.

However, if you include the manufacturing process of the various chips used within the Zhiyun Group in Zhiyun Microelectronics' contract manufacturing revenue, then it becomes quite exaggerated...

Furthermore, Zhiyun Group also has some ancillary businesses, such as financial insurance, satellite services, and a whole host of other miscellaneous businesses. These can also generate some revenue, but not much... because most of these miscellaneous businesses actually serve the group itself and generate very little external revenue.

A Wall Street analysis firm, in its June revenue and profit forecast for Zhuyun Group, boldly predicted that Zhuyun Group's revenue this year would exceed one trillion US dollars, and could potentially reach as high as one trillion five hundred billion US dollars.

Furthermore, it boldly predicts that Zhiyun Group's profits this year will exceed 400 billion US dollars... The main contributors to these profits are superconducting quantum computers, smart terminals, semiconductor computing chips, software, and internet services.

Of course, although Zhuyun Group's projected book profit will be very high, considering Zhuyun Group's consistent high investment and high capital investment, don't expect to have much profit left in the end!
As the saying goes: "Zhiyun makes money and spends it all; shareholders won't get a single penny home!"
That's just how Zhiyun Group is; otherwise, even with its highly competitive core businesses such as superconducting quantum computers, computing cards, virtual equipment, and intelligent robots, its price-to-earnings ratio wouldn't still be only around 30.

If Zhuyun Group's capital and R&D investments weren't so extravagant, its price-to-earnings ratio would have already soared to fifty or sixty times, or even seventy or eighty times, and its market value could have reached two or three trillion US dollars.

However, on the other hand, the reason why Zhiyun Group is able to make so much money is precisely because of its huge capital investment and R&D investment.

Where do top-tier artificial intelligence technologies, intelligent robots, virtual reality devices, and even quantum computers and semiconductor computing chips come from? They come from massive R&D investments and the accumulation of massive computing centers.

The massive capital and R&D investments are the core elements that give rise to these highly profitable core businesses... but it's not something that can be solved simply by relying on a research system.

This is also the characteristic of Zhuyun Group's operation: high investment, high risk, and high profit!

Strictly speaking, without Xu Shenxue's research system, the Zhiyun Group would have gone bankrupt in just a few years, given its current operating model...

However, investors were unaware of the existence of the research system, so they were very worried that Zhiyun Group's high-risk approach every year might lead to its own collapse one day.

With annual capital and R&D investments often reaching hundreds of billions of dollars, the size of Zhiyun Group also means enormous risks. A slight strategic misstep could lead to huge losses for several years.

Therefore, investors are still giving Zhiyun Group a price-to-earnings ratio of over 30 times, pushing its market value to over 10 trillion US dollars... This is already playing a high-risk game, because from an investment perspective, the risk is actually very high.

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Zhiyun Group announced its backlog of orders for its 'Zhiyun Quantum Integrated Computing Power System', while Wall Street third-party analysis agencies issued a series of various analysis reports. Coupled with Zhiyun Group's huge size and the huge buzz generated by its numerous cutting-edge technology products, this has created a significant buzz.

This has made Zhiyun Group a major news story in the global technology and finance sectors recently, and it has been repeatedly reported.

There are various reporting angles, such as American media, which have listed the strategic customers of Zhiyun Group's Zhiyun Quantum Integrated Computing Power System!

These strategic client lists are also quite frightening!

The list of more than twenty strategic clients consists entirely of the world's top high-tech companies, covering China, the United States, Europe, Japan, South Korea, and other regions. These are companies that even ordinary people are very familiar with.

This list of strategic customers also signifies a phenomenon that worries many people in Europe and America: the global high-tech industry is heavily reliant on the computing hardware supply of Zhiyun Group!
Moreover, this phenomenon is even more serious than last year!

Last year, although Zhuyun Group's APO series computing cards still monopolized the global market, there were concerns in Europe and the United States, but not to the point of serious worry.

After all, they do have backup options... such as AMD's computing cards, Qualcomm and Intel's terminal computing chips, and even Tesla has its own automotive-grade computing chips. In China, there are also Huawei's computing cards.

Although Zhuyun Group almost monopolizes the global market for computing cards and terminal computing chips, Western industrial systems have backup options in the event of a supply disruption.

While AMD's computing cards may not offer great performance, have poor ecosystem compatibility, high computing costs, and excessive power consumption, it's undeniable that they are actually usable...

The development of artificial intelligence in the defense sector of many Western countries is based on AMD's computing cards... Although their development of artificial intelligence in the defense sector is not very good, it is undeniable that they do have it.

However, starting in January of this year, with the delivery of the YCL-52 superconducting quantum computer by Zhiyun Group, the world suddenly entered the era of quantum computing.

In this era of quantum computing, they have no backups!

This has caused great concern among many people in the Western world.

Having a backup versus not having one makes a huge difference... Putting aside the supply disruption issue in the civilian sector, given the nature of Zhuyun Group, this situation is unlikely to occur.

But what about the defense sector?

They can't possibly purchase the YCL-52 quantum computer from Zhiyun Group to train or run their defense AI... Even if Zhiyun sold it to them, they wouldn't dare use it...

Can you imagine Americans using Zhiyun Group's 'Zhiyun Quantum Integrated Computing System' to train soldiers to run battlefield command AI in their defense sector?
Americans aren't that crazy!

Therefore, the United States must have its own quantum computer!

Therefore, Google, a company with its own quantum computer R&D team and some previous achievements, took on this important task.

However, the research and development was more difficult than they had imagined... to the point that during a hearing in mid-June, a member of Congress asked Google when they would be able to develop a quantum computer belonging to the United States.

The Google representative replied: "With the current level of project support, we may never be able to make it. However, if there is enough funding, we hope to make a prototype system within five years."

The implication is: Send me money!

It almost made a lot of people furious!

This reminds many people of the hearings regarding AMD's computing cards a couple of years ago, when AMD was also desperate for money...

They all use the same old tricks, they don't even bother to change them, all they care about is making money!
Moreover, it's even more outrageous than AMD. At least AMD came to ask for money with computing power cards, but Google this time, let alone a prototype of a quantum computer, it doesn't even have any technical theory, yet it came to ask for money!

(End of this chapter)