Siheyuan, Shazhu: I have both parents in this life

Chapter 384 Core Fire
Laboratory of the Computer R&D Center of Huanghe Group, Sijiu City.

Huang Lingyi frowned as she faced a pile of design drawings and simulation data.

The chip design is progressing relatively smoothly, but it's stuck at a crucial stage—the manufacturing process.

The Singapore laboratory has a limited number of advanced lithography machines, which it simply cannot lend to domestic research institutes.

She called Singapore and found it very difficult to order, especially in Eastern countries where this product is strictly regulated. Even if she could buy it, it couldn't be shipped to China in a short time.

Although the equipment she had was newly purchased, it wasn't the most advanced and couldn't meet the precision requirements of her designed microprocessor. (The West was dumping low-end lithography machines, but there were limitations on technology and components, let alone high-end ones.)
She recalled seeing research papers on photolithography technology in domestic academic journals a few years ago.

With a try-it-out mentality, she asked her assistant to extensively search and collect relevant information in the archives and libraries of various universities.

A few days later, the assistant brought back a stack of yellowed papers and internal technical reports.

Huang Lingyi spent the night reviewing the materials, her feelings growing increasingly complicated. The data showed that China had launched a lithography machine research and development project more than a decade ago, and several institutions had achieved some initial results. However, due to insufficient funding or changes in direction, most of the projects stalled, and personnel dispersed.

She paid particular attention to two reports: one from the Institute Code Named "Institute 45," which had extensive experience in optical systems and precision mechanics; and the other from a radio equipment factory in Wuhan, which had attempted to develop a contact lithography machine.

The next morning, Huang Lingyi called He Yuxin and gave him a detailed report of the situation.

"Mr. He, we've hit a bottleneck; we can't get high-end lithography machines in. But I've discovered that China isn't completely without a foundation; it's just been interrupted. If we can integrate these remaining technical resources and materials, perhaps we can find a way out, at least solving the immediate problem of whether we have them or not."

He Yuxin remained silent for a moment on the other end of the phone; this matter was beyond his knowledge.

"Manager Huang, please prepare a detailed report on the situation for me first, and I will report to the chairman immediately."

The next day, He Yuxin received the fax and then called He Yuzhu.

"Brother, that's the situation. Supervisor Huang believes that instead of being completely dependent on others, it would be better to try restarting the development of lithography machines in China. She mentioned the 45th Research Institute and Wuhan Radio Factory No. 3, saying that they might still have some resources there."

Has He Yuzhu forgotten? No, it's not. Research institutes and state-owned enterprises used to find it extremely difficult to get involved, especially in high-end projects.

Now that we have the opportunity, we should give it a try. He Yuzhu said, "Yuxin, Supervisor Huang's judgment is correct. We can't put all our hopes on outsiders. Here's the deal: you decide whether you want to lead the team yourself or have your subordinates handle it."

“I think Supervisor Huang is capable of doing this, after all, she comes from within the system.”

"Alright, then give her the authority, set up a team to handle this matter. But if you're going to do it, you have to do it efficiently. There are a few requirements as well."

"Brother, you say it." He Yuxin picked up a pen to take notes.

"First, find senior engineers and experts who have participated in relevant projects, regardless of what they are doing now, whether they are retired or still working, and try to invite them over with good compensation. Second, talk to those companies and buy their idle technical data, drawings, and even semi-finished equipment."

"Understood, brother," He Yuxin replied.

"Also, if things don't go smoothly, ask Uncle Zhou, Uncle Fang, or Uncle Zhao for help in coordinating things."

"Brother, is it really necessary to use the connections of our uncles?" He Yuxin asked in surprise.

"You'll find it useful. This is very important; you'll understand later."

"What if they want us to invest in them?"

"It's not impossible. We can share the technology, with a contract of at least twenty years. We'll see if they're willing to do that. Also, if they go bankrupt or the project is canceled, everything will still belong to us."

"I understand. I'll find someone to take care of it right away."

“Take some people from your own team and give them to Huang Lingyi. If you’re going to do this, do it quickly and don’t leave any future problems.”

"I understand, that's what I was planning to do anyway."

"Well, that's it."

"toot toot"

After hanging up the phone, He Yuxin immediately selected a few people to fly to Beijing, and then called Huang Lingyi to explain the requirements.

Huang Lingyi doesn't object to things like "twenty years" or "projects being shut down," as she was once one of those people.

After He Yuxin's team arrived in Beijing, they joined up with Huang Lingyi's group.

Huang Lingyi led them directly to the 45th Institute in Gansu Province.

After the person in charge of receiving us explained the purpose of our visit, he was quite surprised. The lithography machine project had been stalled for several years, and the staff had all been reassigned. Yet, someone still came to our door, and it was a private enterprise at that.

“You really intend to take on this project? You should know that although the project data exists, it is definitely incomplete, and some of the equipment has been used by other projects, making it very difficult to restart.”

"Yes, we want to take on this project, including the data, equipment, and personnel."

"I need to ask the higher-ups what they mean."

"We can wait."

"Shall I arrange for you to stay first?"

"No need, we've already found a place ourselves. Here's the phone number for our accommodation." Huang Lingyi handed over a piece of paper.

The man glanced at the sign and saw it was the best hotel in the city. He thought to himself, "No wonder they didn't need us to make arrangements."

However, he immediately thought of a possibility: this deal might work out because the other party had money.

After Huang Lingyi and her group left, the man found the supervisor and called the hotel the next day. Huang Lingyi and her group then went there again.

That evening, the leadership of the 45th Institute held a meeting, but there were significant differences of opinion at the meeting.

Some people think this is a good opportunity to get rid of the burden. Since the project has been stopped anyway, the data and equipment will just gather dust. They can use the funds to improve the research conditions of other projects in the institute.

Others have many concerns, worrying about the loss of core technologies and even more about being held accountable by higher authorities in the future.

"Are they private enterprises or foreign-invested enterprises? Is it appropriate for them to hand over the research results they have accumulated over so many years?" a deputy director questioned.

“The project has been shut down for three years, and the staff has dispersed. What’s the use of us keeping these ‘treasures’? You know how tight the institute’s funding is right now. Besides, they gave us two options. We can also choose to have the Yellow River Group invest in our subsequent R&D. Although it requires technology sharing, if the funds are used properly, I can also benefit from them in other projects. I think this is a good thing.” Another person expressed support.

"But their requirement is a minimum 20-year contract. Aren't those conditions too harsh?"

“This project no longer exists because no one invested in it, so why bother with it? Besides, the contract states that they must provide unconditional support if the country needs it. I think we can talk about it.”

The debate continued late into the night without a conclusion.

Later, due to serious disagreements, they reported the matter to the headquarters of China Electronics Technology Group Corporation (CETC).

The headquarters weighed the pros and cons and ultimately decided to transfer the project because they were unsure if Huanghe would continue to invest money. Such a project would be useless once the R&D funding was gone. Another point was that they did not have the ability to purchase new equipment and components, and Huanghe had not made any promises in this regard. That's why they made this decision.

A week later, Huang He's team went to the research institute again. The person in charge of negotiating with them said, "We have already submitted the application for this project, and the higher-ups have responded, agreeing to the transfer of the project."

"What about the technicians?" Huang Lingyi asked.

"You'll have to negotiate that yourselves. Of course, you can't poach the key R&D personnel from our other projects."

"no problem."

Regarding the project transfer fee

"Our group's appraiser gave an estimate of $500,000 for the equipment and documentation." Huang Lingyi's heart trembled when she said this number. Their initial project funding was only tens of thousands of yuan a year, but the group invested millions of yuan, and that was the price given by the appraiser, without even needing to go through the group's upper management.

"Cough cough." The person in charge on the other end of the line twitched. The reason they stopped the project was that the country had allocated a total of one million yuan for this project over the past few years. The 45th Institute received 220,000 yuan, and the Institute of Optoelectronics of the Chinese Academy of Sciences and the Shanghai Optical and Mechanical Factory also had to share the cost. On average, they would only receive 20,000 to 30,000 yuan a year. The other party had just thrown in 500,000 yuan, which was in US dollars. He felt his heart skip a beat.

"Old Zhang, are you alright?" someone sitting next to him quickly asked, trying to ease the awkwardness.

"It's alright, Comrade Huang, are you sure it's 500,000 US dollars?" "Yes, I am."

The group from the 45th Research Institute exchanged glances, and then Old Zhang spoke up again: "Why don't you take stock of the data and equipment list first, and then we can talk?"

"Okay, when can we start?"

"Give us three days to prepare."

"it is good."

Upon returning, the appraiser and legal counsel who had accompanied Huang Lingyi raised questions.

"Manager Huang, are they trying to raise prices?"

"On the contrary, they are afraid that they will not feel secure receiving this money," Huang Lingyi said.

"What if they change their minds, thinking that they can sell it for such a high price and make us invest that money in research and development?"

“Well, I’m not sure if that’s really possible, but there’s another problem. These kinds of projects require continuous investment, and they could be in the tens or hundreds of millions. Our own group’s laboratory also needs funding. I think the chairman might not agree to that,” Huang Lingyi said.

"That's not necessarily true. Based on my understanding of the chairman, if they can really do a good job, money shouldn't be a problem. The problem lies in whether they can spend the money where it's needed. We have similar projects in many universities in mainland China, and the results so far have been quite good," the evaluator said.

"Then let's ask General Manager He first," Huang Lingyi said.

“I agree, this way we’ll have a better understanding,” the legal representative said.

So he called He Yuxin, who then called He Yuzhu. He Yuzhu said, "You can make your own decision about this."

"Brother, it's best to have a general understanding of high-tech matters. I'm afraid that if I make the decision, problems might arise."

"Okay, then I'll give you a framework, so you can talk like this if you encounter this again in the future."

"You said."

"That means looking at the size and team of the other party. If the other party is not small and has a complete team, and you can't poach them all, then you invest; but now, for institutions like the 45th Research Institute, our principle is to take back, because the return on investment will definitely be less than the return."

"What if the other party doesn't agree?"

"Then let's wait. The price might even be lower. Of course, what I'm saying is only valid for ten years or less. It will be invalid after that."

"Oh why?"

"Domestic development trends will drive the pace of development faster and faster, and then the country will not be short of money. Do you think the government will release such projects?"

"Understood. I'll go and give Manager Huang and the others a reply. I estimate this project will require visiting more than one place."

"They can handle that. It would be even better if there could be a supporting factory."

"understood."

Three days later, Huang Lingyi's team returned to the 45th Institute.

This time, the person who came to receive us was a deputy director surnamed Wang, and his attitude was much warmer than last time.

"Researcher Huang, welcome, welcome!" Deputy Director Wang shook hands with Huang Lingyi. "After careful consideration within our institute and with the approval of higher authorities, we agree in principle to transfer this project. However..."

He then changed the subject, a troubled look on his face: "Some of the older colleagues in the institute are very attached to the project and feel it would be a waste to sell it directly. After discussion, we are more inclined to have your group invest in research and development funds, while we provide the technology and personnel to jointly advance the project. This way, we can both revitalize the project and preserve this technological force for the country."

Huang Lingyi and her team's appraisers and legal counsel exchanged a glance, and sure enough, the expected situation occurred.

“Director Wang, we understand the feelings of our colleagues. However, as a company, the Yellow River Group needs to consider returns and efficiency when making investments. According to market assessments, restarting this project independently and catching up with international advanced levels would require an astronomical amount of investment, and the cycle would be very long. Our initial plan was a one-time buyout based on the current state of the project, which would allow the technology to be revitalized as quickly as possible.”

The appraiser added, "Director Wang, the valuation of $500,000 fully considers the project's historical investment and the residual value of existing data and equipment. If it is to be converted into a long-term cooperative investment, we need to reassess the risks and returns. The investment scale and method will be different, and it may not be as beneficial to your firm's current financial situation as a one-time transfer."

Deputy Director Wang pondered for a moment and said, “Researcher Huang, I understand what you mean. But the institute also has its difficulties. After all, this is a nationally funded project. If we sell it out directly, there might be gossip in the future. How about this: cooperative development? We can accept technology sharing, and you can even take the lion's share.”

The negotiations reached a stalemate. Following He Yuxin's instructions, Huang Lingyi did not budge and insisted on the buyout plan.

Over the next few days, the two sides held two more rounds of contact.

The 45th Research Institute attempted to secure cooperation, but the Yellow River team refused to budge, only slightly raising the buyout price to $550,000.

Just as the negotiations were about to break down, Deputy Director Wang finally received clearer instructions from his superiors.

Considering the institute's dire financial situation and the fact that restarting the project would indeed require a huge and continuous investment, the institute ultimately decided to accept the buyout offer.

But before the final signing, Deputy Director Wang made another request: "Researcher Huang, the project can be sold, but those materials are the hard work of our older generation of researchers. We have no objection to the price of 550,000 yuan that you mentioned, but could you please leave us copies of those materials?"

"I need to ask for instructions." This scenario was clearly not anticipated by those on the Yellow River side.

"Yes, we can wait."

"It won't be long, we'll come again tomorrow."

"Row."

As expected, Huang Lingyi received a reply of approval after consulting He Yuxin.

Ultimately, Huanghe Group acquired all the technical data, patents, and related specialized equipment for the 45th lithography machine project for US$550,000.

The contract clearly stipulates that the subsequent research and development results of the project belong to the Yellow River Group. However, it also stipulates that, under the same conditions, the Yellow River Group will give priority to cooperating with the 45th Research Institute and can provide consultant positions for retired experts of the 45th Research Institute who want to continue to study lithography machines.

This outcome is naturally a win-win situation at this stage: the 45th Research Institute has received funding, and Huanghe has gained a research and development foundation.

The signing ceremony was very simple, with no formalities.

As the yellowed blueprints and dusty equipment were carefully packed and transported away, Deputy Director Wang and several senior engineers had tears in their eyes.

"I hope these things will really come in handy in your hands," said Deputy Director Wang.

"We will do our best," Huang Lingyi solemnly promised.

When discussing the project, Huanghe also talked to some people from the 45th Research Institute who had participated in the lithography machine project. Not many of them wanted to leave, after all, their level here is quite high and the treatment is decent.

Once you get to the Yellow River, you really don't know what the situation will be like, since there's no one to cover you. The people along the Yellow River haven't offered any explanation for this either; you can't force things.

After making arrangements with those who wanted to leave, Huang Lingyi's team rushed to Wuhan without stopping.

With the experience gained from the 45th Research Institute, negotiations with Wuhan Radio Equipment Factory went relatively smoothly.

The factory's lithography machine project was discontinued earlier, resulting in a significant loss of data and outdated equipment.

Ultimately, the Yellow River Group acquired the remaining related assets for $100,000. As for the personnel, forget it, their staff quality was not as good as that of the Yellow River Special Economic Zone's own electronics factory.

They also visited the Shanghai Optical Machinery Factory, but the factory already had orders and didn't care about Huang He at all, so they didn't discuss anything else. However, the Shanghai Optical Machinery Factory was hoping that Huang He would place an order with them. After visiting the factory's equipment and workers, Huang He politely declined.

Those who went with them complained, wondering where their confidence came from.

Huang Lingyi said, "You've seen too many foreign products. In China, they really are among the top-tier brands."

"Manager Huang, we're not saying anything else, but they simply can't produce the parts we need."

“I admit that, so I refused. We’ll talk again when they have the capability.”

"Ah."

(End of this chapter)