The Millennium Semiconductor Survival Guide.

Chapter 209 Pattern Innovation (5K)

A 0.25-micron production line requires a high price of 7 million US dollars, and it is unrealistic and unrealistic for individuals to pay for this money.

There are multiple capitals behind any chip foundry.Even if Huaguo Shougang claims to invest tens of billions of dollars to build a chip manufacturing plant in Yanjing, the initial investment is 13.35 billion U.S. dollars.

Among the US$13.35 billion, US$1.2 million was contributed by Shougang-based companies, and two American semiconductor companies each contributed US$4500 million, namely AOS Semiconductor and BVI DEBORAH Semiconductor.Another [-] million US dollars was invested by Yanjing State-owned Assets Management Company, and the remaining money was borrowed from banks.

This is a matter of risk control, as well as a matter of benefit distribution. Only when you distribute the benefits to other companies can you get orders from other companies.

Zhou Xin can afford to pay the money all by himself, but it will lead to invisible difficulties in the follow-up operation, and others will not ask you to do the OEM.

There are so many chip foundry companies now, why not choose the company I invested in, and choose a sole proprietorship company like Xinxin Technology?Zhou Xin has a natural aura in the Internet field, but not in the chip field.

And even if there is a halo, the halo will not allow other companies to hand over chip foundry orders to him. No one thinks about issues out of sensibility when it comes to interests.

Why TSMC was able to get Intel's order, because more than 20% of TSMC's shares are held by Wall Street, and Citigroup holds more than [-]% of TSMC's shares.This has also caused TSMC's decision-makers to be almost bent, and the seats on the board of directors are basically bent, but they cannot refuse the request from American.

At first, Hu Zhengming, like Zhou Xin, pinned his hopes on SMIC. Later, he gave up this idea after carefully understanding SMIC's shareholding structure and internal management.

Instead of cooperating with SMIC, it is better to build a factory by yourself. Xinxin Technology will pay a small amount of money, and other companies will pay a lot. According to his plan, Xinxin Technology will invest 20%, and 20 billion US dollars can leverage the investment scale of 100 billion US dollars.

As for companies in Huaguo not being able to obtain the latest production technology, this is not a problem, because if they target the Huaguo market instead of the foreign capital market from the beginning, then the backward production line is not only not a problem, but an advantage.

Hua Hong Semiconductor, SMIC, and Shougang Semiconductor only considered 8-inch, 0.25-micron production lines when building factories.They also want to import 12-inch, which is 0.18 micron production line, but this production line was banned.

For American, they don't want to cultivate another competitor in the chip field.

American's internal interests are definitely not monolithic. The chip equipment production companies don't mind the fiercer competition for chip foundries, and their equipment is easy to sell.But for American's overall strategic considerations, they don't want Huaguo to become an important player in the field of chip foundry.

Beginning with guided missiles, strategists in Washington have realized that chips and military capabilities are closely related, even highly correlated.Therefore, from a commercial point of view, Huaguo can obtain the equipment for chip production. From a strategic point of view, these equipment and technologies must be at least one generation behind.

Of course, Neon and American have different ideas. They have lost their original status in the field of chip manufacturing. In the 80s, the market shares of NEC, Toshiba, Hitachi, Fujitsu and Panasonic were constantly squeezed by Samsung and TSMC.

Neon is stepping back from manufacturing in the chip field and becoming a supplier of raw materials and equipment, so they don't mind cooperating with Huaguo.Like NEC even hopes to make a comeback through Huaguo's vast market.

So instead, neon manufacturers hope to break free from the shackles of the Wassenaar Agreement.

在80年代的时候霓虹的芯片产业占据了整个芯片产业的半壁江山，占据全世界半导体市场45%的份额。一直到90年代初，前十大半导体公司中依然有6家来自霓虹。在1994年的时候索尼的彩色电视全球出货量高达1亿台，这是多么惊人的数字。

The Matrix is ​​still a long way from Sony's pinnacle in consumer electronics.In the 80s, Neon's memory chips, namely DRAM, defeated the American company, and more than [-]% of American's DRAM companies went bankrupt.

In 1980, the Neon Electromechanical Industry Association held a seminar in Washington to promote the DRAM produced by Neon. Representatives of Hewlett-Packard praised the DRAM produced by Neon at the meeting. caused a strong shock.So much so that the editor of the American technology magazine "Electronics" was incompetent and furious:
"Neon Semiconductor Company came to teach American Company how to conduct quality management, and the representative of American Company personally proved that what they taught was correct!"

Of course, it was another story for American to intervene in Neon's semiconductor business on the grounds of national security.

Hu Zhengming is almost familiar with this period of history. He met many frustrated neon engineers at the annual conference held by IEEE. They often recalled the neon semiconductors in the 80s. Back to alcohol.

Therefore, Hu Zhengming does not dislike the 8-inch production line. In his opinion, the 8-inch production line can already do many things.

It is true that the 8-inch production line produces 0.25-micron chips, but by optimizing the process, structure and function, it is theoretically possible to achieve 0.13-micron chips, which is even lower than the 12-inch 0.18-micron chips.

As for why we insist on choosing Hua Hong, it is because Hua Hong's 8-inch production line is still in Hua Hong's own hands, not in the hands of Hua Hong NEC. Hua Hong is considering a partner.

Xinxin Technology is of course a good partner. No matter from which aspect, Zhou Xin behind Xinxin Technology is an excellent partner.Holding Matrix, a consumer electronics company showing strong potential, has a strong influence in Silicon Valley, has huge cash flow, and has a good relationship with Huaguo's senior management.

There is a natural basis for cooperation.

Unlike Shougang's 8-inch production line, which is still in the planning stage, but the pre-planning work has been completed, Hua Hong's 8-inch production line is about to be put into use.

If there is no Xinxin Technology, Hua Hong's 8-inch production line will be allocated to Hua Hong (American).

Hu Zhengming hopes to build this production line into a model project, which will attract more Huaguo capital or international capital to join in the future.

This cooperation model can always be adopted in the future, so the most important goal at the moment is to convince Hua Hong.

And the control right, that is, the mechanism of different rights for the same share, should be written into the contract.

Neither Hu Zhengming nor Zhou Xin hoped that the crucial point of control is as simple as verbal restraint.They allowed Hua Hong to do this, so is it true that the chip production line jointly established by Xinxin Technology and other companies is just a verbal constraint?
Jiang Shoulei said that the control of Huahong NEC is in the hands of NEC, and the middle-level managers are almost all Nehong people. This kind of control is only temporary. In May 03, Huahong will withdraw the entrusted management right from NEC. .

Hu Zhengming doesn't know what will happen in the future, but based on experience, contractual constraints are the safest means.

"The reason why Xinxin Technology is obsessed with control is that we believe that there may be a big difference between Hua Hong and Xinxin Technology in terms of future business strategies.

In the contract constraints, we will ensure that the annual revenue is not less than 20 billion RMB, and we prefer to invest these revenues in research and development.Then we hope to tilt the remuneration package to front-line employees and R&D personnel.

Then we will invest the funds in some of our upstream and downstream domestic suppliers. We will not rush to pay large dividends. Of course, the dividend itself will definitely be done, but this matter itself will not be so fast.

Therefore, we do not want to agree with Hua Hong on these matters in the future, as this will seriously affect the efficiency of business operations.Hua Hong can monitor the whereabouts of each payment.

Huahong has supervisory rights. Newly established companies can accept Huahong’s audit every year, and capital transactions can be connected to UnionPay’s capital management and control system. We can regress in these areas, but different rights for the same share must be written into the contract. "

After Hu Zhengming finished speaking, Jiang Shoulei was completely willing to cooperate with Xinxin Technology from the perspective of a semiconductor practitioner.

Under the premise of the downturn in the entire semiconductor industry, no company except Xinxin Technology can write guaranteed revenue into the terms of the contract.

Although there is a time limit, the time limit for revenue guarantee in the contract is five years, RMB 20 billion a year, and the guaranteed gross profit rate is not less than 30%.That is to say, Xinxin Technology cannot use the low-price strategy to guarantee revenue.

Five years is long enough. You must know that the chip production line needs to depreciate the equipment every year. For the chip production line purchased for 7 million US dollars, it will take about five to seven years to complete the depreciation of the entire value of the equipment.That is to say, in terms of company assets, the book value of this production line, which actually cost 7 million U.S. dollars to purchase, will return to zero.

Its cost is evenly divided into the previous annual cost. If the joint venture between Xinxin Technology and Huahong completes the depreciation of the production line in five years, then the cost of chips produced by this subsequent production line will only cost labor and Materials cost.

Among chip foundry companies, the bulk of the cost is equipment depreciation.This is why TSMC's profit margin is as high as 60.00%, while the profit margin of other domestic chip manufacturers is at most 30%.It is because TSMC's low-end production lines have already completed the depreciation of production equipment, and there is no cost for depreciation of equipment value.

Most of the production equipment of other domestic chip manufacturers began to go online in 19.

Moreover, most of TSMC's revenue comes from low-end chip foundry, and high-end chip foundry only accounts for a small part. Even in the 3nm era, almost only mobile phone manufacturers can afford TSMC's 3nm chips.

So no matter from which point of view, Xinxin Technology's conditions are too superior.

Jiang Shoulei sighed: "Professor Hu, I personally am very willing to cooperate with Xinxin Technology, and I will try my best to promote this matter.

But this is not my level to have the final say, this is more of a political issue than an economic issue.

On the economic level, to be frank, Huaguo's investment in the chip field on a country-by-country basis has led to a lot of losses.

The conditions given by Xinxin Technology have been decided. Hua Hong's 8-inch production line will at least not lose money. In the current chip industry environment, it is very rare to be able to not lose money.

This is a brand-new method, whether it is a joint venture with a private enterprise or a method of different rights for the same shares, I am not sure whether the above will allow Hua Hong to become a pilot. "

Hu Zhengming reacted quickly: "Mr. Jiang, you can regard it as Hua Hong's venture capital investment in Xinxin Technology.

It's just that Hua Hong invested in a production line instead of money for this venture capital investment, but it is still venture capital investment in essence.The revenue and gross profit margin guaranteed by Xinxin Technology is the agreement before Xinxin Technology accepts this venture capital investment.

Do you know NewPay? "

Jiang Shoulei nodded: "Yes, NewPay also has some businesses in China, and they are very active in the foreign trade industry in the Yangtze River Delta region. I know some professors from Fudan School of Economics, and they have a very high evaluation of NewPay, thinking that NewPay has created a brand new economic model."

Hu Zhengming continued: "Yes, NewPay has accepted investment from Citigroup, Wells Fargo, JPMorgan Chase, Goldman Sachs and other institutions, and the investment of these institutions adopts the structure of the same share with different rights.

The voting rights held by their shares and those held by Zhou Xin are 1:10.

Therefore, if you regard this as venture capital, there is nothing special about it. Huaguo has ambitions in the chip field and hopes to occupy a place in the chip field, but the high investment from the government has not achieved the desired results. I think it's time for a different approach to engagement.

Taking the cooperation between Xinxin and Huahong as a pilot is exactly in line with the spirit of Shen Hai and Zhang Jiang in the field of innovation. "

The model of different rights for the same share is a new thing in Silicon Valley, because Google is far less successful than the original time and space, and it even needs Wall Street to push them to merge with Baidu in order to obtain their original status.So until 2001, the A/B share structure did not become popular in Silicon Valley.

When entrepreneurs propose to adopt an A/B share structure, investment institutions will ask: Are you Newman?
When Huaguo really started to have the concept of different rights for the same share, it should be in 2013, when the "Guiding Opinions on Launching the Pilot Program of Preferred Shares" was issued. Advantage, in fact, this is a kind of different rights for the same share.

If the domestic capital market accepts the A/B share structure, when the listing rules of the Science and Technology Innovation Board are promulgated, it is clearly stipulated in Article 2.1.4 that different shares can have different voting rights.

And the reason why Jiang Shoulei is very excited about cooperating with Xinxin is that he really wants to promote this matter. The 8-inch production line is in the hands of Huahong, and it is far from possible to create an annual revenue of 20 billion RMB, let alone such a high amount every year for five years.

He dared not and could not agree, because in 1995, the state-owned assets management department had a clear regulation: "It is not allowed to approve or approve a plan that adopts different rights and different benefits for state shares, state-owned legal person shares, and individual shares."

After Jiang Shoulei chatted with Hu Zhengming, Hu Zhengming did not confine the matter to his own level. He knew that when it came to model innovation, a higher level of impetus was needed, and Zhou Xin was needed at this time.

Zhou Xin was not too polite, first made an appointment with Director Zeng through email, and then went to Yanjing specifically for this matter, and had a face-to-face chat with Director Zeng.

After Zhou Xin explained in detail, the other party said: "I think we can use Hua Hong and Xinxin Technology as a pilot. The system is dead, but people are alive. Since neither the 908 project nor the 909 project has achieved the expected results. Effect.

There is even a long way from our expectations. Not to mention the cultivation of a number of chip companies, even the companies we have invested heavily in are struggling to survive. It is time to make changes.The conditions offered by Xinxin Technology are also very favorable.

I approve of this in principle and would even push hard for its approval.

But I advocate that there must be compliance in the process, because Zhou Xin just told me that we are exploring model innovation. Since it is model innovation, the cooperation between Xinxin and Huahong this time will set the stage for subsequent state-owned enterprises. Establish samples of cooperation with private enterprises.

Then we have to be a template from the beginning of the previous process.

In my opinion, the following principles need to be followed: sufficient demonstration must be conducted in advance, since it is necessary to operate the same share with different rights, it is necessary to carry out accurate investment argumentation, and there must be sufficient evidence to prove that in this project, the same share with different rights is better than the same share with different rights rights are more valuable.

This value is mainly reflected in two aspects: one is the value of obtaining project opportunities. Simply put, if the same share with different rights is not implemented, it is impossible to obtain this investment opportunity, and naturally there will be no investment income and strategic value; It means that the economic benefits obtained after the same share with different rights can meet the normal return level of general investment behavior.

The second is to make good decisions and comply with regulations.Strictly follow the investment decision-making process of state-owned enterprises, and keep all kinds of decision-making materials and minutes of decision-making meetings during the process, so as to withstand the audit test;
The third is to insist on openness and transparency.Different rights for the same shares are not prohibited by law, so there is no need to hide it, and it should be boldly written into investment agreements, project cooperation agreements, company articles of association and other documents, and no drawer agreements should be made.

The fourth is to uphold fairness and justice.Regardless of whether the state-owned party waives part of the voting rights or dividend rights, or the partner waives it, the principle of consistency of rights and responsibilities must be adhered to, that is, the shareholder responsibilities corresponding to the waiver of part of the rights should also be exempted accordingly.

This is my personal initial thoughts, I will push this thing as soon as possible, because I can only think of a small part, there will definitely be missing.

We will formulate relevant notices and guidelines as soon as possible, and then the cooperation between Hua Hong and Xinxin Technology can follow the guidelines first.

We will continue to pay attention to this case in the follow-up, and then adjust the policies we will introduce at the end, so as to truly do a good job in model innovation. "

　Model innovation is very important. In my opinion, our current way of investing in large chip funds can only achieve catch-up, and it is difficult to achieve innovation.

　　and then tomorrow morning
　　
　
(End of this chapter)