Chapter 455: The chip industry sees the dawn of hope, the first phase of the project is completed

When Lingnan Semiconductor was established, many leaders attended the groundbreaking ceremony.

It can be said that many leaders have high hopes for Lingnan Semiconductor.

China’s first 4-inch wafer production line.

China’s first 3-micron process chip processing production line.

Although these devices are a bit backward in the world, they are the most advanced in China.

Now Lingnan Semiconductor is introducing related equipment for the production of 5-inch wafers and 1.8-micron process.

Naturally, everyone will pay more attention to it.

So when Lingnan Semiconductor sent out invitations for the first phase project completion ceremony and the first chip mass production ceremony, it naturally received a very positive response.

“Xiao Jiang, the main products of the BMW Group now are various automobiles and parts.”

“However, automotive electronics is still in its infancy, and the demand for chips is mainly concentrated in simple functions such as engine control and instrument panel display.”

“The market size is relatively small.”

“Companies such as Nanshan Equipment also have limited demand for chips in areas such as industrial control.”

“Under such circumstances, I think your decision to develop the chip foundry business at the same time is the right one.”

Zhu Jiansheng naturally wanted to attend this important event of Lingnan Semiconductor.

As the most influential semiconductor company established in China after he took office as the head of the Ministry of Machinery and Electronics Industry, he strongly supported it both publicly and privately.

Fortunately, Lingnan Semiconductor is also doing well, so Zhu Jiansheng doesn’t need to worry about anyone gossiping about him behind his back.

Anyway, all the investments made by BMW Technology in Hong Kong in China are well known to the superiors.

The leaders are well aware of the actual situation behind the scenes.

Unless BMW Technology or Zhu Jiansheng makes a major mistake in principle, there is no need to worry too much in this regard.

“To be honest, we were also inspired by TSMC, so we chose to expand our foundry business.”

“I didn’t expect that this would hit the mark with the needs of companies like Intel, and both parties would have a cooperation intention so quickly.”

Jiang Hui was rarely humble.

After all, TSMC was indeed established a few months earlier than Lingnan Semiconductor.

There is no need to compete with others for the first place.

As long as Lingnan Semiconductor develops better than TSMC in the future, that will be more convincing than anything else.

On the other hand, arguing about anything is meaningless.

“The market is constantly changing, and there’s no harm in taking a closer look at what’s happening outside.”

“But you can’t fall behind in your own chip design work.”

Zhu Jiansheng is worried that after Lingnan Semiconductor has tasted the sweetness of chip foundry, it will focus on foundry business like TSMC in the future.

That was not the situation he wanted to see.

“Don’t worry, more than half of our Lingnan Semiconductor R&D team is engaged in chip design-related work.”

“In the future, all chips of the BMW Group will be designed and produced by ourselves.”

“At the same time, we will also increase business expansion for domestic customers and design and produce more types of chips.”

Jiang Hui gave his reply very affirmatively.

If Lingnan Semiconductor wants to grow and develop, it certainly cannot rely solely on the group’s own business.

The BMW Group is not yet strong enough to independently build a world-class semiconductor company.

Of course, as business diversifies in the future, the situation may slowly change.

……

Completion ceremonies have become commonplace for the BMW Group.

Each of the following subsidiaries holds some completion ceremonies almost every month.

Therefore, the relevant personnel have very rich corresponding experience.

“Director Huang, no matter how difficult a task is, it seems to be no problem in the hands of BMW Technology.”

“In recent years, I have not seen any company develop faster than BMW Technology.”

“The Chaoyang Motorcycle Factory they invested in is now the largest motorcycle company in China.”

“The BMW Group is even more outstanding. Whether it is complete vehicles or auto parts, it is the best in the country.”

“When Jiang Hui said he wanted to get into semiconductors, many people thought he was investing recklessly. But now he has achieved results in such a short period of time.”

“The production line has only officially started mass production today, but it has already passed Intel’s approval in advance, and we will start chip foundry cooperation in the future.”

“I think we can do a program about the results of BMW’s reforms, focusing on BMW technology.”

As a reporter for China TV, Fang Siwen has been responsible for following news related to BMW technology at China TV in recent years.

In fact, whether it is China TV or various daily newspapers, there is often a dedicated person to follow up and be responsible for the news of a certain company.

Of course, the prerequisite is that the scale and influence of the enterprise must be sufficient.

Otherwise, people wouldn’t have the energy to assign special people to follow up on the reports.

“Your suggestion is very good. It has been ten years since the reform.”

“A number of excellent companies have emerged in all walks of life, and they deserve our good publicity.”

“Then we will discuss it with Shenzhen City and see if we can work together to make this program better.”

Huang Kangyou has a very sensitive sense of smell.

After Fang Siwen said this, he understood the beauty of it.

As the influence of China’s entire automobile industry increases, chain reactions have occurred in all walks of life.

The support for reform from all parties is much greater than the same period in history.

This is definitely a good thing worth writing about.

“Shenzhen should be very willing to do so. After all, it is a young city.”

“In just a decade or so, Shenzhen has become the city with the highest GDP in the country.”

“This achievement is unmatched even in the entire world.”

When Fang Siwen said this, his voice became a little excited.

Shenzhen’s GDP is already so high, but the growth rate is still high.

By then, the GDP of Shenzhen alone will be comparable to that of the entire Northwest, or even the entire Midwestern provinces.

The impact of such an incident is absolutely huge.

Shenzhen’s current achievements are all thanks to reform.

Originally, there was a saying that Shenzhen was divided into two parts: Inside the Fort and Outside the Fort. However, due to the rapid development of industries inside the Fort, land supply began to become tight.

Starting last year, the concept of “within the Great Wall” has been officially expanded to areas originally outside the Great Wall.

Several surrounding cities have also developed rapidly by providing supporting services to some enterprises in Shenzhen.

Farmers from many places have already started working in factories in the Pearl River Delta.

This indirectly drove the economic growth of the entire Lingnan Province and increased farmers’ income.

And the increase in everyone’s income will further promote consumption.

This will allow the development of the entire industrial chain to enter a positive cycle.

“If Mr. Jiang is willing to be interviewed, we can arrange an interview with BMW executives.”

“I think a lot of people in China should be interested.”

Huang Kangyou further put forward his own ideas.

Fang Siwen naturally had no objection to this.

But if we want to implement this idea, we will have to wait and see.

……

“Jiang Hui, should our group consider expanding its business so that the chips produced by Lingnan Semiconductor can have more application markets?”

“For example, home appliances such as refrigerators, washing machines, and color TVs are not difficult for us to produce.”

Zhu Ling usually does not interfere in the daily operations of the BMW Group and spends more time at home taking care of the children.

However, she would still attend some important occasions with Jiang Hui.

As the general manager of BMW Technology, her nominal position is higher than Jiang Hui.

Over the years, her vision has been gradually honed and she can see through the essence of many things.

“Although there are more or less chips in home appliances, they are basically very low-end applications.”

“Domestic chip manufacturers can basically produce them.”

“It doesn’t make much sense for us to make such chips, and they don’t have any cost competitiveness.”

Jiang Hui must have also thought about making home appliances in the past.

However, the threshold for this industry is relatively low. Even if the BMW Group makes some money, it will still not be easy to expand it.

In addition, many private home appliance companies have emerged in Shenzhen and even in many surrounding cities.

These companies are very flexible in their employment practices and the quality of the home appliances they produce is average, but their prices are low.

So the development is also very rapid.

Some home appliance companies will also purchase core components from Nanshan Technology.

For example, compressors used in refrigerators are produced by Nanshan Technology.

“This is indeed a problem. The demand for chips in home appliances is indeed not that great, and not that high-end.”

“If home appliances don’t work, then computers must work, right?”

“Computers require not only core chips such as CPUs, but also various image processing chips and other chips.”

“The chip industries in the United States and Japan are now basically experiencing rapid development driven by the computer industry.”

I have to say that Zhu Ling has a very good vision.

Globally, the computer industry currently has the largest demand for chips and the most advanced technology.

For example, Intel has launched several chips such as 80286, 80386 and 80486 in the past decade or so.

The technological improvements of these chips have also played a very important role in improving computer performance.

At the same time, the improvement of computer performance has promoted large-scale application in related industries, which in turn hopes that computer performance can be further improved.

It can be said that the computer industry’s requirements for chips are now the highest, and also the most time-sensitive.

“Computers can indeed be used, and I am also considering when to enter this field.”

“In addition to computers, the mobile communications market is also a blue ocean.”

“But now these two markets are markets that American chip giants attach great importance to.” “If we enter now, it will be equivalent to forming a direct competitive relationship with them.”

“By then, there will be basically no hope for the chip foundry business to develop.”

After Jiang Hui said this, Zhu Ling immediately understood the interests involved.

No one will support their competitors to grow and develop.

By then, TSMC, a manufacturer that only engages in chip foundry business, will have a huge advantage.

Lingnan Semiconductor, on the other hand, is disliked.

“So what are your plans?”

There is no need to guess between husband and wife.

If you have any questions, just ask.

Zhu Ling is not the kind of person who is shy.

“We will not enter the computer and mobile communications markets until our chip design and production technology catch up with the international mainstream level.”

“Otherwise, it would be embarrassing if we die before achieving our goal.”

“After ten to eight years of accumulation, the gap between Lingnan Semiconductor and the international mainstream level should be significantly narrowed.”

“The lithography technology of Nanshan Equipment should also be able to be greatly improved.”

“It won’t be too late for us to start producing computers or other products then.”

“At this stage, domestic consumption capacity is such that individuals still cannot afford expensive items like computers.”

“Ten years from now, the situation will be different.”

Jiang Hui naturally had nothing to hide in front of Zhu Ling.

Accumulate food widely and slowly become king.

Improve your own strength first, and then compete with others for the cake.

This is undoubtedly a more appropriate solution.

Although the personal computer market has developed extremely rapidly in the past few years, its annual sales volume is completely not on the same level as in later generations.

The same is true for the mobile phone markets.

Now the world is still dominated by cellular phones and pagers. It will take another ten years for mobile phones to explode.

When we started to enter the market at that time, it was not that sensitive.

After all, there are so many competitors in the market, whether it is chip manufacturers or computer manufacturers, they don’t care so much.

If you really care that much.

Then it would be impossible for Samsung Electronics to obtain OEM orders from Apple and other companies in the future.

They are direct competitors.

“That’s fine, but Lingnan Semiconductor will be under a lot of pressure at the beginning.”

After listening to Jiang Hui’s explanation, Zhu Ling stopped worrying about it.

However, she is still a little worried about the development of Lingnan Semiconductor.

According to Jiang Hui’s plan, the semiconductor industry will be the key industry for development in the future.

The annual investment amount of various types exceeds 1 million US dollars.

But judging from the current situation, it would be great if we could avoid losing money, let alone making money.

Compared with other businesses, this situation seems out of place.

It is rare to find a private enterprise in China that is not making money now.

You can make money by launching any product on the market.

If Zhu Ling hadn’t known that Jiang Hui’s decision to vigorously develop the semiconductor industry must have a hidden meaning, she would probably have stood up to oppose it.

“It’s not as difficult as you think.”

“Lingnan Semiconductor can completely rely on the chip foundry business to grow and develop and cultivate its own talents at the beginning.”

“In the future, when my talent pool and experience grow, it won’t be that difficult to improve my technical skills.”

“And through the OEM process, we can also learn a lot from our customers.”

“We even poached some of our customers’ engineers to work for us.”

To produce a chip on a foundry basis, one must master a full set of technical information.

Otherwise, how can you produce qualified products?
During this process, the technical level of Lingnan Semiconductor’s employees will definitely be greatly improved.

Considering the changes in the international environment in the future, Jiang Hui is still very confident.

……

“Otellini, the board of directors has officially decided to eliminate some of the outdated production capacity and focus all funds on the most advanced chip process research and production.”

“In the future, if we want to maintain our leading position in the computer field, the human and material resources we will spend will be enormous.”

“But some relatively backward CPUs are still in demand in the market, so there is no need for us to give up directly.”

“The production of this part will be handed over to TSMC and Lingnan Semiconductor, which have passed your verification.”

Further actions were soon taken within Intel.

It is very common for large companies in Europe and the United States to adjust their development strategies every now and then and cut or weaken some businesses.

At this stage, the production of some relatively backward chips will be cut internally, and relevant personnel will be transferred to high-end chips.

Even if it is in line with Intel’s strategic adjustment.

“No problem. We will work with the purchasing department to get TSMC and Lingnan Semiconductor to start providing information on the foundry production arrangements and quotations for this batch of chips.”

“At that time, we will combine the evaluation of QCD and make a comprehensive choice.”

Otellini was not surprised by the CEO’s instructions.

The last time I went on a business trip to China, this direction had actually already been discussed internally.

Otherwise, there would be no such arrangement at all.

“The outside world now knows that we are making adjustments in this regard, and it is possible that other competitors such as AMD will also make similar adjustments.”

“So we also need to pay attention to the methods and approaches when communicating and cooperating with the OEM factories.”

“On the one hand, we need to maintain our active position, but on the other hand, we should not make the relationship too rigid.”

“They are our suppliers, but they are also our partners.”

“Don’t push them to our competitors because of some minor problems.”

Party A is often more powerful in front of Party B.

This is actually not a secret.

In order to avoid such practices from having an adverse impact on Intel, the company must emphasize this again.

Following Intel’s decision, personnel from relevant departments quickly took action.

Both TSMC and Lingnan Semiconductor received formal contact and began to provide quotations for specific projects.

……

“Sanders, Intel has officially adopted a plan to cooperate with foundries to reduce chip production costs.”

“This is bound to have a huge impact on us.”

As AMD’s sales director, Lina has been keeping a close eye on Intel’s moves during this period.

In the computer CPU market, the competition between AMD and Intel is the most intense.

As a latecomer, AMD’s president Sanders has made tremendous efforts since its founding in 1969 to achieve today’s results.

Someone once joked that it took Intel only 500 minutes to raise $5 million, but it took Sanders 5 million minutes to raise $500.

Sanders also did not forget to provide welfare incentives to ordinary employees, such as holding large-scale parties regularly, distributing gifts to ordinary employees, promising never to lay off employees, etc.

Treating employees as his life gave Sanders a strong support in his tough struggle with Intel.

The situation had finally started to show some signs of change, but unexpectedly Intel took new action.

“Intel is not the only company that can do chip foundry.”

“If TSMC or Lingnan Semiconductor’s foundry costs are lower than ours, we can also choose to outsource some of our CPUs to them.”

Sanders doesn’t think Intel can completely overturn its disadvantage in chip costs by relying on chip foundry.

Of course, Intel is the inventor of the computer CPU.

But being ahead once doesn’t mean you can always be ahead.

As long as AMD maintains its current development speed, he is confident that it will catch up with Intel.

Of course, at this stage he can only say that he has caught up with Intel, and he dare not easily say that he has surpassed Intel.

“Then should we ask the technical and purchasing departments to send personnel to TSMC and Lingnan Semiconductor to conduct the audit?”

“This way, if we need to hand over the chips to the other party for production later, we can respond quickly.”

Lina’s proposal is completely aimed at reducing costs.

If the cost cannot be reduced, then their sales department will not be able to sell products at very low prices.

This is definitely a very disadvantageous thing.

After all, computers are still too expensive nowadays, and both consumers and manufacturers are sensitive to prices.

As a key component, the CPU accounts for a relatively high proportion of the cost.

“It’s okay to inspect it first. After the inspection, you can even ask them for a quote to get a grasp of the cost of chip foundry.”

“It also indirectly helps us understand Intel’s chip foundry costs.”

“But whether we will eventually adopt the chip foundry model like Intel will depend on the confirmation results.”

After all, chip foundry is a new thing, and Sanders has no idea whether it is good or bad.

It is not easy for AMD to reach its current situation.

He would definitely not be able to accept the situation being ruined because of a wrong decision.

“Well, we must make sure that the chip foundry has no problems with its production capacity and quality assurance capabilities, and that its costs have a clear advantage.”

“Otherwise there would be no point in us doing this.”

Lina naturally understood Sanders’ concerns, so she made it clear what should be done during this period and did not force Sanders to make a decision.

As AMD began to follow Intel’s pace, naturally more manufacturers began to take action.

IBM, Apple and Texas Instruments are all exploring the feasibility of chip foundry.

Intel outsources part of its production to foundries and produces part of its own products. At least the capital market recognizes this model of Intel.

Other manufacturers are naturally more interested.

(End of this chapter)