Tech Giants: Starting from Bankrupt Companies

260: Chapter 260 Chip Order TsunamiXiaomi Chairman Lei Ming walked over with his team, his style completely different from Huawei.

’Ms. Li, we don’t play games,’ Lei Ming said, getting straight to the point. ’We’ll use 14nm for mid-to-high-end phones, and 16nm and 28nm for mid-to-low-end ones. Based on wafer counts: we’ll start with an order of 100,000 units for 14nm, 300,000 units for 16nm, and 500,000 units for 28nm.’

Xiaomi’s business director quickly calculated:

14nm: 100,000 units × $5,200 = $520 million

16nm: 300,000 units × $4,700 = $1.41 billion

28nm: 500,000 units × $2,800 = $1.4 billion

Total: $3.33 billion

’Can we negotiate the price?’ Lei Ming asked. ’We operate on a high-volume model with low profit margins.’

Li Wanqing had prepared for this: ’Large-volume orders can receive a discount. We can lower the 14nm to $5,000, 16nm to $4,400, and 28nm to $2,600. That brings the total price to $3.15 billion.’

’Sign!’ Lei Ming said without hesitation.

Xiaomi’s signing was faster because they primarily focus on consumer electronics. Unlike Huawei, which has to-B businesses like base stations, their agreements are relatively simple.

There was only one key clause: Xinghuo Chip must guarantee a stable supply and cannot cut off Xiaomi due to capacity shortages.

’We cannot guarantee this,’ Li Wanqing shook her head. ’If we encounter force majeure, we cannot guarantee supply.’

’Then let’s add a clause: if supply is cut, you must provide three months’ notice and assist us in finding alternative solutions.’

’Agreed.’

Xiaomi, contract signed. Total amount: $3.15 billion (first year).

BYD Semiconductor President Li Ke arrived with her technical team.

’We need 28nm automotive-grade chips for the electronic control systems of our new energy vehicles,’ Li Ke said. ’200,000 units for the first year, increasing by 50% each year thereafter.’

’Automotive-grade chips require additional certification and testing, so the price will increase by 20%,’ Li Wanqing said. ’That comes to $3,360 per chip.’

’Agreed. But the yield rate must be over 99.999%, and the failure rate cannot exceed 1ppm (one in a million).’

’That is the basic requirement for automotive-grade chips; we can achieve it.’

BYD, contract signed. Total amount: $672 million (200,000 units × $3,360).

Zhang Zhen, head of the semiconductor division at ZTE Corporation, walked over with a complex expression.

ZTE suffered US sanctions in 2016 and nearly went bankrupt, leaving them with a painful, firsthand understanding of the need for chip independence.

’We need 300,000 units of 16nm base station chips,’ Zhang Zhen said. ’But there is a condition... we hope Xinghuo can help us redesign the base station chips that are currently under US embargo.’

Li Wanqing pondered, ’This involves technology transfer, which requires evaluation.’

’We can pay additional fees, and... ZTE can offer cross-licensing with Xinghuo on 5G patents.’

This was a very tempting offer. ZTE owned a large number of core 5G patents; if cross-licensing could be achieved, it would be highly beneficial for Xinghuo’s entry into the communications chip sector.

’Agreed,’ Li Wanqing nodded. ’But we will only help you with the design; production must remain with us.’

’No problem.’

ZTE, contract signed. Total amount: $1.41 billion (300,000 units × $4,700).

The requirements brought by Zhang Jianfeng, head of Alibaba’s Pingtouge Semiconductor, were quite unique.

’We need 14nm AI inference chips for Alibaba Cloud’s data centers,’ Zhang Jianfeng said. ’200,000 units in the first year, but the chips need to be customized—integrating our NPU (Neural Processing Unit) architecture.’

’We can customize them, but you will need to pay an NRE (Non-Recurring Engineering) fee of $5 million per chip model,’ Li Wanqing said. ’Additionally, tape-out costs will be calculated separately.’

’No problem. We want to make three types of chips: one for image recognition, one for natural language processing, and one for recommendation algorithms. The total NRE will be $15 million, and tape-out costs will be settled based on actual expenses.’

’Deal.’

Alibaba Pingtouge, contract signed. Total amount: $1.04 billion (200,000 units × $5,200) + $15 million NRE.

By noon, the eight signing stations had been running non-stop.

Besides these giants, there were others:

OPPO: 400,000 units of 28nm chips, 200,000 units of 16nm chips, totaling $1.88 billion

VIVO: Similar to OPPO, $1.72 billion

Lenovo: PC and server chips, $1.26 billion

Hikvision: Security chips, $840 million