Tech Giants: Starting from Bankrupt Companies

144: Chapter 144 The ”Battle of Babel” for Baseband ChipsHuaxing, Shenzhen Supply Chain Center, December 18, 8:00 AM.

The air in the conference room had frozen.

The cold wind brought in by Zhang Tao, the supply chain director of Huawei, seemed to still linger in the center of the room. This 40-year-old veteran of the Huawei supply chain had no panic on his face; instead, he had a look of relief, as if to say, ’It’s finally here.’

”Comrades, brace yourselves.” Zhang Tao walked to the projector without sitting down. ”Ten minutes ago, Qualcomm China officially sent an email notification: effective immediately, they are ceasing the supply of all baseband chips to Huaxing, including parts that have already been ordered but not yet delivered.”

There was a deathly silence in the conference room for three seconds.

Some people gasped, others squeezed their fingers until their knuckles turned white. The young supply chain analyst, Xiao Chen, turned pale instantly: ”Director Zhang, what... what about our mass production next month? The HX1 Pro and Max versions both use the Qualcomm Snapdragon X24 LTE...”

”Shut up.” Zhang Tao’s voice was not loud, but it cut through the panic like a blade. ”I ask you, when I asked you to start the ’Noah’s Ark Project’ six months ago, how many of you thought I was crazy? Saying that hoarding so many baseband chips, occupying 3 billion rmb in funds, was a taboo in supply chain management?”

He scanned the room; no one dared to meet his eyes.

”What about now?” Zhang Tao pressed the remote control.

The large screen lit up, showing a 3D warehouse map. Real-time photos of five warehouses in three locations—Shenzhen, Guancheng, and Huicheng—showed each warehouse stacked with neatly arranged anti-static boxes.

”6 million Qualcomm Snapdragon X24 LTE baseband chips.” Zhang Tao articulated each word. ”Purchased in batches through the channels of the four major domestic mobile phone manufacturers—OP, VO, Xiaomi, and Huawei—and arrived successively over the past six months. All were obtained at a 5% premium over the market price, with a total cost of 3 billion rmb.”

A stifled gasp echoed in the conference room.

”Crazy...” Chief Financial Officer Wang muttered, ”Zhang Tao, you really are a madman...”

”I am a madman, but a madman with a plan.” Zhang Tao pulled up the data. ”For the HX1 series, calculated at 1 million units shipped per month, 6 million chips are enough for 6 months. But these 6 months are a theoretical value—there will be losses in actual production, and there will be yield issues, so our real safety window is 4 months.”

He looked around at everyone: ”That is to say, before the end of April next year, we must switch to self-developed baseband chips. Otherwise, Huaxing’s flagship phones will face a supply cut.”

The video conferencing system started automatically, and the face of Mobile Phone Product Manager appeared on the side screen. He looked like he had just woken up, his hair a bit messy, but his eyes were as clear as a blade.

”I have seen Director Zhang’s data.” The voice of Mobile Phone Product Manager came through the speaker, as calm as if he hadn’t just learned about the supply cut. ”A 4-month window, but in reality, we only have 3 months—because we need to leave time for production line switching, testing, and tuning. By the end of March, the self-developed baseband must be mass-produced.”

”Director, this is too tight...” The R&D director wanted to say something.

”Tight?” Mobile Phone Product Manager interrupted. ”When we chose to take this path, we knew it would be tight. Zhang Tao bought us 4 months with 3 billion, which is strategic depth exchanged for real money. Now, it’s the R&D department’s turn to prove that this money was well spent.”

He paused: ”Where is Zhao Min’s team, and how is the progress?”

”Xingchen Academy of Sciences baseband chip laboratory, they have been developing it for 3 months.” Zhang Tao replied.

”Connect them.”

The screen switched.

Xingchen Academy of Sciences baseband chip laboratory, at the same time.

The laboratory was filled with the mixed smell of coffee and instant noodles. Zhao Min stood in front of the whiteboard, holding a marker in her right hand and unconsciously spinning a disassembled ballpoint pen with her left—a habit she had learned from Lin Yusheng.

At 36, she was wearing a lab coat, her short hair messy, and her eyes behind her glasses were bloodshot, but her gaze was as sharp as a scanning electron microscope.

”Director, Director Zhang.” She didn’t engage in small talk and pointed directly to the progress chart on the whiteboard. ”’Lightning Project’, current status: architecture design 90% complete, physical design 70% complete, verification environment set up. Countdown to tape-out: 90 days.”

A huge countdown was written on the whiteboard in red marker: 90 days.

”90 days to tape-out, then 30 days for packaging and testing, 30 days for mass production ramp-up.” Zhao Min spoke extremely fast. ”It will just catch up to the end of April, but this is an ideal situation; any problem in any link will cause a delay.”

Mobile Phone Product Manager asked: ”The biggest risk?”

”Three things.” Zhao Min held up her fingers. ”First, the process. We skipped 4G and went straight to 5G baseband, using the 14nm process of the Xinghuo Chip, but the analog RF part of the 5G baseband is extremely sensitive to noise—it’s like embroidering in a typhoon; the stitches cannot be off by even a fraction.”

She pulled up a simulation chart: ”This is the noise figure simulation of the RF receiving link, currently at 3.2 dB, and the goal is to get it below 2.8 dB. Every 0.1 dB reduction requires re-optimizing the layout and routing.”

”Second, power consumption.” Zhao Min switched to the next chart. ”The power consumption of the Qualcomm X24 in 5G mode is 3.5 watts. Our goal is 2.8 watts, a 20% reduction. This requires full-chain optimization from architecture to circuit to process.”

”Third...” She hesitated for a moment, ”Compatibility. The 5G standard has more than 600 mandatory functions and over 300 optional functions. We have currently implemented all mandatory ones and 80% of the optional ones. But the problem is that network configurations vary wildly between different countries and different operators.”

On the video screen, Mobile Phone Product Manager was silent for a few seconds: ”Zhao Min, be direct. Can our baseband be used?”

”It can be used.” Zhao Min answered without hesitation. ”But it might not be as stable as Qualcomm’s in some edge scenarios. For example, switching base stations on a high-speed train, or in places with signal blockage in dense urban areas.”

”Can users perceive it?”

”90% of the time, no. But the remaining 10%...” Zhao Min pushed up her glasses, ”If the user happens to be in that 10%, they will curse.”

There was a low chuckle in the conference room, but the laughter quickly disappeared. Everyone knew that this 10% gap could be the difference between high-end and top-tier.

”Call from Director Su.” The assistant said in a low voice.

The screen switched, and Su Chen’s face appeared on the main screen. He seemed to be in a car, with the streets of Shenzhen in the early morning in the background.

”I just finished the meeting.” Su Chen got straight to the point. ”Zhao Min, how many operators does the compatibility test cover?”

”All three major domestic operators have completed joint debugging, Vodafone, Deutsche Telekom, and Orange in Europe, Etisalat and STC in the Middle East, Singtel and AIS in Southeast Asia...” Zhao Min reeled off a list of names. ”A total of 37 operators, covering 65% of global 4G/5G networks.”

”What about America?”

”AT&T and Verizon rejected our test request.” Zhao Min’s voice was low. ”T-Mobile is willing to test, but they require us to provide all source code for inspection—this is impossible.”

Su Chen nodded, as if he had expected it: ”Then let’s take Asia, Africa, and Latin America first.”

”Director Su?” Zhao Min didn’t understand.

”I mean.” Su Chen’s voice came through the car audio, with a bit of noise, but every word was clear. ”If the door in America is closed, we will open all the other doors. Let those who cannot use our mobile phones start by using our base stations.”

He paused: ”Zhao Min, what does your team lack the most right now?”

”Time.” Zhao Min blurted out, then thought for a moment, ”And... people with actual 5G network testing experience. Most of our engineers come from the 4G or even 3G era, and their understanding of new 5G features like massive MIMO and beamforming is still theoretical.”

”I will transfer people to you.” Su Chen said. ”The wireless department of Huawei has the largest 5G live network testing team in the world. I will have Yu Chengnan send a team over to support you full-time for three months. Also, I have already greeted ZTE.”

Zhao Min was stunned. Huawei and ZTE, these are the two giants in the field of communications in China, and also former competitors. Now, with just one word from Su Chen, he can mobilize their people?

”Don’t look at me like that.” Su Chen seemed to guess her thoughts. ”If Huaxing falls, the next one will be them. We are grasshoppers on the same rope; they understand that.”

The video hung up.

The laboratory was quiet for a few seconds, and then cheers erupted.

”Huawei’s live network testing team! That’s the best in China!”

”With them here, more than half of the compatibility problems can be solved!”

Zhao Min didn’t cheer. She walked to the window and looked at the brightening sky outside. 90 days to complete China’s first fully autonomous 5G baseband chip, from design to tape-out to mass production.

This was an almost impossible task.

But she had to complete it.

Because those 6 million Qualcomm chips were a time window bought with 3 billion rmb. Every second was burning real money.

She turned around, walked back to the whiteboard, erased ”90 days”, and rewrote:

”89 days, 23 hours, 58 minutes”

The countdown begins now.

Qualcomm San Diego Headquarters, US West Time December 17, 16:00.

Eleven people sat around the long table in the boardroom, and everyone’s face looked bad.

Qualcomm CEO Steve Mollenkopf spread his hands and made a helpless gesture: ”Gentlemen, ladies, let me say it again—stopping supply to Huaxing is not a business decision, it is an administrative order. The Department of Commerce’s export control list has been updated, and Huaxing, under the xinghuo system, is on the list.”

”But Huaxing is our biggest growth point in Asia this year.” The CFO knocked on the report. ”In Q4, they placed an order for 12 million chips, accounting for 8% of our Asian revenue. After the supply cut, the revenue forecast for Q1 next year will have to be lowered by at least 5 percentage points.”

”I know.” Mollenkopf sighed. ”But politics is politics. Washington believes that the technological development of Huaxing has threatened national security. We are just...”

”Just a scapegoat?” The General Counsel took over. ”Steve, let me be blunt—the promoters of this ban, besides Apple, include Broadcom. Broadcom wants to acquire us and needs to let Wall Street see that Qualcomm’s reliance on the Huaxing market is decreasing. That way they can drive down the price.”

There was a stir in the conference room.

Rumors of Broadcom acquiring Qualcomm had been circulating for half a year, but this was the first time someone had linked it to the current supply cut.

”Is there any evidence?” A director asked.

”No evidence needed.” The General Counsel sneered. ”Look at the timing: Broadcom submitted acquisition anti-monopoly review materials to the European Union last week, and Huaxing was cut off this week. It’s too coincidental to be a coincidence.”

Mollenkopf rubbed his temples. He was 58 this year and had worked at Qualcomm for thirty years, from engineer to CEO. He had experienced the glorious era of CDMA and the fierce competition of 3G and 4G, but he had never felt as powerless as he did now.

The logic of business was being crushed by the logic of geopolitics.

”What does the technology side say?” He asked the CTO who had been silent.

”Huaxing is developing its own baseband.” The CTO pulled up a report. ”According to our intelligence, their ’Lightning Project’ has progressed to the physical design stage. If all goes well, they can tape out in March next year.”

”Performance?”

”Preliminary assessment, their architecture design is very aggressive—skipping 4G and going straight to 5G. Performance might be 20-30% stronger than our X24, but power consumption and stability are questionable.” The CTO paused. ”However, if they solve these problems...”

He didn’t finish the sentence, but everyone understood: if Huaxing made a usable 5G baseband, Qualcomm would lose its last shackle on the Chinese mobile phone market.

In the corner of the conference room, Tech VP Chen Zhiyuan stood up: ”I’m going to the restroom.”

He walked out of the conference room, not to the restroom, but to the fire escape. After confirming that no one was around, he took out an old Nokia feature phone from his inner pocket—no smart system, no internet function, only capable of making calls and sending text messages.

He typed a text message:

”The ban has been issued, Qualcomm is already aware of Huaxing’s baseband chip R&D plan. Suggest accelerating the development of alternative plans.”

The message was sent, he deleted the record, removed the battery, broke the SIM card into two, and threw it into the trash can.

When he walked back to the conference room, his expression was as calm as usual.

No one knew that this Tech VP, who had worked at Qualcomm for fifteen years, had another identity: a ”Deep Blue” asset buried by a certain department in China for ten years.

He also didn’t know how fast his text message would travel, through what encrypted channels, and finally end up on whose desk.

He only knew that some things had to be done.