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

DJI: Drone-specific chips, $580 million

BOE: Display driver chips, $720 million

By 1:00 PM, the total on-site contract value had exceeded $18 billion.

But that wasn’t all.

For small and medium-sized enterprises not qualified to attend the on-site signing, Xinghuo opened an online ordering system.

The system launched promptly at 11:00 AM.

The open quota for 28nm chips was 400,000 units.

The rule was simple: first come, first served, with a 30% deposit required to lock in the order.

The moment the countdown hit zero—the backend data showed:

1st second: 5,321 orders received, 87,000 units of capacity locked

10th second: Orders exceeded 20,000, 280,000 units of capacity locked

30th second: The 400,000-unit quota was completely sold out

60th second: Queued orders reached 150,000, with demand exceeding 2 million units

’Fastest order: payment completed in 0.8 seconds,’ the Technical Director reported to Li Wanqing. ’It came from a copycat phone factory in Shenzhen Huaqiangbei; they locked in 5,000 units.’

’Largest single order: 50,000 units, from Bitmain’s mining machine chip demand.’

’Farthest customer: An automation equipment company in the Karamay Oilfield, Xinjiang, ordered 200 units for oilfield monitoring.’

Sixty seconds after the online system opened, the annual open quota for 28nm chips was sold out.

The backend received countless emails and calls requesting increased quotas, with some even willing to pay a premium.

But Xinghuo’s response was uniform: ’Capacity is limited; please wait for the next batch.’ This was the confidence of a seller’s market.

While domestic companies were snatching up chips in a frenzy, international giants couldn’t sit still.

The first to call via an encrypted video link was Timothy Clark, Senior Director of Supply Chain for Apple, calling from the Cupertino headquarters in California.

’Ms. Li, we have noticed that your company’s 14nm chip’s energy efficiency data... is very impressive.’ Timothy’s tone was as cautious as a bomb disposal expert. ’We are interested in purchasing a portion for the entry-level iPad, but it requires your company to pass Apple’s supply chain audit.’

Apple’s supply chain audit is the strictest in the industry, involving hundreds of standards covering environmental protection, labor, anti-corruption, data security, and more.

Li Wanqing smiled, ’Mr. Timothy, we have studied Apple’s audit standards, and Xinghuo Chip fully complies. However, there is a prerequisite...’ She paused. ’Our export contract has a clear clause: the chips must not be used for the US military or related projects. If Apple intends to use the chips for any project involving US national defense, the transaction will be automatically terminated, and a penalty must be paid.’

Timothy’s expression shifted slightly. ’This... will need to be evaluated by our legal department.’

’Please do,’ Li Wanqing said. ’However, I must remind you that today’s open quota for 28nm chips has already sold out. The next opening will be in three months, and the price may increase by 10%.’

’Wait!’ Timothy said urgently. ’We’ll order 50,000 units of 28nm for testing first; we can sign a letter of intent immediately! This is for evaluating an alternative solution to the A10 chip for the entry-level iPad.’

Apple’s A10 chip uses TSMC’s 16nm process. If Xinghuo’s 28nm could achieve the same performance with lower power consumption, it would be a huge temptation for cost control.

’Very well, I’ll transfer you to the business department,’ Li Wanqing said. ’But the test order also requires signing the ”non-military clause”.’

’Understood.’

Just as she hung up Apple’s call, the phone of Samsung Semiconductor President Lee Jae-min connected directly—speaking in Chinese, clearly having found a translator.

’Ms. Li, this is Lee Jae-min from Samsung Electronics.’ The voice carried a Korean accent. ’We are willing to trade our 3D NAND flash memory technology for a license for the 14nm FD-SOI process.’

Samsung’s 3D NAND flash memory technology is world-leading, currently mass-producing 128-layer stacks.

But Li Wanqing laughed, ’President Lee, we have already surpassed 128 layers in our 3D NAND this year, and we will develop 192 layers next year. Furthermore... have you solved the yield issues with your 10nm process? I heard it’s still hovering around 35%?’

There was silence on the other end of the line for a full ten seconds.

Samsung’s 10nm process was indeed facing serious problems—low yields and high costs—which led to a decline in the competitiveness of their Exynos processors.

’The technology exchange can be negotiated,’ Lee Jae-min attempted to recover.

’No need,’ Li Wanqing refused directly. ’Xinghuo’s technology is not for external licensing. If Samsung wants to purchase chips, you can go through normal commercial channels. But the prerequisite is: they must not be used for South Korean military projects.’

’You...’

The call hung up. Samsung was shut out.