Chapter 680 SMIC’s Negotiations
If these Hynix patents and manufacturing processes can be acquired, it will save SMIC at least 3 years and catch up with the development of mainstream chip manufacturers, which is of great significance.
Take a breath and calm down.
"Mr. Xu, it may not be easy to bypass the Wassenaar Agreement and export these technologies to China?"
"This requires the efforts of both of us. ." Xu Liang laughed.
Now China and the United States are in a honeymoon period. Coupled with his connections in the United States, there is a great hope of passing.
Among SMIC’s shareholders are U.S. capitals such as Goldman Sachs, Huacheng International, Enyi Investments, Core Semiconductor, and Motorola, as well as international capitals such as Flextronics, Deutsche Management Fund, and Xiangfeng Investment.
Zhang Rujing nodded, SMIC has sixteen influential major shareholders.
It would also be in their interest if the company could go further and create higher revenue.
The most important thing is that although 90nm is the world's mainstream CPU production technology, it is no longer the latest.
There is no threat to Western technological hegemony.
"Mr. Xu, why did Hynix sell these assets?"
"It's simple. Hynix is heavily in debt. In order to pay off the debt, it wants to sell all their non-memory chip businesses. The CPU business is the top priority.
In addition, please rest assured, Mr. Zhang, as long as the United States can pass it, Hynix’s CPU business will be sold to SMIC.”
Hynix and Hanix. He also heard about the investment in a chip factory in Wuxi by Hua.
So he didn't doubt Xu Liang's words.
"How much does Mr. Xu plan to sell the CPU business for?"
"1.5 billion US dollars."
Zhang Rujing frowned and shook his head.
“It’s too high, the most we can accept is $600 million.”
Xu Liang smiled, Lao Zhang looked kind, but showed no mercy at the price.
"Mr. Zhang, 600 million is impossible. Let me take a step back. We don't need cash for 1.4 billion U.S. dollars, and we can turn it all into SMIC's convertible bonds."
Zhang Rujing's heart moved.
If this is the case, there is no need to use SMIC’s precious cash flow.
You only need to pay a certain amount of interest every year. In the future, as the company grows and the income increases, repaying it will be much easier than it is now.
"We can accept convertible bonds, but US$1.4 billion is still too much."
"Mr. Zhang, I have given in. You should show a certain degree of sincerity."
The two sides were at loggerheads.
Finally an agreement was initialed.
‘Red River Fund’, a shell company of Hongyan Fund, sold all the patents and processes of Hynix’s CPU business to SMIC for US$1.3 billion.
SMIC does not pay cash, but replaces it with 5-year convertible bonds. It only needs to pay an annual interest of 7.86% within five years, and the principal will be paid after maturity.
After talking about business, Xu Liang took Zhang Rujing around the Lilac Garden. After having lunch together at noon, he saw him off.
Watch the car go away.
“Mr. Xu, why don’t we want shares?”
“Do you remember the SMIC information you read?”
After nodding, Lu Hui suddenly realized.
“Are you not optimistic about the lawsuit between SMIC and TSMC?”
Xu Liang nodded slowly.
When Zhang Rujing founded SMIC, he took away a group of employees who originally belonged to TSMC and followed TSMC's factory operation model, which laid hidden dangers for litigation disputes.
TSMC has repeatedly used this to sue SMIC for infringement of its patent rights and trade secrets.
After the first lawsuit was settled, SMIC and TSMC reached an agreement to grant each other's patent rights, and SMIC had to pay US$175 million over six years.
Since 2005, the US$30 million in compensation paid annually in the first five years has accounted for more than 30% of SMIC's R&D expenditures, weakening the company's R&D investment capacity and reducing operating income and net profit.
The economic losses caused by the second lawsuit settlement in 2009 amounted to US$200 million and an equity outflow equivalent to 8%, accounting for approximately 30% of the operating income and profits that year, which was approximately 10% of the R&D expenditure that year. 2 times.
At the same time, the terms of the settlement restricted SMIC’s use of advanced technical materials and slowed down the company’s development.
To make matters worse.
The prosperity of the semiconductor industry began to decline in 2005, causing SMIC's losses to expand.
Global semiconductor sales reached a peak year-on-year growth rate of 40% in 2004, but subsequently declined due to inventory revisions and production capacity digestion.
The year-on-year growth rate from the second half of 2005 to the first half of 2008 was only single digits. When the global economic recession occurred in the second half of 2008, it even entered a negative growth range, with the highest decline exceeding -30%.
It was not until 2010 that it became profitable again.
Although Xu Liang does not remember the general trend of the chip industry, he remembers the previous entanglements between SMIC and TSMC.
If you lose the lawsuit, you will have to pay a large sum of money, which will definitely affect SMIC's stock price.
If you take shares now, you will lose money in a short time.
The wise do not do this.
It won’t be too late to wait until SMIC’s stock price falls and squeeze out the water before converting the debt into shares.
Xu Liang looked at the time.
"Let's go out with me."
In order to attract as little attention as possible, Xu Liang didn't take anyone else with him except Lu Hui.
After all, this is China, it is safe enough, and there is no need for so many bodyguards; with his strength, as long as he doesn't use his gun, no more than a dozen people can get close.
"Mr. Xu, where are we going?"
"Thaihua Center."
At this stage, Taihua Group has six major projects in Shanghai. First, Taihua Plaza [Modu International Financial Center] with a total construction area of 400,000 square meters.
Second, the 100,000-square-foot Oriental Center [Golden Landmark Building] needs to be mentioned that the Oriental Center is a pure office building, not a shopping mall or Commercial complex.
Third, Taihua City [Xujiahui Center].
This is Taihua’s largest investment project in Shanghai.
It covers an area of 130,000 yuan, has a construction area of 900,000 yuan, and has a total investment of nearly 9 billion Chinese yuan.
Fourth, Taihuali [Aegean Shopping Center].
Taihuali was originally the magical city of Hongqiao Trade City, but it was taken over by Taihua after it failed in 2003.
The construction area of 550,000 square meters is too large, and it is not expected to open until 2006.
Fifth, Taihua Peninsula Hotel [Modu Peninsula Hotel].
As the first new building on the Bund in 60 years, Xu Liang got the land ahead of the Kadoorie family.
It covers an area of 13,898 square meters and consists of a 15-story hotel tower, a 14-story luxury apartment tower, a 3-story attached podium, and a three-story underground podium.
55,999 square meters above ground and 36,521 square meters underground, totaling 92,520 square meters of built area.
It can only be said that history is inevitable. Not long after Taihua built this project, Peninsula Hotel came to cooperate.
After discussion, the two parties cooperated with each other.
Taihua Hotel Group holds 51% of the shares and Peninsula Hotels holds 49%, but the management rights belong to Peninsula Hotels.
Of course, the shares do not involve the property. The property ownership of the Peninsula Hotel still belongs to the Taihua Group.
Sixth, ‘Thailand Center’.
The once unfinished building ‘Magic City Global Financial Center’ originally spent 3.4 billion Chinese dollars to acquire all the rights and interests from a number of investment institutions including Dongyingsen Building Co., Ltd.
Thaihua spent 7.4 billion Chinese dollars and more than 2 years to finally complete this building with 2,100 parking spaces, 118,000 square meters of shopping mall, 78,000 square meters of super luxury Goodwood Garden Hotel, 19.4 It is a world-class landmark building with an office area of 10,000 square meters and a total of 51.3 square meters.
Although after it is fully completed, the Taihua Center is no longer the tallest building in the world, but it is still in the top three.
As Taihua’s first project in Shanghai, and with the previous foundation, Taihua Center was the first to be completed.
Starting from March this year, the entire Taihua Center will be officially open to the public.
Because of its popularity as the tallest building in mainland China.
In just three months, the mall’s passenger flow exceeded 4 million.
Unlike other commercial projects in Taihua, in order to attract traffic, merchants who move in are usually given free discounts for three to six months.
But the Magic City Taihua Center charged a fee from the beginning, and it was very high.
Even so, the occupancy rate still exceeds 90%.
Become a strong support for the performance of Taihua Group.
Driving to the underground garage, after walking around for a while, I saw almost no parking spaces.
"Mr. Xu, it seems that this place is really popular." Lu Hui said.
Xu Liang nodded slightly and went to the third floor.
There are obviously a lot less cars here, but the park is still half full.
I found an empty parking space and parked.
First follow the instructions to the negative floor.
Here are supermarkets, restaurants and boutique department stores.
Like other commercial properties owned by Taihua, the supermarket partners are all ‘Kelong’.
The dining area is mainly hot pot, Sichuan cuisine, noodles and other chain restaurants, mainly mid-range restaurants.
The boutique department store is mainly the former No. 1 store, now Taihua Department Store.
Xu Liang turned around and nodded secretly.
During the Chinese New Year, he took Jiang Xiaoyang to visit Kelong Supermarket and found many faults.
Looking back now, it is basically solved according to his requirements.
Coming to the first floor, there are two huge circular hollows in the north and south.
It runs through the six floors of the shopping mall.
Standing on the edge, you can see every floor. This kind of arrangement with front and rear hollows rarely appears in current shopping malls.
Because this will cause huge waste.
If all are sealed, there will be tens of thousands of square meters more commercial area, and the annual rent collected will be a huge amount.
In fact, if Xu Liang had not repeatedly requested it, Taihua Design Department would not have done this.
"Mr. Xu, you are still awesome. The effect of your design is much better than that of traditional shopping malls." Lu Hui marveled.
As Xu Liang's administrative secretary, she is very aware of the pull between her boss and Taihua's design department.
The latter changed it six or seven times before meeting Boss Xu's requirements.
At that time, she thought the big boss was being picky, but now that she saw it, she admired Boss Xu even more.
Xu Liang smiled, what later generations were accustomed to is now a fashionable and avant-garde design.
Go from the first and second floors to the sixth floor.
It can be seen that the Taihua Center is positioned as a high-end luxury hotel.
It gathers world-class luxury brands such as Dior, Patek Philippe, Hermès, and Versace.
Judging from the passenger flow, sales should be good.
After all, this is the CBD of Shanghai, with the highest consumption power in the country.
(End of this chapter)