Chapter 1033 Spending money or litigation
SMIC will serve as Motorola’s strategic foundry partner and provide Motorola with comprehensive technical support from MOS17 to other chip factories.
In addition, the two parties have also cooperated in the fields of patents and advanced CMOS process technology licensing.
Motorola acquires 11.4% of SMIC shares.
SMIC subsequently invested US$710 million to expand production in the industry and build a production line capable of meeting 0.13 micron requirements.
After expanding production, the Jinmen factory became the largest factory under SMIC.
The monthly production capacity is 180,000 wafers, which is almost twice that of the Modou factory and three times that of the Beijing factory.
In October 2005, SMIC Shanghai 12-inch (FAB8) started construction.
The planned monthly production capacity is 35,000 wafers.
The technical standards are the same as those of the Jingcheng factory, 0.18um~55nm.
SMIC, the four factories combined, has a monthly production capacity of 375,000 pieces of 8 inches and above, making it the third largest chip foundry in the world after TSMC and UMC.
As for Samsung, TSMC’s later rival, it just started chip manufacturing last year, and its current production capacity is not even one-fifth of SMIC, let alone catching up with TSMC.
However, with the Hynix information provided by Xu Liang, SMIC has moved a step faster than before in its advanced manufacturing process, and has now broken through the 65nm process.
Only slightly later than TSMC.
However, the current environment is not good, SMIC is heavily in debt, and it no longer has the ability to build new factories and pursue stronger processes.
In the chip foundry field with high capital, high technology and fierce competition.
One step behind may lead to decades of backwardness.
If it weren’t for the subsequent changes in China’s general environment, it would be difficult for SMIC to catch up from behind.
After reading the information several times, Xu Liang was confident about the next step of SMIC’s development.
——
A black Mercedes-Benz S drove out of the SMIC Headquarters in Shanghai, onto Longdong Avenue, onto the Inner Ring Viaduct, and exited the Nanpu Bridge before entering Zhongshan South Road.
Soon we arrived at the famous Bund.
"Mr. Zhang, we are here."
The secretary's words made Zhang Rujing, who was deep in thought, react.
The trace of sadness between his brows and his slightly haggard look indicate that he has not been having a good time recently.
Through the car window, I saw the vermilion color outside getting closer and closer. The main facade of the building was a three-section classical structure. The figure of the young man I had met once came to mind.
In 2004, although the other party was already the richest man in China, Hanhua and Hongmeng were famous.
But it is far from the level where it is now famous all over the world and tramples on Soros.
Hanhua, Hongmeng, Taihua, Master Kong, Fengshou, Facebook, Vidyone, Hynix, and Unocal are names that shine in various industries, forming an increasingly large business empire of the Xu family.
In contrast, although SMIC has made some progress in the past three years, it is far from being able to compare with its opponent.
Too far off.
The car stopped.
Zhang Rujing, who got off the car, glanced at the door lintel subconsciously.
The two characters "Hongyan" painted with iron and silver hooks reveal a sharpness and vitality.
“Mr. Zhang?”
Zhang Rujing smiled after coming back to his senses.
"I heard that the two characters 'Hongyan' were written by Xu Liang."
"It is said so outside, and it is generally used by Xu's companies. The seal matches the oracle bone inscription. Company logo." The secretary said.
After Zhang Rujing nodded slightly, he stepped forward.
Push the door open and you will be greeted by a screen wall two meters high and about three meters wide.
In the middle of the screen wall is a vermilion seal the size of a washbasin. In the middle of the seal are two simple, complex, yet beautiful oracle bone inscriptions.
This is the well-known logo of Red Rock Fund.
Write it in both Chinese and English below the logo.
Red Rock Fund.
"Mr. Zhang, welcome to Hongyan Fund."
He looked at Li Jinling walking towards her, wearing a lavender women's business suit and her hair tied high.
“Are you Secretary Li who contacted me before?”
“Yes.”
“Hello, hello.”
After a brief handshake.
"Please come with me, Mr. Xu is waiting for you in the office."
"Thank you."
Take him to the reception room on the third floor.
Push the door and go in.
“Mr. Xu, Mr. Zhang is here.”
Xu Liang, who had been waiting here for a long time, came forward with a smile.
"Mr. Zhang, welcome." After holding the other person's right hand, "We haven't seen each other for more than two years since we said goodbye in 2004."
"We haven't seen each other in two years. It can be seen that Mr. Xu is already the world's top financier, comparable to Buffett and Bogle; Hanhua has grown into a respected global financial giant
In comparison, these two SMIC. It has continued to decline over the years.”
“Haha, the company’s performance is affected by the external environment and the IT cycle. It is normal for the company’s performance to rise and fall. Mr. Zhang does not need to be too entangled. br>
Please take a seat. "
"Thank you. "
The two sat down and the secretary served tea.
"Mr. Zhang, when I transferred Hynix's 90nm and 65nm technologies in the IC field to you, I made an agreement. Repay the first convertible debt within two years.
But you don’t seem to have this intention now? ”
Zhang Rujing sighed inwardly.
The US$1.3 billion acquisition of Hynix’s technology patents consolidated SMIC’s patent pool and allowed them to perfect the 65nm advanced process two years in advance and catch up with TSMC.
But man’s calculation is not as good as God’s calculation.
Just when he was confident and ready to compete with TSMC, the other party not only gave him a blow, but the demand for chips also weakened from the hotness before 2004.
SMIC, which has insufficient operations and cannot make money, naturally cannot repay its debts.
Although the first debt was only $200 million. But after paying compensation to TSMC, SMIC really had no money in its account.
"Mr. Xu, SMIC's situation is not very good recently, so please extend your grace for a while. When SMIC makes money, we will repay it immediately."
Xu Liang put down the tea cup in his hand.
"Mr. Zhang, based on your experience in the chip foundry industry, when will the market recover?"
"This..."
He hesitated for a moment.
As an industry veteran, he certainly knows the industry cycle, but it’s hard to tell now.
“According to our survey, it takes three to five years for the chip industry to get out of the cycle.
This wrinkle started in late 2004, and it still hasn’t improved at all.< br>
According to past experience, I am afraid it will take until 2008 or even 2009 to get out of the bottom.
This also means that SMIC will continue to default on its debts. "
Zhang Rujing opened his mouth, but couldn't say anything to refute.
This is indeed the case.
"Mr. Xu, I'm sorry. ”
Xu Liang waved his hand.
"Shopping malls are like battlefields. No one knows what will happen next moment. Mr. Zhang does not need to apologize."
After a pause, Xu Liang changed the subject.
"However, I have a solution here that can solve the dilemma between Mr. Zhang and SMIC."
"Mr. Xu, please speak?"
"It's very simple. Hanhua converted all 1.3 billion US dollars of convertible bonds into SMIC shares."
Xu Liangtu had a hard time seeing.
Zhang Rujing was stunned for a moment, obviously he didn’t expect that Xu Liang’s idea was this?
"Mr. Zhang, the chip foundry industry is capital-intensive, technology-intensive, and extremely competitive. It is foreseeable that as the chip manufacturing process continues to shrink, the investment scale of chip foundries will become increasingly large. Large.
The investment in the 65nm process is almost double that of 90nm.
45nm is twice as much as 65nm.
The investment in research and development of new generation technologies will also become higher and higher.
These require a lot of funds to support.
The most important thing for Hanhua is funds. ”
Looking at Xu Liang’s words, the expression on Zhang Rujing’s face gradually calmed down.
After pondering for a moment.
"Mr. Xu is so optimistic about SMIC?"
"I am more optimistic about SMIC led by Mr. Zhang." Xu Liang continued with a smile, "Having been in business for so many years, I deeply understand a Logically speaking, a successful company must have an excellent manager.
For SMIC, Mr. Zhang is the most suitable helmsman.
This is an important reason why I am optimistic about SMIC. .”
With Xu Liang's current identity and status, he could receive such praise from him.
Zhang Rujing was also very happy.
But while I was happy, I also felt a little complicated.
Now accompanied by a lot of bad news, SMIC's market value has fallen to about US$1 billion.
Once Hanhua chooses debt-for-equity swap.
Will immediately obtain absolute controlling stake in SMIC.
The man in front of you will no longer be an investor, but the real boss of SMIC.
And it seems difficult for me to prevent the opponent from entering the core.
After all, SMIC really cannot afford to repay the huge debt of US$1.3 billion.
With SMIC’s current situation, no one in the capital market will be interested, let alone raising new debt to repay old debt.
Even so, he still didn't intend to give away his hard work easily.
"If Mr. Xu takes over SMIC, how will it develop?"
"There are two main things.
First, throw money.
Chapter 2. Litigation.
This year, Hanhua plans to invest US$2.5 billion to expand SMIC’s No. 4 factory in Magic City, with a 12-inch, 65-nanometer process, and a monthly production capacity of 35,000 wafers to 100,000 wafers.
Next year, it will invest US$7 billion to build two 12-inch, 65-nanometer process foundries with a monthly output of 100,000 wafers in Yangcheng and Yidu. ”
Zhang Rujing’s face was full of shock.
He thought that Xu Liang would spend money to expand production after acquiring SMIC.
But he did not expect to spend so much.
9.5 billion US dollars, a monthly production capacity of 265,000 wafers, if converted to 8 inches, it is a monthly production capacity of 47.17 wafers, which is more than double SMIC’s current monthly production capacity of 449,100 8-inch wafers.
Once put into production, SMIC will instantly surpass UMC and become the world's second largest foundry after TSMC.
But Zhang Rujing calmed down quickly as he was used to big winds and waves.
"Mr. Xu, the current global chip demand is 9.6 million 8-inch wafers per month, of which the IDM model accounts for 67%, and the remaining 33% is pure foundry production capacity.
And TSMC accounts for half of the more than 3 million 8-inch wafer production capacity.
Although I would very much like to see SMIC surpass TSMC and become the world's number one chip giant, I have to regretfully remind you.
After the three chip factories are put into production, we may get huge losses. "
Xu Liang smiled.
"Loss?
Of course it is a loss, and I want it to be a loss.
We lose, and so do other institutions.
Everyone will compete to see who has the most capital and will have the last laugh. ”
(End of this chapter)