Chapter 1086: Blast production capacity

Lee Jae-soo summoned all the heads of Samsung Electronics' China mobile phone business department.

On the camphor wood-colored table, there are two mobile phones, which are two newly launched mobile phones by Kewang Hi-Tech and Lianxin based on ESS baseband chip technology.

Samsung's mobile phone application research center in Jianye made detailed tests and evaluations overnight. All the performances were quite mediocre, and there were no obvious defects. Even if the appearance could be considered as an advantage, it was quite limited. Lee Jae-soo asked everyone to take out his phone and put it on the conference table. These two phones were indeed inconspicuous, but in the eyes of Lee Jae-soo and everyone here, these two phones had an extremely significant and unignorable advantage, that is, the manufacturing cost was low enough.

Based on information from all aspects, the manufacturing cost of these two mobile phones is around US$100, and compared with the market price of around US$160-170, manufacturers and dealers have considerable profit margins.

In addition to the baseband chip, the baseband chip provided by Kumho also integrates other major core components required by digital phones. Kumho also provides an additional cheap small-sized STN black and white screen, which is a key factor in the manufacturing cost of these two phones to be controlled at around $100.

Lee Jae-soo looked at the dazzling number "$140" in the report and rubbed his temples. This is the manufacturing cost limit that Samsung Electronics can control for producing mobile phones of the same specifications. In addition to the manufacturing department of Samsung Electronics' mobile phone business, it is mainly left in HG locally and the human resources cost is relatively high, core components such as baseband chips also need to be provided by European and American manufacturers, which are the key reasons why the cost cannot be reduced.

The mobile phones produced by Samsung Electronics now are mainly supplied by Qualcomm, and the G** baseband chips are mainly supplied by Infineon and Deyi. Not only these three chip factories, but also the world's major baseband chip suppliers are all focusing on mid-to-high-end chipsets with larger profit margins. Even if they are willing to provide a small number of low-end chipsets, they will not compress their profit margins so that downstream manufacturers will be more competitive.

"Even if Kumho has attracted enough attention from major mobile phone chip manufacturers such as Infineon, Deyi, which is wearing the same pair of pants as Kumho, will most likely limit the energy of Infineon and other manufacturers to the competition for mid-to-high-end chipsets," Jin Nanyong analyzed. "The situation faced by Motorola and Nokia is somewhat similar to ours. Although Ericsson and Philips also master baseband chip technology, they are not even as good as us in terms of manufacturing cost control... Even if we adjust our low-end market response strategy now, it is already a relatively optimistic estimate to be able to adjust it in two years. By then, two new factories of Zhongjing Microchip will be built, Kumho can once again gain cost advantages..."

"Ah..." Li Zaizhu sighed in his heart. Kumho himself did not follow Kewang Hi-Tech as expected. Lianxin launched low-end mobile phones at the same time. On the one hand, Kumho's production capacity may be limited. On the other hand, Kumho temporarily gave up entering the low-end market when the door to the low-end market was open, which means that there is a more flexible strategy than its competitors. Samsung's sudden change in the development strategy of its mobile phone business at this time will only be more exhausted.

In addition to core technologies and an increasingly perfect manufacturing system, Lee Jae-soo could not close his eyes and said that he could not see Kumho's natural advantages in the local market.

When other mobile phone chain companies in China were just starting out, Shengxin Telecom used 500 million yuan to implement the "Hundred Cities and Hundred Stores" plan in 1997. Relying on the backbone network that Shengxin Electric has already deployed, the direct mobile phone network will be fully penetrated into second- and third-tier cities. In September this year, Shengxin Telecom proposed the "Thousand Cities and Thousand Stores" plan to penetrate the marketing network into county-level cities.

This time, Shengxin Telecom accepted the franchise of county-level urban mobile phone dealers. The actual funds used by the "Thousand Cities and Thousand Stores" plan are quite limited, but it can greatly increase the market coverage of Shengxin Telecom.

As a member of the Kumho Group, Shengxin Telecom is undoubtedly a member of the Kumho Group. This highly permeable vertical system of Kumho makes it highly competitive in the local market. Kumho can even compress the profit margins of each link and significantly reduce the actual market price of the product to completely suppress competitors. Although Kumho is still very restrained in this regard, the competition is cruel to a certain extent. Who can guarantee that Kumho will not use this killer weapon?

Samsung Electronics also implements this high penetration industrial strategy in HG, but the local market capacity of HG is simply not comparable to that of China. Lee Jae-soo can't imagine what advantages Samsung has to fight with Kumho in the low-end mobile phone market in China.

In the low-end mobile phone market and Kumho Meat Popular will not only have no chance of winning, but will also disrupt the current market strategy. But how can you be willing to watch Kumho swallow the entire low-end mobile phone market?

Although the absolute profit of each low-priced mobile phone is relatively limited, hundreds of millions of ordinary citizens in China constitute the consumption potential of the mid- and low-end markets, and the market potential is so great that it is unimaginable.

On Ge Jiande's desk, there were also two new mobile phones launched by Kewang Hi-Tech. He stared at him with his eyes tightly, gritting his teeth and hating him so much that he was so angry that he was twitching.

Xiao Ruimin's open confrontation was a stinger in Ge Jiande's heart, but just as Huaxia Electronics was officially assigned to the Economic and Trade Commission for jurisdiction, Lianxin successfully launched a new mobile phone based on ESS baseband chip technology, which undoubtedly initially shows that Xiao Ruimin's initial decision was not wrong.

The domestic mobile phone market has been maintaining rapid growth, but due to the insufficient supply of upstream components, except for Aida and Kewang Hi-Tech that can obtain sufficient chip supply to compete directly with foreign mobile phone manufacturers, the other thirteen domestic mobile phone manufacturers are facing a situation where production is seriously insufficient and money cannot be made.

In response to this situation, other mobile phone manufacturers have adopted strategies to increase the order quantity and increase inventory. Only Lianxin, under the leadership of Xiao Ruimin, cooperated with Kumho in a deep-seated manner.

Among the three mobile phone companies under Huaxia Electronics, Lianxin's performance has always been better than Dongxing and Lianxun, but its advantages are not too obvious.

Since the summer, in addition to cooperating with Kumho to develop new mobile phones based on ESS baseband chips, Lianxin has also obtained some shortage components from Kumho. Lianxin's performance in the third quarter has been far away from Dongxing and Lianxun.

New phones have also been developed. Compared with Lianxun, Dongxing needs to purchase mobile phone chipsets from overseas cooperative manufacturers at high prices. Although the price of new phones is low, the profit margin is doubled.

Even if Huaxia Electronics left the Ministry of Information and Industry, Xiao Ruimin could not obtain direct support from the Ministry of Information and Industry. Ge Jiande could not find an excuse to remove Xiao Ruimin's sting from his heart, and even had to worry about Lianxin going out from Huaxia Electronics.

Ge Jiande closed his eyes and felt his temples swelling. He had nothing to do with Jinhu before. He never expected that Lianxin would become a nail that Jinhu had stuck in his heart. He had some sense of life and death. He thought to himself that the construction of the new NEC factory in China was also necessary, and the resources could no longer flow to Jinhu.

In late November, the outside world was staring at the construction of two new factories of Zhongjing Microchip, but Zhang Ke ran from Kingsoft to Xinting, and had to have a headache about other things.

Donghai and Iron and Steel Group jointly acquired Dongshan Iron and Steel Co., Ltd. for a year-long negotiations to jointly implement the Dongshan Port's 10 million ton steel manufacturing base, and the efforts of private capital to penetrate into super-large state-owned enterprises for the first time were declared a failure.

This result is not particularly surprising, and multiple plans have been prepared before.

The final approved plan after the adjustment is to jointly invest and register a new company by Donghai United Iron and Steel Group and Dongshan Iron and Steel to be responsible for the construction and operation of Dongshan Port's tens of million-ton steel manufacturing base.

The shareholding ratio of Donghai Lian Iron and Steel and Dongshan Iron and Steel in the new company is 7:3, and will also provide the new company with a total construction fund of US$2 billion in advance according to this ratio. The steel base construction project has been officially launched.

Kumho Commercial holds 75% of Dongshan Steel, and should bear US$450 million in construction funds in advance, and Xinting Local Government will bear US$150 million in construction funds in advance.

When the construction of Dongshan Port was started, almost every minute of the financial resources that Jiangnan Province could squeeze out was invested in Dongshan. It was really less than 150 million US dollars in funds. The pressure on this part of the funds still fell on Kumho. Kumho had to spend a total of 600 million US dollars in advance to inject Dongshan Steel in the name of corporate bonds.

The groundbreaking ceremony of Dongshan Iron and Steel Base was very low-key, and there was no intention to invite media reporters. In addition to local media in the two provinces, some electronic media reporters were uninvited. These professional media were more concerned about the financial situation of Jinhu Commercial, the major shareholder of Zhongjing Microchip. It is really unimaginable that Jinhu Commercial's financial resources can still bear the investment obligations to be shared by the construction of two new factories of Zhongjing Microchip after investing US$600 million in advance for the steel base.

In early winter, Xinting stands by the sea. The sea breeze blows, and the filled beaches are not covered with vegetation on the vast construction site of the reclamation project. After autumn, there is little rain, and the soil is dusty. When the wind blows, the white dust flows. When people stand in the middle, they feel like standing in the vast desert, with blue lake water in the distance.

Zhang Ke did not go to the groundbreaking ceremony of the steel base specifically. He parked the car on the side of the road, walked around the construction site, ate the wind and sand for a long time. When he received a call and heard that the groundbreaking ceremony was over, the convoy returned to Xinting City, he walked towards the parking place.

The entire convoy was parked on the side of the road waiting for him. When Zhang Ke saw the window of Tang Xueqian's car open, he walked straight towards Tang Xueqian's car.

"Come on, take my car." Tang Xueqian helped Zhang Ke open the car door.

Zhang Ke saw Lu Wenfu in Tang Xueqian's car, and Tang Xueqian's secretary Xu Ruiping was not in the car. Instead, Meng Xueqing was sitting in the passenger seat, probably talking about Xinting's topic, calling Meng Xueqing into the car, so that he could better understand the specific situation. He just didn't know what other officials in Xinting City would think in their eyes.

Meng Xueqing is now the deputy mayor of Dongshan Port District. Although he is more familiar with port district construction, Xinting City has taken into account his particularity and has given him the responsibility of attracting investment in the port district.

When Zhang Ke saw Meng Xueqing getting off the bus and giving up his seat, he smiled and said, "I will sit in the back and follow Uncle Tang, Governor Lu will squeeze... All three of us are thin."

Tang Xueqian gave in to the court and asked Zhang Ke to sit in.

The car was driving on Tonggang Highway, with busy construction sites on both sides. Zhang Ke smiled and said, "It seems that you can smell the breath of the Great Industrial Age..."

Lu Wenfu smiled and said, "The central government asked Governor Tang and Secretary Xu to come to Jiangnan, so we can count on them to shoulder the heavy responsibilities and turn the tide..."

Lu Wenfu was a special trip to attend the groundbreaking ceremony on behalf of the Donghai Provincial Government. He smiled. The atmosphere of large-scale industrialization is also caused by huge investment in construction funds. Even in the world, the operation of such large-scale capital is extremely rare. Not to mention the large-scale port industrial development in the later stage, the early stage of the Dongshan Island port construction project has driven the economic scale of Xinting and surrounding areas to more than double. The economy of Jiangnan Province, which suffered heavy losses in the flood last year, temporarily curbed the trend of recession, and this year it will even increase above the national average.

The central government decisively launched Xu Xueping and Tang Xueqian at critical moments. This move is very courageous and insightful, otherwise it would be really hard to imagine when the economy of Jiangnan Province will embark on the road to complete recovery.

Meng Xueqing sat in the front row, thinking that the total amount of funds that Kumho Commercial has invested directly and is about to be invested in Xinting is close to US$1.4 billion, which is seven times the total amount of foreign investment introduced in Xinting in 1997.

"..." Tang Xueqian sat in the back row, wanting to laugh but not, but sighed softly and said, "The economic data can be improved temporarily, and the benefit areas are still limited, and the adjustment of the industrial structure of the province cannot be completed overnight..."

Zhang Ke scratched his head, and knew what was pressing on Xu Xueping, Tang Xueqian and others.

Next year, the total number of laid-off workers in Jiangnan Province may exceed 1.4 million. In fact, the secondary industry can provide less than 100,000 new jobs. In addition, the employment flexibility of urban unemployed people is not as good as those who have worked in rural areas. Just like the huge construction site in the east of Xinting has created tens of thousands of jobs, the main labor force absorbed at this time is still the migrant workers who have come out of rural areas.

This summer, Donghai Province comprehensively raised the living relief standards for laid-off workers. The provincial fiscal expenditure was more than 400 million yuan, and there was almost no pressure. However, Jiangnan Province has not even resettled people who suffered from floods last year.

Lu Wenfu asked Zhang Ke with a smile: "Zhongjing Microchip has too many fake moves. Don't say that the outside world is confused about this. The province is a little confused. It is not easy to catch your people. I want to ask you, when will the Kingsoft Factory be launched?"

"It also depends on the progress of the negotiations in Singapore," said Zhang Ke. "No matter what, Kingsoft Factory will be launched before the end of the year. Even if Singapore cannot reach an agreement, it will still have to raise funds and bite the bullet..."

"Kumho shouldn't just want to build a wafer fab into Kingsoft, right?" Lu Wenfu asked.

"Governor Lu is really a pair of fiery eyes," Zhang Ke said with a smile, "We estimate that in two or three years, the mid- and low-end mobile phone chips will be almost the main 0.25 micron wafer technology..."

"..." Lu Wenfu turned his head and asked in surprise, "So Kumho wants to build a factory in Kingsoft?"

"For a period of time, even if we have the ability to control more market share, Aida has maintained a certain degree of restraint," Zhang Ke said, touching his nose, "The business policy is always not fixed. Especially at this stage, we have completed some preparations on low-end mobile phones. Low-end mobile phones will ultimately not escape the situation of small profit competition. For things that cannot be reversed artificially, we can only take the initiative to cater to it. The next step is to expand the production scale and further dilute the cost..."

"Oh," Tang Xueqian asked with a smile, "I was wondering when will you explode your production capacity? The current mobile phone assembly capacity of Aida mobile phone is only 2 million, right?"

"The assembly capacity is slightly weaker, and it has just exceeded 2 million this year. The next step of the manufacturing department is to focus on the expansion of core component capacity," said Zhang Ke. "Now, we will hand over some assembly and low-end products to Xinyuan Electrical Appliances and other companies for OEM, and we will further strengthen cooperation. However, the next step of capacity expansion is very large, and many issues need to be coordinated, and the progress cannot be fast..."

"How big should you take?" Tang Xueqian asked with his eyes shiny.

"A mobile phone assembly base with 50 million mobile phones can be built in two years, and the production capacity will reach 100 million within four years..."

Tang Xueqian and Lu Wenfu took a deep breath at the same time. It is estimated that the total number of domestic mobile users may not be 50 million by 2001, the production capacity exceeds 50 million in 2001, and the production capacity exceeds 100 million in 2003... Kumho's goal seems to be too ambitious. You should know that this year, the number of new users in mobile communications uses has just exceeded 10 million.

"A new manufacturing base is located in Kingsoft?" Tang Xueqian asked, knowing in his heart what such a large-scale manufacturing company will bring to Kingsoft. The construction funds used by fabs are mostly used to import high-end process equipment and ultra-clean rooms, and the recruited employees are also high-level. In fact, there is no practical help in alleviating the employment pressure in Kingsoft City. However, the situation of components and assembly factories is very different. Most jobs in the factory can be competent with a little training, and the jobs are relatively sufficient, which can solve the problem of unemployment in urban population.

"It's almost the same!" Zhang Ke said. "We are considering completely putting the production of low-end mobile phones into Kingsoft, not only assembly lines, chipsets, STN crystal screens and other low-end production lines to Kingsoft. Haizhou and Jianye focus on the development and production of core technologies and mid-to-high-end industries..."

"In this way, wouldn't you be the king in the mid- and low-end mobile phone market?" Lu Wenfu asked.
Chapter completed!