TSMC’s lawsuit against SMIC has caused huge waves in the entire domestic semiconductor industry. People related to the industry and leaders in charge of this field are all aware of the huge impact this matter may have.
Among them, Bingxin’s tears of worry about the future development of the industry are just a small tidbit. More people are paying attention to what kind of response SMIC will make and whether TSMC’s lawsuit will be successful.
There are a lot of articles in the industry, but there is not much movement outside the industry.
With the development of the national economy, all walks of life are very lively. The semiconductor industry is certainly important, but its money and resource threshold means that only a few people can have ideas, and those who are really willing to get involved are taking less from less.
Fang Zhuo occasionally read Sina’s report on the SMIC incident. The first article had quite a lot of clicks and comments, but the number dropped rapidly after the second article.
After all, wafer foundries are far away from the general public, and there are no annoying bottlenecks at the moment, so this behavior is normal.
SMIC has been sued, but life and work must continue.
Fang Zhuo postponed his flight to New York, planning to wait until the second board meeting was over before going over to work on Yike’s listing.
If the first meeting of the Ice Core Board of Directors was to express a stance and show firm ties, then the second meeting was to take some substantive actions.
Goldman Sachs, Deutsche Bank, IDG, and DCM, these four companies are all well-known. If you want to save effort in the future and truly have friends, you cannot completely succeed by relying on the attitude of one meeting.
Fang Zhuo had no intention of paying lip service but not delivering on the promise. He was really considering the pros and cons for them after being tied up.
Just before Bingxin held its second board meeting, Fang Zhuo once again received news about SMIC and couldn’t help but sigh with regret.
One week!
It has been a whole week, and SMIC has not yet formed a team of lawyers to respond to TSMC’s lawsuit!
This is definitely a failure of internal processes, or a lack of understanding from top management.
What would you do if you were in this situation?
On the one hand, it is to find someone to deal with it, whether it is administrative power or a partner, in any case, it is necessary to exert influence.
On the other hand, they immediately sought out the best business lawyers in the United States at all costs, lobbied the ITC, searched for strong evidence, and dragged this lawsuit to ten years or eight years. If necessary, other factors were introduced, such as SMIC’s transgender status in the United States.
LGBT employees, etc.
In short, according to Fang Zhuo’s intuition, there is room for maneuver in this lawsuit.
For example, Cadwalader, the law firm that Yi Ke cooperates with in New York, handled a class action lawsuit. The content was that several customers who purchased Apple IPOD initiated a lawsuit because the battery life did not match the promotion.
Judging from the feedback Fang Zhuo received from lawyers, this lawsuit can be easily delayed by Apple for four to five years, or even longer if the other party wants to.
Of course, the legal process of this lawsuit is not that important, and the relative publicity that Yike received from it may be a little bit more important.
It’s just that Fang Zhuo does feel that SMIC can be more familiar with the laws within various American rules to deal with the issues at hand.
November 30, the last day of this month.
Bingxin held its second board meeting. Before the meeting, Fang Zhuo had direct communication with Xu Kaiwei of Goldman Sachs in the conference room about SMIC’s response. He wanted to persuade Zhang Rujing to do more work through this SMIC shareholder.
“I’m afraid SMIC doesn’t want to make a big fuss for the time being. The legal process will go through, but according to their resolution, they should keep a low profile as much as possible. This is what they intend after the board meeting.”
“Their focus now is to get it on the market as soon as possible, the sooner the better.”
“SMIC’s financial confidence is not strong enough. Their first round of financing has long been spent, and they still have long-term and short-term loans. The board of directors is also worried that the longer it delays, the harder it will be to go public.”
Xu Kaiwei hesitated for a moment and said tactfully: "In addition, Mr. Zhang's acting style is different from Mr. Fang's."
Fang Zhuo understood that after all, Mr. Zhang Rujing and Mr. Zhang tend to be in the technical field, and their business operations are sometimes conservative. Moreover, SMIC’s internal shareholdings are complicated, and there may be some constraints in decision-making.
Then there is no other way. In such a situation where life and death are at stake and development is at stake, it is impossible to do without the determination to sink the boat.
Xu Kaiwei and Fang Zhuo completed their additional communication about SMIC. The two talked about Bingxin's board of directors again and reached an agreement in advance.
Fang Zhuo has temporarily lost the trust of IDG Xiong Xiaoge, and seeing that Xu Kaiwei is more capable, he first makes some necessary references to the board of directors.
It's still ten o'clock.
The meeting process this time was relatively straightforward.
Fang Zhuo put forward a proposal to sign a supplementary agreement.
First of all, among these four institutions, only Goldman Sachs and Deutsche Bank signed ratchet clauses when investing, which are clauses used to adjust valuations and prevent the next round of financing from losing shares due to poor business performance.
Colloquially, it is called an anti-dilution clause.
Fang Zhuo didn’t know why there was no such clause in the contract between IDG and DCM at the time, so he simply brought it up at the meeting and signed it together.
The expectations that Bingxin currently faces may indeed require such a constraint. From the perspective of investors, it is a blessing among misfortunes.
IDG's Xiong Xiaoge and DCM's Connor listened to Bingxin Legal's narration, and saw Fang Zhuo, Xu Kaiwei, and Zhang Hongli who had no expressions on their faces. They suddenly felt a little bit ashamed of themselves.
What's going on? What went wrong?
Are there any flaws in your own business process? Why did those two companies sign the contract before?
Complete the legal briefing.
“About this ratchet clause, Lao Xiong and Connor shouldn’t object, right?”
“This is for your good, but after much thought, it’s not the best.”
“The ratchet clause is not a panacea and will only take effect when the next round of financing is valued.”
Fang Zhuo simply said these few words, then turned to signal his legal affairs department to continue talking about the core content of today’s preparation: Vacation Adjustment Mehanism (VAM).
VAM is relatively famous in later generations and is widely used.
But now, it is a new thing in the field of equity investment that capital combines with domestic conditions.
Last year, Morgan Stanley invested in Mengniu, using the company's profits as a bet for the first time, creating VAM.
What Fang Zhuo now proposes is to combine the valuation of VAM and ratchet clauses, agree on a time limit, evaluate the valuation at maturity, and set up equity redemption.
Because the ratchet clause involves the next round of financing, but VAM does not need to do this, it is an on-site statement of legal affairs.
Such a creation is also based on the fact that it is difficult for semiconductor projects to make quick profits, so it is more appropriate to talk about valuation.
“In five years, a 50% increase in valuation can be regarded as a guarantee of income despite droughts and floods.”
"Do you have any other questions?"
Fang Zhuo allowed time for digestion. When the basic techniques were discussed in the conference room, he asked aloud.
“Mr. Fang, it took you five years to achieve a 50% improvement. Don’t you have too little confidence?” Connor raised objections. He felt that the time was too long and the target was too small.
When venture capital makes equity investments, their goal is to increase the value by at least several times.
Now it takes five years to do 50%. Again, it would be better to use the money to invest in other projects.
Fang Zhuoyan expressed his sincere attitude in a concise and concise manner: "I've tried my best, but I don't want to sign."
Connor felt the sincerity of the young president, so he put away his temptations, tried his best, and signed whatever he lost his temper.
This VAM comes from Bingxin’s implementation of the bottom-line clause in the contract. Compared with the current situation and general expectations, it has shown its sincerity.
According to Connor's understanding, this is an exchange between the two parties. The stock promotion at the last meeting has become binding. Otherwise, he will help raise Yike's stock and this guy will cash out and run away...
By then, the money he had cashed out would have been more than the money he had invested in the ice core.
At least now we can ensure that we have a better exit mechanism.
Even Connor was convinced, and the other three companies naturally had no objections.
Now we can think about it optimistically. Even if Mr. Fang cashes out his shares, he will still be able to enjoy some soup and will not lose his money.
You can already make a lot of money by going in and out like this.
80% of the content of the second Bingxin Board of Directors is the legal interpretation of the contract terms, and 20% is the negotiation and consent of the presidents.
In just two hours, the board of directors was declared over, and subsequent supplementary terms will follow the normal process.
Hang Lung 23 has set up a lunch reception, but Fang Zhuo will not participate because he has to go to the airport immediately to fly to Luzhou. He needs to communicate with the local government about the recent ice core assessment of the future. In addition, he also wants to communicate with the University of Science and Technology of China.
The treatment of Hu Zhengming.
The teams from Goldman Sachs and Deutsche Bank stayed for lunch, and Su Wei, Vice President of Yike, attended the reception.
DCM's Connor has been somewhat subtle since he found out about the tacit understanding and did not want to participate in additional communication.
IDG’s Xiong Xiaoge also had work to catch up on, so he and his team took a flight back to Beijing in the afternoon.
“Mr. Xiong, Bingxin’s agreement this time is really sincere and he has put in a lot of effort.”
Liao Yu, who was traveling with me, expressed his opinion after getting on the plane. Well, he would not be thrown off the plane.
“Liao Yu, you think Fang Zhuo is sincere, right?” Xiong Xiaoge asked.
Liao Yu nodded without hesitation: "Yes."
“Then let’s take a longer look at the timeline of this action. Fang Zhuo was generally optimistic about SMIC’s listing, so he invited Qiu Ciyun, SMIC’s senior vice president, to work on a new project together, and everyone invested in it.”
“When the project was launched, all the funds were in place, and all contracts were signed, something happened to SMIC, and the prospects took a turn for the worse.”
“At this time, Fang Zhuo stood up and said, don’t be afraid if you leave your money with me. I will sign a redemption clause for you, but you have to leave it for 5 years. In these 5 years, we will work together to complete the project.”
Xiong Xiaoge opened the magazine: "Liao Yu, do you think the sincerity you feel is a bit insincere?"
“Mr. Xiong, I don’t think so.” Liao Yu gave a negative answer, “Mr. Fang’s sincerity may only be 60%, but how can you demand 80% sincerity in the business field from the very beginning?”
Xiong Xiaoge sighed: "Fang Zhuo probably thinks so too, so he is extremely confident."
Liao Yu shut up. If he continues talking, Mr. Xiong should drive him away again.
Five minutes later, Xiong Xiaoge, who had not even finished reading the first page of the magazine, suddenly said: "Investing in ice cores may be the most failed investment operation in my career."
Liao Yu was slightly shocked. He knew that Mr. Xiong had always regretted the investment in Tencent, but when he thought about it, the money invested in that investment was far less than this one.
He was thinking about how to respond to his boss's emotion.
However, Xiong Xiaoge continued talking to himself: "But if Fang Zhuo is there, maybe this investment may be the most successful operation since I started my career."
Liao Yu was shocked. This was Mr. Xiong’s general evaluation of the other party!
He felt that he had learned a lot from both Mr. Fang and Mr. Xiong this time, and said with emotion: "Investors and project parties just compromise with each other and help each other, which is difficult to say and easy to say."
“It’s quite easy, we help each other.” Xiong Xiaoge paused, “It’s indeed quite difficult, we have to compromise unilaterally.”
Liao Yu: “…”
Emotion is emotion, reality is reality.
There’s nothing wrong with it.
The four members of the IDG team arrived in Beijing in the evening.
They came back in a hurry because they had already made appointments to negotiate for investment in two projects and were in a hurry.
That evening, the company worked overtime, and four people and a local entrepreneurial project in Beijing had to communicate.
At seven o'clock, Xiong Xiaoge, who had taken a short break, sat in his conference room and listened to the entrepreneur's description of the project.
Entrepreneur Sun Maoqi spoke passionately for a whole hour.
It can be seen that this entrepreneur has good eloquence and a certain ability to draw blueprints. However, through the project book and asking some questions, not only Xiong Xiaoge, but also the other three people can see the rough intentions of the other party.
I couldn’t help but compare this rough and new ice core project. The difference between the two is like putting jade and stone together.
Liao Yu was thinking about how to tactfully reveal that something was not right about this entrepreneur, because this person was introduced by connections in Beijing.
Unexpectedly, Mr. Xiong, who had been silent for a while, opened his mouth to ask the question, which stunned everyone.
Xiong Xiaoge asked gently: "Can you cry?"
“Ah?” Sun Maoqi was confused, “What?”
Xiong Xiaoge patiently repeated: "Can you cry? Just do it now."
Sun Maoqi looked at Xiong Xiaoge, then turned to look at the other three people. For a moment, he didn't know what was happening in front of him. The investor's request made him confused.
He said slowly: "Mr. Xiong, does this have anything to do with the project?"
"You know Fang Zhuo, President of Yike, right? He has a strong emotional appeal, and this ability brings him great leadership charisma." Xiong Xiaoge said solemnly, "So, we investors have also begun to examine this
Already."
Outrageous projects and outrageous requests go well together.
Sun Maoqi's eyes lit up: "I admire Mr. Fang very much. I'll give it a try."
One try, two attempts.
Facts have proved that under the watchful eyes of several pairs of eyes, not everyone can do it just by saying it.
Xiong Xiaoge stood up with a smile and shook hands with this entrepreneur who was too weak in skills.
Sun Maoqi was not too disappointed. He already knew that such a request was a rejection of himself.
On the contrary, he asked very curiously: "Can Mr. Fang of Yike really cry whenever he wants?"
"Of all the entrepreneurs I have ever met, Mr. Fang is the one who has the best grasp of his emotions." Xiong Xiaoge replied, "Part of his personality charm lies in what kind of emotions he expresses on what occasion. Therefore, he has always
Very trusted by investors.”
Sun Maoqi left full of yearning.
"Is this person a liar?" Liao Yu felt funny, "Mr. Xiong, you always thought that Mr. Fang was also a liar because of the registration website."
"No, a big liar is not a liar, this guy is too bad at it." Xiong Xiaoge shook his head, "Fang Zhuo said last time that he would take me to invest together. I thought about it later. He has such a keen sense of smell. If nothing else,
At least you can tell a liar very well."
Liao Yu was surprised. Mr. Fang also wanted to invest? Then he couldn’t be a peer.