Texas Instruments' situation has been declining since the second quarter of this year.
The main factor here is not the impact of subprime debt, but distributors reducing inventory levels, continuing the looming weakness in the first quarter.
Among them, the wireless sector has experienced the most obvious decline.
Simply put, Deyi encountered challenges on the mobile side.
With YiKe equipped with Qualcomm chips and Apple equipped with Samsung chips, TI's competitive pressure in the high-end market has gradually increased, while the low-end market has also been squeezed by emerging Asian forces MediaTek and Spreadtrum.
The low-end market is a red ocean with low gross profit. The high-end market has long been cut off from the baseband chip product line, making it difficult to create synergy with mobile chips and showing a lack of competitiveness.
Now in the third quarter, this performance is even more fatal.
It is said that some major customers are turning to multi-vendor strategies, and the largest customer Nokia is also considering cooperation with Broadcom and STMicroelectronics.
This is likely to create a vicious cycle.
The economic crisis brought about by the collapse of Lehman in September has undoubtedly greatly increased the possibility of the situation worsening.
After arriving in New York, Fang Zhuo rested for a long time, adjusted his schedule and state, and was waiting to confirm whether the U.S. Congress would veto the bailout bill as rumored.
On the evening of the 26th, Yike Company mobilized an eight-person evaluation team to handle external demands that may arise during this period.
At nine o'clock, Fang Zhuo met Yu Hong, who had just returned from Silicon Valley, and treated her to a sumptuous supper.
"It's so late at night, you big fish and meat guy..." Yu Hong was surprised, "Did you lose billions in Xiangjiang, and you can't eat there, so you're hungry?"
"Aren't you thinking that Mr. Yu will be tired after a long journey?" Fang Zhuo said with a smile, "The Hong Kong stock market has fallen because of numbers, and it may rise back up in a year."
Yu Hong adjusted her dinner plate, wanting only something vegetarian, and asked casually: "Morning Star is quite unlucky, but Yongke Real Estate seems to be even more unlucky. I'm still thinking of buying some Yongke Real Estate shares. Is it going to be listed yet?"
"Go ahead, go public earlier and sell money earlier." Fang Zhuo replied, "If we go public this year, the basic real estate market is here. We should be able to sell it for a lot of money next year and the year after that. It just so happens that Ice Core needs to make progress in both 28nm and FinFET processes.
It’s a lot of money, but it can be put to good use.”
Yu Hong: "..."
She said with a bit of laughter and tears: "Have you even figured out the time?"
"It's not that bad. Funds need to be invested in advance. Just to buy a photolithography machine from ASML, you have to place an order early. It will take a year and a half to prepare materials in advance." Fang Zhuo said, "FinFET
The craftsmanship is a major improvement, and if possible, I hope our mobile phones will be able to use this as a key upgrade."
"It depends on the digestion and absorption of the Hummingbird chip?" Yu Hong knew what Mr. Fang was referring to.
Fang Zhuo nodded slightly. Yike acquired the Hummingbird team and is still jointly developing chips with Samsung. This is an important achievement worth looking forward to in the next two or three years. It is likely that this decision will also lead to its relationship with Qualcomm.
One of the focuses of this visit to the United States is to improve Yike's strength in IC design.
Calculating time, the 28nm chip with independent chip design + FinFET process will be a sublimation of Yike mobile phones.
Completing either of these two is satisfying.
Yu Hong was coming back from Silicon Valley this time, so she took the opportunity to chat about the R&D center there. She also experienced the extremely immature fingerprint recognition technology yesterday.
In order to demonstrate the technical direction, the R&D center sincerely invited the co-founders of Yike to try the early adopter function of mobile phone fingerprint + laboratory access control. Then, several people were trapped for half an hour... It can only be said that there is still a long way to go.
Fang Zhuo was very happy to hear it and planned to experience the laboratory technology after meeting Deyi's people.
"TI's profit has dropped by nearly 30% this quarter, and you have contributed a lot to it." Yu Hong, who lives in the United States, is very clear about the situation of suppliers like TI who play a decisive role in the industry.
Fang Zhuo was surprised: "How to say?"
"Nokia is very confident in its touch screen phone, but you held a press conference to wipe out its sales. Online people are ashamed to buy its touch screen phone." Yu Hong talked about her observation, "I heard that it will be launched by the end of the year.
If we get a new phone, we may have to switch to a capacitive screen."
She continued: "Samsung's Android phones launched this month are also equipped with Qualcomm chips. TI lacks a complete mobile phone chip solution. This is a problem. Qualcomm's competitiveness is getting stronger and stronger."
"Samsung actually used Qualcomm chips?" Fang Zhuo was surprised.
He is preoccupied with the financial market these days and has indeed neglected to observe mobile phone competitors, and Samsung just launched a touch-screen smartphone two days ago.
Yu Hong greeted her secretary, took out Samsung's latest product from her bag and handed it to Mr. Fang: "It's only equipped with Qualcomm chips in the United States, and its own chips are used in Asia. It hasn't been released in Europe yet, and I heard that it hasn't been negotiated with the operator yet.
"
Fang Zhuo was playing with Samsung's latest i7500 mobile phone, and he clearly saw the shadow of his own company and Apple.
This is the first product launched by Samsung to run on Android.
He thought for a moment and asked: "How did Samsung do it? How did it negotiate with Qualcomm?"
Yu Hong said without raising her head: "Then you have to ask your close partners, but there must be an important reason, because Samsung is the world's second largest mobile phone manufacturer."
Such a position in the mobile phone market will undoubtedly increase the influence of Qualcomm chips in the industry and improve its competitiveness in the field of high-end mobile phone chips.
"Will Samsung also use Qualcomm chips in Europe?" Fang Zhuo asked.
"I don't know, I doubt it. We will find out soon." Yu Hong replied.
Fang Zhuo turned his thoughts to himself: "You said, if our Hummingbird chip is digested, can we also use our own chips domestically and Qualcomm's chips abroad?"
"The domestic market potential and South Korea are two different things. Can Qualcomm agree? Let's not talk about the performance of its own chips and Qualcomm chips. There is indeed recognition of the brand power. It is hard to say whether consumers can accept it." Yu Hong said seriously, "But for this
This is a good thing for Yike, I think it can be done in one go.”
She thought about it again: "Hummingbird Chip can specially produce a sub-flagship and give in on the price, so that consumers have nothing to say, and Qualcomm should be able to negotiate with it."
If Yike has chips based on high-end flagships, it will undoubtedly compete with Qualcomm. Whether the other party is willing to cultivate competitors will have to weigh the pros and cons.
Yu Hong also put the future in reality and said with a smile: "But if you, Mr. Fang, can really enrich the chip department now and come up with chips that are not inferior to Qualcomm in a few years, at worst we will start a lawsuit with Qualcomm again."
Fang Zhuo sighed and said: "The company is getting bigger and bigger, and there are more and more lawsuits."
"Who says it's not the case? Nokia's application for a sales ban has also been filed with ITC." Yu Hong frowned, "If it releases a capacitive screen phone by the end of the year, we can have another round of talks with Nokia."
Although the U.S. ITC's unfair handling of the case hindered Nokia, it could not dissuade the other party from filing a complaint, and the case was finally filed.
Fang Zhuo took a sip of tea with excitement and said seriously: "Well, let's talk for another round."
Yu Hong knew Mr. Fang's counterattack plan in the capital market and remained silent. She also felt the signs of Xiao Ao's counterattack at the end of this month, and it seemed that there was hope of laying the groundwork for a massacre.
"By the way, HTC went to Shanghai before and wanted to talk to me about patent fees." Fang Zhuo suddenly remembered a small achievement in the lawsuit.
"How is it?" Yu Hong really didn't understand this matter.
"I haven't seen her." Fang Zhuo said with a smile, "Didn't HTC counter-claim? You can wait for the process, or you can wait for the ITC's judgment on LG Electronics. Google told me that HTC has started to contact Android, probably
I want to reach a settlement through the PRO Alliance."
Yu Hong asked: "What do you mean?"
"LG Electronics will definitely not let go. This is also the intention from Google, to scare the monkeys." Fang Zhuo said slowly, "HTC, if it is equipped with Android, then I will take its money. If I don't give up Microsoft's WM system, then
I don’t want this money.”
That's what coercion and inducement are all about.
Yu Hong said tactfully: "This is also for HTC's benefit. The Android system is better than Microsoft WM."
"Indeed, I hope that next year will be a year when Android systems bloom." Fang Zhuo considered, "The development based on mobile devices can also bring many opportunities."
Yu Hong said "Yeah". It was she and Mr. Fang who went to meet Schmidt together at the beginning. The Android system also has a built-in software location as agreed.
She ate until she was 70% full, thinking about the schedule mentioned by Mr. Fang, and said sincerely: "A year ago, I would never have imagined that I would say such a thing. TI's absolute dominance in mobile phone chips has been shaken."
A year ago, TI was undoubtedly the largest player in the high-end mobile phone chip market, but demand from manufacturers has weakened every month in the past December.
Now, it has begun to lay off employees and adjust its mobile phone chip business, and it seems to be struggling.
The changes in technology and market are really rapid.
…
On the 29th, at four o'clock in the afternoon.
Accompanied by the Yike team, Fang Zhuo flew to Dallas, where TI's headquarters is located.
Today, as the news went viral, Congress rejected George W. Bush’s $700 billion bailout bill.
Then there was an immediate impact on financial markets.
The stock market plummeted wildly, and everyone panicked.
The Dow Jones Industrial Average plunged 777.68, a drop of 6.98%, to close at 10,365.45.
The S&P 500 stock index fell 106.59, or 8.79%, to close at 1106.42.
The Nasdaq Composite Index, which is dominated by high-tech companies, plummeted 199.61, or as much as 9.14%, to close at 1983.73.
It was the largest drop in U.S. stock market history.
Fang Zhuo felt numb.
The most direct connection with him is that Morningstar Semiconductor has fallen by another billion, and Qimonda has lost 95% of its value on the New York Stock Exchange, with its stock price less than 1 US dollar.
In 2005, Qimonda was listed at an issue price of US$18. No one could have imagined that it would be like this three years later.
Fang Zhuo felt very sorry for Qimonda's performance. Today he received another call from Mr. Luo. He hung up the phone after only 30 seconds of conversation. He couldn't bear to hear the other party's plea for help.
Judging from the current situation, with the outbreak of the global financial crisis, Qimonda has been unable to obtain financial assistance from Infineon and the German government, and bankruptcy is inevitable.
Fangzhuo does not plan to acquire Qimonda, which means that it may have to bear debt and other problems, which is undoubtedly a big pitfall.
Now he is just waiting for Qimonda to come to an end, and then use the arrears of foundry fees + cash to pick out some practical DRAM patents and reactivate Ice Core's Lin'an No. 2 Factory.
In fact, Fang Zhuo is also considering whether to take advantage of this opportunity to spin off Lin'an No. 2 Factory and operate it independently. This will not only make it easier to receive capital injections from international funds, but also be relatively more focused.
To him, this is a system that he can control. Ice Core can go into battle with ease, and Lin'an Factory can be considered a cunning rabbit. However, it seems that it will harm the interests of shareholders.
Fang Zhuo has not finalized the decision yet, and plans to discuss it with Qiu Ciyun and others before taking a look. Anyway, the current shareholders will definitely be happy that the loss-making Lin'an factory will be cut off.
In the evening, the Yike team arrived in Dallas.
When Fang Zhuo could see the TI signboard, he suddenly asked his secretary: "TI's layoffs, UMC's layoffs, Qimonda's layoffs, is there any news about Qualcomm's layoffs?"
Liu Zonghong first confirmed it again, and then replied: "I haven't received any news from various channels."
Fang Zhuo nodded regretfully.
Under the crisis, some manufacturers have bucked the trend and developed. Qualcomm is worthy of being the fourth member of the Iron Triangle. As long as Qualcomm is fine.
At eight o'clock in the evening, Fang Zhuo, who was in the autumn wind, met Richard Templeton, the head of Deyi.
Originally, Fang Zhuo only wanted to meet with the vice president or something like that, but he didn't expect that after Richard heard the news, he immediately expressed that he wanted to meet in person.
In fact, he made it very clear on the phone that this time it was not for the Mars series of chips, but to help TI optimize its business, but Richard still couldn't hide his enthusiasm.
The two sides meet.
As expected, Richard still talked about TI's mobile phone chips.
"Yike has no plan to change suppliers." Fang Zhuo was a little helpless, "In the first half of last year, we had frequent contact with TI, hoping to get more support for solution optimization, but TI was indeed slow. I hope everyone will
There is room for collaboration, but definitely not now."
Last year, TI did not help Yike to optimize, but this year, Yike came to help TI to optimize.
Richard really felt sorry for him.
However, who could have imagined the explosion of Yike mobile phones and Android systems?
Nokia, its largest customer, did not hesitate to add STMicroelectronics and Broadcom to its supplier ranks, which made TI very passive.
"TI will catch up. We plan to launch a high-end chip for Android systems next year, and we hope to be able to cooperate by then." Richard said.
Then, he called Deyi for today’s menu.
The heads of five project teams walked into the conference room.
Because of Mr. Fang’s sincerity, Deyi provides a two-way option for packaging.
Seeing the unconscious smile on Mr. Fang's face, Richard could only comfort himself in his heart. Instead of letting the layoffs go, it would be better to send them to a place that would be good to them.
Fang is always a good person. At the very least, there will be no problems with his treatment.
