The peak annual output of Ziguang IC in 2020

Chips are business, others are business

Ziguang Group's corporate development strategy is to "focus on the integrated circuit industry and strive to develop into a high-tech industrial group with the world's top ranks." In addition to integrated circuits, Ziguang Group's business includes several other major segments, including life and health, urban infrastructure, science, education, real estate, and financial investment. The positioning of these businesses is that "chips are business, others are business." "Business" is also very important. Ziguang Group's IC industry is still weak compared to international giants, and its profitability is not strong. If there is no "business" support, there will not be enough funds to support its development. In terms of specific integrated circuits, Ziguang’s goal is to develop into the “China's first, the world's top 3 chip giant.” In order to achieve this goal, Ziguang Group will directly invest 30 billion yuan from 2014 to 2020, and strive to increase the annual output value of integrated circuits of the entire group from 1.8 billion U.S. dollars in 2014 to 10 billion U.S. dollars in 2020.

Analyzing the industry characteristics of integrated circuits can be summarized by high capital, high intelligence, and high labor-intensive. In order to develop healthily in such industries, it must have large-scale capital investment, sufficient human capital for intellectual guarantee and a suitable and feasible product market. For a long period of time, the mobile chip will be a focus area of ​​the Ziguang Group. In the mobile chip market, from the smart phone to the tablet PC, Ziguang Group will go all out and fight with each other. Currently, Ziguang’s largest customer is Samsung Electronics, and the major domestic smart phone manufacturers are Ziguang customers or potential customers. The mobile chip market is relatively mature. Although there are only 3 to 5 major companies in the global market, the competition is fierce. There is no more trickery in the competition strategy. Only the products can be launched more quickly and the products have better performance and cheaper prices. At present, Ziguang mainly adopts a "following strategy." If Qualcomm is compared to Mercedes-Benz and BMW, MediaTek is equivalent to Audi and Ziguang is equivalent to Passat. It seems that there is nothing missing, but it always feels like "a bad thing" in the eyes of users. Therefore, the purple should still be more like Qualcomm, MediaTek learning, especially MediaTek, Violet to study it more, learn it.

For the wearable device market, Ziguang Group is also very concerned about, but this market is not yet big enough, the practical value of wearable products for consumers is not yet fully reflected. When it is not yet strong enough, Ziguang’s strategy is to try to do better in relatively strong areas so as to make itself more perfect and stronger, and to be cautious in some areas where prospects are more uncertain, in the market. When you haven't really started yet, you can't rush.

However, this does not rule out the fact that Ziguang actively tracks the technological developments in some emerging areas, such as the 5G communications standard and the next-generation digital TV chip, and Ziguang is all involved in the technical reserve and the formation of more patent packages. It is hoped that by 2020, Ziguang Group will be able to form a wider and more reasonable product layout with an output value of US$10 billion, of which 50% will be based on the mobile market and the other half will be from the non-mobile market.

The outside world is also very concerned about the overall listing of the A-shares of the Ziguang Group. The work in this area is being done by Ziguang Group, but this is not the focus of Ziguang's current work. The reason why companies pursue listing is nothing but financial cashing, increased visibility, and financing. These are not particularly urgent at present for purple light.

Expanded consolidation

The acquisition of Spreadtrum and RDA in the Ziguang Group has now been completed. Now the two companies are in good condition. Compared with the pre-acquisition period, the market share of both companies is now increasing. This year, the shipments of the two companies are expected to total 550 million chips, which will be used in more than 300 million mobile phones, of which more than 200 million will be used. For smart phones. The annual output value of the two companies will reach 1.7 billion U.S. dollars.

The two companies, Spreadtrum and RDA, ultimately want to merge, but they need to adopt a slow approach. In addition, their merger is not the same as general corporate mergers and acquisitions. To be exact, it should be an "expanding merger." In the field of integrated circuit design, human resources are the key to the development of a company. Ziguang Group is "expanding" for both companies. On the one hand, it invests heavily in research and development, recruits talents globally, gives the team benefits, and keeps the team passionate and energetic while improving management; on the other hand, it will also cooperate with several universities. The establishment of the Institute of Communication Microelectronics and the establishment of a world-class Institute of Communication Microelectronics at Tsinghua University will solve long-term problems of personnel training and talent transfer. At the same time, it will also strengthen patents and intellectual property rights and improve self-protection under international competition. Before the July acquisition in July 2013, the number of Spreadtrum employees was approximately 1,500, and now it has reached 3,000. Rydico is almost 600. It is estimated that by the end of 2015, the total number of employees of the two companies will increase to around 5,000. The plan is to reach 2020. It has grown to 20,000 people annually.

Cooperation with Intel "pure investment"

The cooperation between Violet and Intel has also attracted the attention of the market, but it may be considered as a "pure investment" behavior. From the perspective of purely commercial investment, Spreadtrum and RDA are very international companies in China's local chip companies, whether it is the composition of the customer base or the personnel structure; at the same time, they have a very good presence in the Chinese market. Control, whether it is the understanding of the Chinese market, or the market reaction speed and responsiveness. And China is the world’s largest mobile phone manufacturing center and largest market. From any perspective, these two companies are good investment targets. We might as well make a hypothesis. If Intel did not make its own mobile chip, but instead invested in Qualcomm on the occasion of the establishment of Qualcomm in 1985, what will happen today? Sometimes, for a company, a smart investment can be solved. many problems.

As for Spreadtrum and RDA, the current product lines are all based on the ARM architecture and will be mainly based on the ARM architecture in the future. We must first make the ARM architecture better, and even research and develop the design of the soft-core level in order to thoroughly grasp the connotation. However, we do not rule out some exploration of the x86 architecture with Intel. Intel has a lot of technology accumulation in many fields. Using these resources is beneficial to the purple light. The key is how to integrate and serve the ultimate goal.

Do more vicious SOEs than private companies

As for the nature of the company, Ziguang Group is a state-owned holding company, but Ziguang has a relatively high degree of marketization. Ziguang is a more vicious state-owned enterprise than a private enterprise. In terms of corporate mechanism and culture, Ziguang Group should have both local ambitions and global perspectives and develop into an international company rooted in China.

In response to this cultural strategy, Ziguang Group’s talent mechanism should be broad-based, prudent, diligent, strict, and generous; the management mechanism should be flattened, refined, and have all the spirit for the front line; corporate culture should be formed. From the perspective of performance, the relationship between people is simple; on the interest mechanism, it is necessary to reward those who can break ground; on the decision-making mechanism, we must emancipate the mind, make bold assumptions, be careful in verifying, exercise caution, and act quickly; It is a learning ability with new things, a sense of mission and self-motivated, indomitable tenacious execution.