The EDA industrial software used for chip research and development can be directly paid for and licensed.
Use it for a few years first, and a few years later, Xingyi Technology will develop its own.
Or collaborate with Huawei on research and development, that's also fine.
There's no fear of foreign blockades at all.
However, the ARM architecture is fundamental, so it's safer to buy it out directly while the price is low in 2011.
ARM's headquarters are located in England, with branches in countries like the Empire.
President Norbert Bellows personally met with Wang Yi:
"So the mysterious Eastern giant who caused a sensation in the Empire, is Mr. Wang!"
"You flatter me. Ordering so many chips at once puts a lot of pressure on me too."
"Yes, it's enough for you to use until the year after next, Hahaha."
Norbert said with a laugh:
"But Chairman Wang coming to us, does that mean you intend to develop your own chips?"
"Yes, one must have dreams, even though it's difficult."
"Chairman Wang will definitely succeed!"
Norbert's face lit up with joy, wishing everyone would come to develop chips, so ARM could sell more licenses and earn more money!
"Whether it succeeds or not, one must try. How is the licensing fee for the ARM V8 architecture calculated?"
Wang Yi asked.
V8, just released this year, a 64-bit chip architecture, is much stronger than V7, a 32-bit one.
Wang Yi naturally chose the most advanced architecture, to directly develop a quad-core 64-bit processor.
Nvidia's Tegra 3 and Qualcomm's quad-core processor 8064 are still based on the V7, 32-bit architecture, which is somewhat behind.
Wang Yi entered the chip R&D in 2011, and directly secured the V8 architecture, which can be considered seizing the initiative.
Norbert smiled slightly:
"The V8 architecture has just been released, and there are few customers buying it, so the price is still very favorable."
V8 had not been released long, and chip manufacturers were all adopting a wait-and-see attitude regarding its performance.
Except for Apple, who bought it directly, others like Qualcomm, Nvidia, Texas Instruments, MediaTek, HiSilicon, etc., were still using V7 and observing V8.
If V8 turned out to be excellent, they would follow suit later.
If V8 failed, V7 would still be more cost-effective.
Norbert elaborated:
"For the V8 architecture, there's an upfront one-time fee of 2 million US dollars. After that, a royalty fee of 30 cents per chip is paid, which is very cost-effective."
One can only say that ARM calculates clearly.
Whether chip R&D succeeds or fails, 2 million US dollars must be paid first.
If successful, then a royalty fee of 30 cents per chip will be paid according to the chip output.
Of course, the initial 2 million dollars is pocket change.
The continuous flow later, the royalty fees calculated per chip, that's the main chunk!
However, the current royalty fee is very cheap, the same price as for Apple.
Wang Yi murmured:
"30 cents royalty fee per chip. So for the next two years, I'll only be doing R&D. For tape-out, a maximum of a thousand chips would be enough. A total of 300 US dollars in royalty fees?"
"..."
Norbert was a bit disappointed:
"Theoretically, that's correct."
He had thought a big client had come, splashing out a fortune, and that he could earn tens of millions of dollars in royalty fees.
In the end, after all that effort, the royalty fees for two years were only three hundred US dollars...
That's like giving alms to a beggar!
Wang Yi looked at the other party's grim expression, and said softly:
"No worries, there's a high probability of mass-producing chips in the third year. Estimated annual production of five million chips, which means 1.5 million US dollars in royalty fees. Of course, if R&D fails, then so be it."
Norbert remained silent: "..."
1.5 million US dollars in royalty fees over three years, do you really think ARM is a beggar?
But for an emerging semiconductor company, to successfully develop and produce five million chips in three years, would also be quite remarkable...
It's even possible that Xingyi Technology might go bankrupt before three years are up, and then they wouldn't earn a single cent in royalty fees.
This won't do!
Norbert pondered a myriad of thoughts, then changed the subject:
"Chairman Wang, besides this volume-based calculation method for our royalty fees, there's also a buyout system. For example, a one-time ten-year buyout, only... 20 million dollars!"
Hmm, this way, no matter how many years it takes for your chip R&D to succeed, I would have earned these 20 million dollars in copyright fees all at once.
Even if, three years later, Xingyi Technology's chip R&D fails and it goes bankrupt, the 20 million dollars would be safely in ARM's pocket, and ARM wouldn't refund a single cent!
Compared to earning 1.5 million dollars in royalty fees over three years, it's more cost-effective to earn 20 million dollars through a one-time buyout.
In Norbert's opinion, Wang Yi's self-developed chips would most likely fail.
Charging copyright fees per chip, 20 million dollars might not be recouped even in 20 years.
Chips are such advanced things, how could they be so easy to research?
Especially Chinese companies, they can't even make good phones, and they want to make chips?
What a joke.
Even powerhouses like Huawei HiSilicon, after researching for so long, finally managed to create K3V1 and successfully taped it out, but its performance was too poor for mass production, which was considered a complete failure.
Whether they will continue to invest in developing a second chip is also a question.
Even stronger chip giants like Texas Instruments are giving up their mobile chip business, and Nvidia probably won't last much longer either.
These giants can't even handle chip R&D, let alone you, who makes clothes?
Norbert even thought, whether Xingyi's mobile phone could succeed was questionable.
And Wang Yi's chip R&D would 99% fail!
It's more reliable to earn a large lump sum from a buyout copyright fee at once.
Wang Yi shook his head:
"Who can say for sure about the future? If it really fails, 20 million dollars would be wasted. Volume-based billing is still more cost-effective."
"..."
Norbert's heart sank, this guy isn't taking the bait!
"How about this, Chairman Wang, a ten-year royalty buyout, just 10 million dollars, ten million will do!"
A fat sheep delivered to the door, how can I let you go back unharmed?
What a joke!
At least leave 10 million dollars!
Even if Wang Yi's chip R&D fails, ARM would still have earned 10 million dollars in royalty fees!
Wang Yi was secretly pleased in his heart, this price was very attractive, but he could still cut it further.
ARM also couldn't have imagined that Wang Yi would continue to invest in chip R&D until successful!
Even less could they imagine that years later, the annual output of Xingyi Semiconductor would not be five million chips, but fifty million chips, or even more!
At thirty cents per chip, the annual licensing fee would be over 15 million dollars.
How terrifying the development of the smartphone market would be, Norbert couldn't have foreseen, and neither could ARM!
Otherwise, they wouldn't have given Apple a unit price of thirty cents, and later regretted it so much their intestines turned green.
But this price could still be negotiated further!
Wang Yi frowned:
"Ten-year buyout, 10 million dollars in royalty fees? If I succeed in R&D in three years, that's equivalent to 10 million dollars in royalty fees for the subsequent seven years in total, averaging 1.43 million dollars a year. That's no different from paying volume-based royalty fees of 1.5 million dollars a year currently! Not cost-effective."
Norbert was stunned, it seemed that made sense, it was indeed not cost-effective, so what to do?
Just as Norbert was pondering how to continue tricking Wang Yi into spending more money for a buyout, Wang Yi spoke:
"Unless you give me the V8 architecture, with a permanent buyout license!"
Permanent buyout license?
Does this make sense?
Norbert was utterly confused, this kind of architecture would be continuously updated and replaced.
The V8 architecture used for ten years, would be used directly until October 2021, by which time the V9 architecture would already be out!
By then, everyone would be using the V9 architecture, who would still use the outdated V8?
So, a ten-year buyout license for the V8 architecture, a 20-year buyout license, and a permanent buyout license, would all make little difference!
Everyone would have to switch to V9 after ten years, and buy again, so there's no difference.
It didn't matter to ARM, as long as Wang Yi was willing to buy, whether it was ten years, 20 years, or even a permanent license, it didn't matter, and they could still earn a bit more money!
Norbert smiled slightly:
"I can give you a permanent buyout license, but you'll have to pay more, 15 million dollars for the buyout!"
Wang Yi frowned:
"Too expensive, 11 million dollars!"
"14 million dollars, no less!"
"12 million dollars!"
Wang Yi continued to haggle.
Norbert sighed:
"Alright, let's compromise. 13 million dollars, and I'll give you a permanent buyout license for the V8 architecture. With the one-time fee, that's a total of 15 million dollars!"
Wang Yi thought for a moment:
"Okay, I'll take a small loss. But this permanent buyout license must include subsequent upgrades like V8.1, V8.2... After all, a permanent license can't become obsolete in three years, right?"
"Absolutely, no problem!"
Norbert readily agreed:
"However, for the brand new V9 architecture, you'll have to buy it again when it comes out!"
"Alright, I'll take a gamble!"
Wang Yi sighed, seemingly taking a huge risk, even getting tricked, but his heart was blossoming with joy!
Norbert was in an even better mood:
'This fool has finally taken the bait. Chip R&D has a 90% failure rate, yet he first spent 15 million dollars to buy a permanent license for the V8 architecture. I've never seen anyone so foolish. Hahaha!'
Norbert didn't know that a few years later, Wang Yi's annual royalty fees would exceed 15 million dollars.
But now, the permanent buyout only cost 15 million dollars, and no money would be needed later.
Norbert, oh Norbert, you truly are a great benefactor.
Thinking about it this way, ARM was quite miserable too, Wang Yi couldn't help but sigh with emotion.
First, Apple's unit price of 30 cents, a long-term agreement was signed, and prices couldn't be raised for decades to come.
Then there was Wang Yi, who directly spent 15 million dollars, to buy a permanent license for architectures like V8, V8.1, V8.2, etc., with no need for subsequent payments.
Even better than Apple!
Norbert immediately drafted the agreement, and quickly pulled Wang Yi to sign it, as if fearing Wang Yi would change his mind.
After all, people who dared to directly buy a permanent license for an architecture before chip R&D had even begun were truly few and far between.
Subsequently, both parties formally signed the agreement, with 15 million for a permanent buyout of the V8 license.
Both parties felt it was a cost-effective deal, and both felt they had made a huge profit.
By now, the foundation for self-developed chips was properly laid.
EDA industrial software purchased, ARM V8 64-bit architecture, permanent license bought out.
Top chip R&D talents were also poached.
Even R&D elites were continuously being recruited.
The rest was just a matter of time.
Norbert extended his hand with a smile:
"Chairman Wang, you are forever a friend of ARM, and a friend of Norbert."
Hmm, with this big order alone, 15 million dollars, he could get a promotion and a raise.
ARM does not produce chips, it only develops chip underlying architectures, earning licensing fees and royalty fees.
In 2011, when smartphones just started, ARM's annual revenue was only 100 million US dollars.
Now, Wang Yi contributed 15 million dollars all at once, which was definitely a brilliant achievement, and Norbert's promotion and raise would be a given.
However, a few years later, the situation might be completely different.
Watching Xingyi Semiconductor produce tens of millions of chips annually, ARM wouldn't earn a single cent.
ARM's board of directors' desire to kill him, would probably already be there.
Wang Yi smiled slightly:
"Norbert, you are also a friend of our Xingyi Technology."
Hmm, for Xingyi Semiconductor, he might even sacrifice his own future, how could that not be good?
Wang Yi's trip to the Empire, he met two good people.
Tool-man, Old Huang!
Great benefactor, Norbert!
Both are good!
Back at the hotel, Wang Yi had Wu Shuang book tickets for the return flight home that evening.
This trip to the Empire was fruitful, and it was time to return home.
He then opened his laptop, and began to handle work emails.
During this period, Wang Yi was also paying attention to domestic business.
The Northern pure desire style dresses were completely unsalable, and the revenues of Meiyou and Zhenyou were both declining.
On October 11th, Meiyou Mall's daily revenue fell to 150 million, and the revenue of offline flagship stores fell below 50 million.
Even Meiyou International's revenue fell below 15 million dollars.
Past its former glory, Meiyou Group's daily profit also dropped from the previous 300 million to 200 million.
Although it decreased by 33%, it was still very substantial.
Of course, these profits were only from the apparel business.
Once on the financial statement, after deducting all expenses such as employee salaries, mergers and acquisitions, investments, R&D, etc., the book profit became very low.
All companies operate this way.
Some companies have an annual revenue of 200 billion, but their final book profit is only 30 billion, that's how it's done...
It seems in a few days, Meiyou Cosmetics must be launched as soon as possible.
Otherwise, this continued decline won't do, making phones is too expensive.
While Wang Yi was processing company emails, he also saw Du Tianhua's email:
[Chairman Wang, the box office for "Love Is Not Blind" has exceeded 650 million!]
"Huh, has it been extended?"
Wang Yi was a little surprised, as it should have ended its run on October 8th.
Today was already October 11th, and it was still showing, so it must have been extended.
Wang Yi searched the news, and indeed it was.
For popular films, they would be shown for a longer period, even an extra month.
Moreover, the entire National Day holiday period was filled with bad movies, with no single hit.
Cinemas were losing money hand over fist, and were relying entirely on "Love Is Not Blind" to sustain them.
Even though "Love Is Not Blind" had been showing for over a month now, its daily box office still ranked in the top three.
The cinemas were still hoping "Love Is Not Blind" would carry the banner and earn big money, which was why they were reluctant to take it off screen.
If it ran for another month like this, the box office for "Love Is Not Blind" could advance even further.
It sold over 600 million in the first month, even if it performed poorly in the second month, selling 100 million should not be a problem.
If it could accumulate 800 million in box office, that would also be excellent.
Wang Yi would also get a larger share.
After packing in the afternoon, Wang Yi and his group headed straight to the airport to return home.
This trip to the Empire concluded successfully, with fruitful gains.
Not only did he secure the global premiere of Nvidia's quad-core chip, but also the premiere of Qualcomm's quad-core flagship in the second half of next year.
Baseband chips were also negotiated, with attractive prices.
He also acquired Xiya, poaching Estée Lauder's former R&D director and R&D team, preparing Zhenyou for its push into the high-end market.
Even many top R&D talents from Texas Instruments, and related personnel, were poached.
Many of these people have already arrived in China, and joined Xingyi Semiconductor.
Buying a permanent license for ARM V8, V8.1, V8.2... for 15 million dollars, was simply a massive win.
This trip to the Empire, though it cost a lot of money, also yielded abundant gains!
In addition, he gained a lot of international recognition.
These past few days, numerous international media outlets were scrambling to report on the mysterious tycoon who frantically bought 30 million chips, the emerging mobile phone giant.
It caused a huge sensation in the Empire and worldwide.
And Wang Yi's identity and Xingyi Mobile, could no longer be hidden, and were gradually uncovered!
The world was once again sensation-struck!
(End of chapter)