Can Gree core success?

Editor’s note: This article is from WeChat public account “Baker Street Prosecutor”(ID:bkjtag), author Chen Yimu, this article is the first to launch Tencent Technology.

Dong Mingzhu's Chip Dream: Zeng Haoyan wants to spend 50 billion now depends on Sanan Optoelectronics

Ordinary netizens are busy with the Double 11 Shopping Festival, and Dong Mingzhu is busy spending a lot of money on a “shopping addiction”.

Sanan Optoelectronics, one of the domestic semiconductor industry giants, announced in a double 11 night that it will raise funds for a total of 7 billion yuan. Among them, Gree Electric will subscribe for 2 billion, and the remaining 5 billion will be subscribed by the leading high core.

According to the information of Sanan Optoelectronics, the 7 billion yuan raised will be used to invest in high-end products: high-end LED epitaxial chips, high-power trichromatic lasers, solar cell chips, etc. This move will enable Sanan Optoelectronics to take a step forward in the future high-end chip and semiconductor industry competition.

Gree, who has great interest in self-developed chips, can be said to be a solid foundation. This time, the new project of Sanan Optoelectronics was added, and Gree announced that it will greatly promote the chip and semiconductor equipment in the company’s central air-conditioning, smart home appliances and other products.

Dong Mingzhu’s Gree mobile phone dream is getting depressed, but her chip dream has just set sail.

Dong Mingzhu's Chip Dream: Zeng Haoyan wants to spend 50 billion now depends on Sanan Optoelectronics

1. Sanan Optoelectronics, Where is the Holy Land

As one of the giants in the domestic semiconductor industry, Sanan Optoelectronics has always been undoubtedly the most advanced LED and semiconductor production R&D enterprise.

The main production and development of Sanan Optoelectronics is concentrated in the fields of LEDs, supporting chips, integrated circuits, etc., and it plays a major role in the domestic and even the world in the research and development of semiconductor materials. After its completion of the Sanan plant in Tianjin, its production capacity and scale ranked first in the world and in the world.top ten.

LED and chip business As one of Sanan Optoelectronics’ main business, the revenue of this segment accounts for 80% of Sanan Optoelectronics’ total revenue from 2013-2018. After 2015, Sanan Optoelectronics put the eggs in more baskets. Create a vertical LED industry chain covering the upstream and downstream. In 2018, Sanan Optoelectronics LED chip and product revenue accounted for 4.43% of the previous year’s decline.

Dong Mingzhu's Chip Dream: Zeng Haoyan wants to spend 50 billion now rely on Sanan Optoelectronics

Image Source: Prospective Economist APP

Sanan Optoelectronics is the leader in the LED market: it ranks first in the domestic LED market with a market share of approximately 29%; chip and LED production capacity accounts for approximately 19.7% of global chip production.

In fact, before this non-public fundraising, Sanan Optoelectronics is experiencing the first crisis after the rise. Affected by the sluggish global LED market industry, Sanan Optoelectronics reported its peak profit in 2012 after peaking in 2017, and this trend continued to this year.

According to the third quarter financial report of 2019, Sanan Optoelectronics finally achieved a quarter-on-quarter growth in revenue in the third quarter, and it continued to decline in the previous year. Net profit also increased by 3% quarter-on-quarter to reach 270 million yuan.

After two years of recession in the LED industry, with the advent of miniLED, the trend has been reversed. Although Dehao Runda has just shut down the chip factory, AUO and TCL’s miniLED products and related chips have already been shipped and listed. Sanan Optoelectronics will also benefit from it.

But the two-year downturn brought more crisis to Sanan Optoelectronics. In the future, only LED products cannot be based on the market, and integrated circuits are the future trend.

Last year, after Sanan Optoelectronics obtained investment from Changsha Jianxin and Changjiang Anxin, it has turned its attention to chip self-research. This time, the company will issue 7 billion yuan to Gree Electric and the leading high-core, and the funds will be used for the construction of Hubei Sanan Optoelectronics and Quanzhou Sanan Semiconductor Project. It is estimated that the annual income will reach 8.2 billion yuan and the profit will be close to 2 billion.

The “appetite” of Sanan Optoelectronics is so great that what Gree wants to do is to add another fire.

2. Dong Mingzhu’s core wish

Miss Dong’s thoughts on self-developed chips are not a day.

“Even if we invest 50 billion, we must create our own GreeCore,” Dong Mingzhu once vowed to say.

At the Gree Shareholders’ Meeting in mid-2018, Dong Mingzhu stated to all shareholders that “Geli Core” has been researched for more than three years and plans to invest 50 billion yuan in the next three years. For chip development. Dong Mingzhu’s determination is obviously easy to see: even if it is to save money, it is necessary to pull out the Gree core.

“In fact, we have been developing chips for three years. Now we have achieved little success. But what to do with this chip, which direction to do, and the need for board research can make a specific decision. But there is one, the chip is affirmative, we Will continue to do it.”

This is the first time Gree has not paid dividends in 11 years. Dong Mingzhu responded positively to this.

Gree wants to make chips is not without reason. The heights are not overwhelming, and Gree, who is in the upper reaches of the industry, feels pressure from suppliers. The control chips in air conditioners currently rely on imported supplies. The main suppliers are Texas Instruments, STMicroelectronics, Renesas Japan and Taiwan Hanzhi.

The urgent “core pressure” is unbearable for Dong Mingzhu. In her opinion, Gree must not be subject to people.

Dong Mingzhu's Chip Dream: Zeng Haoyan wants to spend 50 billion now depends on Sanan Optoelectronics

“I will invest 10 billion this year, invest 20 billion next year, and invest 50 billion in three years. We have no reason not to do it.”

Incorporating Dong Mingzhu’s discourse, Gree’s business plan and forward industrial planning introduced in 2018 shows that Gree will pay more attention to building smart factories in the future, focusing on the research and development and production of smart homes and integrated circuits. At the same time, the company’s business is divided into air conditioning, high-end equipment, lifestyle categories and communication equipment, chip business is attributed to the category of communications equipment.

The original Gree has strong strength and control in the industry, relying on the complete upstream and downstream industry chain, and the parts and components are developed and produced by themselves. But what Gree can’t produce is the chip.

If Dong Mingzhu’s ambition can be realized, Gree can get rid of the most critical control chip on the subject in the future, so that the upstream and downstream of the industrial chain will be laid out, and there will be no harm to its future development.

After playing Dong Mingzhu’s conviction of “Geli Core”, Gree Electric began to cast a net around.

In 2016, in the Gree Annual Report, for the first time, “independent research and development of chips with independent intellectual property rights” appeared. In 2017, under the direction of Dong Mingzhu, Gree Electric established the microelectronics department and began to develop chips.

Gree is doing external research and development while moving outside.Frequently.

On August 14, 2018, a limited company called “Zero-Boundary Integrated Circuit” was established with a registered capital of 1 billion yuan. The business scope covers the design of semiconductors, integrated circuits, chips, electronic components and electronic products. Sales.

Dong Mingzhu's Chip Dream: Zeng Haoyan wants to spend 50 billion now depends on Sanan Optoelectronics

And this inconspicuous company, the legal representative is Dong Mingzhu, Gree Electric shares 100%. The remaining directors and managers are executives of Gree Electric.

Gree has finally taken an important step in self-developed chips, and stripped out the chip research and development business as a wholly-owned subsidiary. According to previous reports, Gree’s goal is to develop high-end variable-frequency drive control chips and host chips, which will replace imported chips in the future.

Gree not only established its own subsidiary for chip development, but also did not stop at the other side. At the end of 2018, Gree invested 3 billion yuan to participate in the acquisition of Wingtech Technology, which helped Wingtech to successfully win 76% of the shares of Anshi Group and become the largest shareholder. Gree Electric also passed the investment unit of the Anshi Group.

As a world-class semiconductor company, Anshi Group has a full industrial chain of semiconductor design, wafer fabrication, packaging and sales. Its share in the global semiconductor industry is as high as 14%.

Gree Electric holds the shares of Wentai Technology as a second largest shareholder through direct shareholding and indirectly through Zhuhai Ronglin. This also added a significant boost to Gree’s road to chip development.

In addition to the non-public fundraising of Sanan Optoelectronics, which has raised 2 billion yuan, Gree Electric has gradually improved its layout on the road of self-developed chips. That is, lining promotes R&D, external shareholding or acquisition of mature companies to expand the chassis.

3. Dong Mingzhu’s Gree core is on the way to take off.

Because of the restrictions imposed by companies such as ZTE, domestic companies have paid more attention to the pain point of the chip. The previously stubborn “takenism” has clearly no longer adapted to the current international situation, and “self-sufficiency” is the future direction.

TCL is undoubtedly one of the first in the development of cross-border chips among domestic manufacturers. As early as 2013, the visionary TCL invested in two chip companies: Duntai Electronics and Jingchen Semiconductor. A year later, Ziguang Communications, which has two communication chip design companies, Spreadtrum and RADICO, was introduced, and continued to increase its holdings as one of the top five shareholders of TCL.

Dong Mingzhu's Chip Dream: Zeng Haoyan wants to 砸500Billion now relies on Sanan Optoelectronics

Although Li Dongsheng has been emphasizing that TCL is still in its infancy in the chip field, nothing has been achieved. But the discerning person can see that TCL has gone to the end of the self-developed chip. As a TV manufacturer, Huaxing Optoelectronics has been purchased to make it a stable source of panel supply. Together with the self-developed chip, TCL can realize the autonomy of the entire industry chain in the future.

Another home appliance giant Konka is also on the occasion of the 38th anniversary of the establishment of the time, announced that it will break away from a single home appliance business, invest in research and development, and integrate the vertical industry chain.

At the 2017 CES show, Konka showed its own 8K chip developed and won the CES Innovation Award. Li Hongwei said that Konka’s future chip investment will focus on design and packaging, and hope to become one of the top ten semiconductor companies in China within 5-10 years.

In addition, Galanz announced at the September 28th conference that it will cooperate strategically with SiFive China, the world’s leading semiconductor company. At the same time, Galanz released two chip products “BF-fine” and “NB-Shishan”, officially announced that it will enter the self-developed chip industry.

Industry rivals have made their own efforts to research their own chips, and everyone is more concerned about Gree. No matter how much Gree core can be done, no one can know now.

Gree has made progress in the main chip of the air conditioner, but if it completely replaces the chip used in air conditioners and smart homes, Gree has a long way to go.

The terminal manufacturers are now not developing a control chip such as a processor chip. The process technology and technical requirements are not high. Most companies can produce as soon as they are willing to invest. But the key lies in the class of connected chips and AI chips, Gree is still in its infancy.

“Haier, Hisense and Changhong have hundreds of people doing this kind of chip every year, and five years as a cycle have no results,” said the industry.

Can Gree achieve a decisive breakthrough in chip design, whether it is sustainable investment, and maintaining the high pressure situation of Dong Mingzhu is the key. Dong Mingzhu’s attitude will be whether Gree can come up with the life and death line of the independent chip.

Chip self-research is getting hotter and hotter now, and all of them are working on self-developed chips. But the thunder is so big, how much raindrops will eventually fall, and the industry needs to continue to pay to break the current dependence on chip imports.