Although chip manufacturing companies have basically integrated the industrial chain to achieve completely independent intellectual property rights and production, there are only a few things that can restrict them, such as lithography machines.
"If it's a lithography machine, I can consider it, but Mr. Warren, I have two questions. The first is why you want to invest in a chip company, and the second is why you can ignore your country's officials and give me the lithography machine."
Although Si Mingyu's chip manufacturing company already has thirty production lines under construction, this is limited by the fact that there are only thirty lithography machines. Otherwise, sixty or ninety production lines could be built.
It is no exaggeration to say that if Si Mingyu goes out and shouts, people who want to invest money can be sent three miles away. Who would not want a business that is sure to make money?
"Some things may involve your company's secrets. First of all, I have to apologize to you." Mr. Warren said calmly.
"It's okay, you don't have to worry about it."
Before investing in a business, it's essential to fully understand the investment target, and using some means to do so is perfectly normal. They told you they were treating you as an equal partner. Otherwise, if you couldn't find out, wouldn't the whole thing be a lie? So Si Mingyu didn't say anything, and could only take stricter precautions after returning.
"As far as I know, East Asia Mingyu Integrated Circuit Manufacturing Co., Ltd. has basically mastered chip manufacturing technology, and all upstream industries have been opened up, achieving your country's own production."
Si Mingyu just listened quietly and did not deny what Mr. Warren said.
"Although photolithography technology is difficult, it's not impossible to overcome. It's only a matter of time before you develop your own 5-nanometer photolithography machine. The 30 production lines currently under construction can meet at least one-third of the nation's demand for high-end chips, a third of the entire Chinese high-end chip market, and there's absolutely no shortage of sales. Such a high market share will bring huge profits."
"I understand." Si Mingyu nodded to show his understanding.
What Mr. Warren said is correct. China spends nearly 2.8 trillion Chinese yuan on chip imports every year. Leaving aside the mid- and low-end chips, even if it is only the high-end chips, one-third of it will bring in nearly 300 billion Chinese yuan in revenue. Converted into US dollars and multiplied by 9% of the shares, it is about 3.8 billion US dollars, and the final amount should be more than 2 billion.
The entire chip company has invested a total of 200 billion Chinese yuan, and 9% of the shares is equivalent to 2.5 billion US dollars. It is not an exaggeration to say that it will pay off in three years.
This is also the reason why Si Mingyu wanted to pull a group of Internet giants to participate in it. The cake is too big and it would make people jealous if he eats it all by himself.
The reason why we did not look for manufacturing entities to invest is because these companies only share the piece of cake that China has a promising future, and there will be a third piece of cake in the future.
But Mr. Warren didn't even want to take out the 2.5 billion, which brings us to the second question he raised, which is to invest in the company using lithography machines.
"Although only ten of the thirty production lines are EUV lithography machines, if you include the other production lines in your country, they can probably meet most of the demand. When the number reaches a certain level, it won't matter if we add a little more." said Mr. Warren.
"So what's your plan? You know we only lack EUV lithography machines." DUV lithography machines can still be purchased if we think of a way. If the old man uses this to invest, then there will be no need for it.
"Of course. Five EUV lithography machines represent a 9% stake. How about that?"
The price of five EUV lithography machines would not exceed US$1 billion, and the shares acquired would be worth US$2.5 billion, which was a huge profit. But then again, Si Mingyu couldn't buy the lithography machines at all, so it seems that Mr. Warren's cut was not too harsh.
"Mr. Warren, your offer is really tempting. Please allow me to consider it. How about I give you a reply within three days?" Si Mingyu couldn't make a decision on such an important matter on the spot.
"Of course, three days is nothing." The old man didn't care. It was very fast to get a result in three days for such a big business.
Si Mingyu had no doubt about the truth of what Warren said. The fact that he could say it in front of Gates showed that there was some kind of agreement between the two. If these two wanted to do something, it was definitely possible.
After bidding farewell to the three bosses, Si Mingyu was busy with this matter for the rest of the time. First, he called Jiang Xueyi and Pei Songqiang from the "company" to confirm whether the shares could be sold. Then he called Gu Shuanghui to discuss how to maximize the benefits, and then he informed several shareholders to listen to their opinions.
In addition, Si Mingyu also has to negotiate with Mr. Warren and Mr. Munger to get the best terms.
Zhang Ningxi and Lin Shirui were responsible for taking care of his daily life.
.
Three days later.
"Mr. Warren, Mr. Munger, it's a pleasure to work with you."
“It’s a pleasure to work with you.”
The two parties exchanged signed agreements, and Berkshire Hathaway officially became a shareholder of Ya Mingyu Integrated Circuit Manufacturing Co., Ltd.
Of course, Si Mingyu's negotiations were not in vain; he managed to reduce the other party's stake to 8%. Mr. Warren knew that his discount was a bit steep, but he agreed based on the principle of making money first.
The agreement stipulated that Berkshire Hathaway only had the right to receive dividends, and Si Mingyu had the right of first refusal if he wanted to sell his shares. The agreement with other shareholders also included these two clauses, so Warren had no objections.
He invested in the company with the intention of making money. If the chip company does not go public, the 1 billion yuan he invested can bring him at least 2 billion yuan in net profit every year in three years. If the chip company goes public, he will make even more.
But you can't expect merchants not to exploit contract loopholes in transactions.
The five EUV lithography machines that Warren agreed to purchase were secondhand from TSMC. After all, he owns TSMC shares, and with the launch of ASML's 2-nanometer lithography machine, TSMC was also preparing to upgrade. This is also why he was able to obtain the lithography machines, as dismantling the old ones made the operation much simpler.
Although it is second-hand, it does not affect its use. For this, Mr. Warren only needs to pay less than 800 million US dollars.
With the addition of five additional lithography machines, the chip manufacturing company's production capacity will increase and its profits will definitely increase. Will Mr. Warren's dividends increase?
Of course not. Before signing the agreement with the old man, Si Mingyu had already donated his five EUV lithography machines to China Youwei Group as equity, so this part of the profit had nothing to do with the old man.
After getting the lithography machine, Mr. Ren immediately started building a chip production line. Since Guoxing Group had already integrated the upstream industrial chain, China Youwei Group only needed to copy one. If it could be replaced by its own technology, it would use its own technology, and if it could be replaced by its own cooperative company, it would change the cooperative company.
The purpose of doing this is to ensure that there are at least two or more companies in the same field in the country as suppliers.
In Mr. Ren's chip production company, except for Si Mingyu who holds 15% of the shares, other shareholders are physical manufacturing companies.
If both chip manufacturing companies go into production, they can solve nearly half of the country's high-end chip supply problems.
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