novelones Chapter 111: We found Qualcomm! 200 million!
Chapter 111: We found Qualcomm! 200 million!
"I mean $85."
The barbed words and the doubled price did not change the expression on Lei Jun's face.
Lin Bin had already calculated the answer.
At the current exchange rate, this price is approximately 580 Chinese Yuan, which is $13 more expensive than the MediaTek MT6575's $72.
This price is more expensive than the cost of a single screen.
This price represents a significant increase compared to the previous generation of chips.
"Mr. Wang," Lei Jun began, his tone hesitant, "this price is considerably more expensive than MTK."
"Performance has improved by 40%, making it the most powerful mobile processor." Wang Xiang did not back down. "Mr. Lei, Qualcomm doesn't focus on cost-effectiveness; it focuses on technological leadership."
He switched to the next slide of the PPT, which showed the communication module of the MSM8255.
After saying that, he picked up the tea on the table and confidently drank it.
Since he dared to quote this price, he was betting that the other party would agree to the plan, the price being another matter...
"Moreover, we offer a packaged solution: CPU + GPU + baseband, all integrated. MediaTek chips require an external baseband, which incurs additional costs, power consumption, and PCB area."
He looked at Lei Jun.
"Mr. Lei should be able to figure this out better than I am."
The meeting room was quiet for quite a while!
Wang Xiang confidently looked at Lei Jun. Qualcomm's CPUs did not restrict compatibility with other communication basebands, but it would take time to adapt them and ensure a good network experience. Moreover, the cost of basebands was not low, and they were not as good as this solution.
This was a huge trap he had no choice but to accept.
After a moment of silence, Lei Jun suddenly laughed.
"Mr. Wang, the way you're saying it makes it sound like I'm here to haggle."
He stood up, walked to the window, and looked at the scenery outside.
"I'm here today to discuss cooperation."
He turned around.
"One million units, the first of its kind in China. That's a pretty big order."
Wang Xiang's expression twitched slightly. If he wasn't here to haggle, what else could he be here for?
Cooperation? What a joke!
When did this new factory become able to negotiate cooperation with Qualcomm? Unless it's called Honor...
He did indeed meet with Yu Dazui; they were also somewhat interested in the MSM8255…
While Wang Xiang was pondering, Lei Jun had already started telling a new story, and he still spoke at a slow pace.
"Our first mobile phone, made with rice, uses a Qualcomm single-core processor and sells for 1999..."
When he said that number, something in his eyes reignited.
"To be honest, Honor's solution was actually designed by us. I don't know how it was stolen by our competitors... But they only stole the solution, not the real core. I'm confident that I can take them down with 1999."
At that time, each series will have annual sales of at least ten million, which is a huge contract.
However, achieving this requires a certain level of strategic planning, so I need a three-month exclusivity period. Before Q3 of next year, the MSM8255 can only be used in Xiaomi phones in the Chinese market for the first three months.
Wang Xiang was silent for a few seconds, then laughed disdainfully.
Lei Jun is known as the "Cash King of Kyoto," and he sold 10% of his shares for $2500 million in his first round of financing... It was a great start, and he was very optimistic about it.
But after today's conversation, he felt that this person seemed a bit crazy... Could it be that he had misjudged him?
"Mr. Lei, this request..."
"I know this request is a bit excessive." Lei Jun didn't let him finish speaking. "But Mr. Wang, think about it... Transsion and Huawei have touted the Mtk6573 as the 'Kirin 1.' Most people only know that their optimization is very good, but they have forgotten the chip manufacturers' own design capabilities."
It also made MediaTek a bit arrogant, because the chip that had its price increased was no longer in demand.
The real big customers buy the MTK6573 and then modify it themselves. They also have their own chip design departments, and they might kick them out at any time.
Now, everyone laughs at Mr. Zhang from MediaTek.
He paused briefly, giving the other party time to think it over. Should Qualcomm become a subsidiary, or find a better partner to open up a broader market?
Wang Xiang chuckled dismissively again. If the rice company doesn't choose it, then nobody cares?
Seeing the other party hesitate, Rebus spoke again with his magical mouth.
"We each get what we need."
The negotiations lasted three hours, and the final terms of the agreement are as follows:
The exclusive domestic launch rights for MSM8255 have been granted to Dami Company, prior to Q3 2010.
The chip is priced at $55 per unit (package deal), with an initial order of 200 million units.
Qualcomm provides a complete set of reference designs and technical support.
At the launch event, the company will refer to the MSM8255 as the Fire Dragon S2 and include it in Qualcomm's Fire Dragon brand lineup.
When signing, Wang Xiang finally uttered one truthful sentence:
"Mr. Lei, 200 million units is no small amount. What if they don't sell..."
Lei Jun put down his pen: "Then I'll take the blame."
Wang Xiang smiled and said, "What I mean is, the value of this order has exceeded the rice company's valuation, so we need your company to pay 20% of the payment in advance as a deposit..."
…………
That evening, Lei Jun and Lin Bin dined at a Chinese restaurant near Qualcomm's headquarters in California.
The restaurant was mediocre; the stir-fried chicken was cooked like sweet and sour pork, but Lei Jun ate it very quickly, as if he hadn't eaten in a long time.
Lin Bin barely touched his chopsticks.
"Old Lei, 200 million wafers, $55 each. The cost of the wafers alone is $1.1 million. 20% of the payment is $2200 million."
Including other BOM components—screen, memory, battery, camera, and casing—one unit would cost at least 1500 yuan.
He looked at Leibusi.
"Selling for 1999, the gross profit is less than 500 yuan. After deducting R&D, marketing, after-sales service, and distribution channels, a net profit of 100 yuan would be considered good."
"Selling 2 million units and earning 200 million yuan is less than what you could earn in a month on Joyo.com, and the risk is far too high."
Two million orders is indeed a lot, but it's what Qualcomm requires. After all, this is for one of their biggest clients; otherwise, they would rather die than lower the price, as if they were starving a rice company.
Lei Jun put down his chopsticks.
"Brother Bin, I have a question for you."
"you say."
"What's the gross profit margin for Transsion's phones right now?"
"Their Powermax is in Africa. The BOM cost is about $70, and they sell it for $149, with a gross profit of $80, which is about 50%."
According to their investigation, this is a very standard profit model. After all, the issue of inventory backlog or product sales needs to be taken into account.
In addition, market factors need to be considered; it's already quite ethical for businesses in the African market to earn half a profit.
[Sound transmission: More than half!]
"That's right." Lei Jun nodded. "But what about the Honor Play? It's priced at 1999, but its BOM cost is over 1500, and its gross profit is less than 500. It's not much better than us."