Is it ridiculous that Dong Mingzhu spent 50 billion to make chips? How much money does this industry burn?

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At the end of last month, Gree Electric Appliances disclosed its annual report, which showed that the company's revenue in 2017 was 148.286 billion yuan, a year-on-year increase of 37%, and its net profit was 22.402 billion yuan, a year-on-year increase of 45%, setting a historical record.

Screenshot of CCTV Finance video

But at the same time, the company also announced that there would be no dividend plan in 2017, and the reserved funds would be used for new industries such as integrated circuits . This is the first time in 11 years that Gree Electric has announced no dividend, and the news of Gree's no dividend has quickly become the focus of the market.

Dong Mingzhu said: "As for Gree, I feel that I have to be responsible to investors, because Gree is for long-term sustainable development, not just a one-time dividend and then no more next year. Many of our listed companies have run into problems, and from the overall average, our dividends to shareholders have exceeded 44%. Even if I don't pay dividends this year, my average dividend rate has reached 44%, which is also very high when taken out of the profit. So why don't I pay dividends? It's easy for us to pay dividends, but Gree's sustainable development requires strategic planning. We want to make integrated circuits. This is where everyone sees the current problems, because you don't have core technologies. And if you want to be a creator, if you want more people to change because of your products, then you must have core technologies."

Screenshot of CCTV Finance video

Dong Mingzhu said that only by mastering core technologies can Gree achieve sustainable development. The core technology Dong Mingzhu mentioned is chips.

She said: "We want to make high-quality products. Now that we have the strength, we should have our own chips. When we can master chips and make high-end chips, we can serve the world."

Dong Mingzhu also responded for the first time to the doubts about investing in chip research and development: "I don't need the country to give me money, I will invest myself, I must succeed in chip research, it's just a matter of time. My investment in chips has not affected the development of my company, my investment in chips has not affected my profits, I want to ask, if I make 150 billion today, my profit is only 5%, do you blame me? I have a profit of more than 7 billion. I have made 15% now, I take 10% for research and development, is it not okay? If I don't have this profit, can you blame me? In the home appliance industry, our highest profit is only 7%, I have 15%, I am the same as others, so I will take 7%, I will take more than 10 billion for research and development, there is nothing wrong with it. I will invest 10 billion this year, 10 billion next year, 30 billion in three years, and even 50 billion in three years, there is no reason why I can't do it. Our phased air conditioners have gradually started to take off, maybe by this time next year, you will see that all my air conditioner chips will become mine."

Investing 10 billion every year and 50 billion after three years may sound like a lot at first glance, but is it really enough?

Let’s first take a look at IC Insights’ semiconductor R&D spending rankings for the past two years.

IC Insights Semiconductor R&D Spending Rankings 2017

(Photo from IC Insights official website)

IC Insights' 2016 Semiconductor R&D Spending Rankings

(Photo from IC Insights official website)

According to the IC Insights report, the top ten companies in global semiconductor R&D investment for two consecutive years are Intel, Qualcomm, Broadcom, Samsung, Toshiba, TSMC, MediaTek, Micron and SK Hynix.

Companies have also spared no effort in investing in scientific research funds. Their annual investment in research and development funds starts at more than ten billion US dollars, and sometimes even reaches tens of billions of US dollars.

Intel, the leader in the semiconductor industry, spent $13 billion on research and development in 2017. The expenditure on building new factories and purchasing equipment is also astronomical.

For example, the 14nm factory of SMIC, a civilian IC company, and the factories of some other companies have investment amounts of RMB 40 to 50 billion. And these factories are generally 2 to 3 generations behind the international leading level.

From this perspective, Gree's claimed annual investment of 10 billion RMB in chip research is not a huge amount.

Of course, there are many types of chips, such as communication chips, artificial intelligence chips, LED chips, computer chips, etc. What Dong Mingzhu mentioned is actually just the air conditioning chip, and the specific details have not been determined.

But she said that she would invest 50 billion yuan to make chips. After hearing this, many people accused her of not really taking out 50 billion yuan to develop chips, and would she choose to fire blanks at the right public opinion point? Instead, they used her ignorance that the chip industry is the product of large-scale global cooperation, and it cannot be made just by money, and made a fuss about the performance of the ignorant and fearless, which is a bit of a miss.

Dong Mingzhu went to Zhuhai in the early 1990s and worked as a salesperson for Gree. At that time, she didn't know anything about air conditioners, but didn't Gree make air conditioners the world's number one in terms of shipments under her leadership? Of course, compared with the technical development difficulty of chips, the difficulty of making air conditioners is simply a horsetail tied to tofu - don't mention it, but chips are always man-made. After decades of development, the technology is very mature today. As long as the people who understand chips on the earth have not died, the machines for making chips have not stopped production, and the companies holding chip integration technology patents still want to make money, we can't jump to the conclusion that Dong Mingzhu can't invite technical experts, and can't buy equipment and patents. Besides, how many things in this world are made by people who know the business and promoted by people who know the business? The story of the "King of Inventions" Edison who invented the incandescent light bulb, which we have known since childhood, is now clear. It turns out that it was the "Matthew Effect" of celebrities behind it. The inventor of the incandescent light bulb was not Edison at all, but he did a great job in promoting the incandescent light bulb.

Those who say that Dong Mingzhu does not understand the difficulty of chip technology development sound like technical experts. We are so short of chips that we are strangled by others, but we have not seen them stand up to save the country from the crisis. Dong Mingzhu, a female man, refreshed the three views. Compared with chip technology experts, none of them is a man. In

terms of the possibility of developing chips, Dong Mingzhu's chip development is much more likely to succeed than a few chip technology experts. Apart from other things, in terms of the amount of funds, management ability, social influence and business appeal, chip experts are more suitable to work for her rather than take on the responsibility themselves. Is there anything worrying about Dong Mingzhu's statement that she wants to develop chips? Yes. That is, will the fact be as she said today, that she can really invest 50 billion yuan in real money, rather than just empty talk and miss the chip.

Source: Comprehensive compilation from the Internet

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