Zhao Weiguo: The focus of the Tsinghua Unigroup model lies in "independent innovation"

In the past two years, Tsinghua Unigroup 　　, which was once famous for its "big-money" mergers and acquisitions , is adjusting its development model: Tsinghua Unigroup, which used to wave the banner of mergers and acquisitions in the capital market, is fading away, and what is emerging is the ever-increasing investment in research and development. In this regard, Zhao Weiguo, chairman of Tsinghua Unigroup, pointed out: "The external environment for corporate development is changing, and Tsinghua Unigroup's response methods will naturally change accordingly. However, Tsinghua Unigroup's development goals have not changed, and Tsinghua Unigroup's strategic core will not change. Tsinghua Unigroup entered the chip industry through mergers and acquisitions, and proposed a development model of independent innovation + international cooperation, and the current work focus has completely shifted to independent research and development." Let's follow the mobile phone portable editor to learn about the relevant content.

　　Explaining the “Purple Light Mode”

Ever since Tsinghua Unigroup successfully acquired Spreadtrum Communications 　　for US$1.78 billion in 2013 and RDA Microelectronics for US$910 million in 2014, "international mergers and acquisitions" has become the outside world's most intuitive understanding of Tsinghua Unigroup.

　　However, upon closer examination, the so-called "Ziguang model" is not just a simple "buy, buy, buy". In fact, upon closer examination, Ziguang Group itself has not formally proposed a "Ziguang model". The relevant discussions circulating in the industry now are scattered from Zhao Weiguo's speeches at forums or media interviews. "Capital is profit-seeking. Industrial development needs the support of capital. Capital invests in us, we use the money to develop industries, and capital then goes to the capital market to arbitrage." This was said by Zhao Weiguo in a public speech at a forum in 2015. In the interviews over the past two years, Zhao Weiguo proposed the "one, two, and three" of Ziguang. One refers to a positioning, Ziguang Group wants to become a world-class high-tech industrial group; two refers to two paths, independent innovation plus international cooperation; three is three combinations, combining corporate strategy with national strategy, combining university resources with market mechanisms, and combining international talents with local teams.

　　Therefore, if we really want to summarize a "Ziguang model", it should not just stay at the level of "mergers and acquisitions", but should at least include two key points, namely "independent innovation plus international cooperation" and "combining corporate strategy with national strategy". Among them, independent innovation is the foundation. Zhao Weiguo believes that both capital operation and international mergers and acquisitions are just means. "The integrated circuit industry is very expensive. Analyzing the characteristics of the integrated circuit industry, it can be summarized as 'capital intensive, talent intensive, technology intensive and global competition'. In such an industry, if you want to develop healthily, you must have large-scale capital investment and intellectual capital investment as a guarantee. Without the support of the capital market, government projects alone cannot meet the needs of development. Therefore, it is very important to win the support of capital." Zhao Weiguo said.

　　Tsinghua Unigroup's purpose of capital operation is to develop the real economy. "Capital is profit-seeking, and we use the power of capital to make it profitable. We use the power of capital to develop the integrated circuit industry, and then use the profits of the industry as feedback to support the continuous investment of capital in the industry," said Zhao Weiguo.

　　When talking about Samsung's development experience, Zhao Weiguo pointed out: "Samsung is a technology capital consortium. The chip business is only a part of Samsung's business. Samsung's finance and industry have provided huge funds for the development of the chip industry. Therefore, Tsinghua Unigroup should learn from Samsung's experience and become a comprehensive technology consortium with chips and cloud networks as its leading businesses. Only in this way can Tsinghua Unigroup accomplish the great cause of revitalizing China's integrated circuit industry."

　　Speaking of the changes in the current international and domestic environment, Zhao Weiguo said: "The integrated circuit industry not only has a huge market scale and wide applications, but also has huge profits once it takes the lead. Therefore, the blocking of integrated circuit enterprises in mainland China by the United States, Japan, South Korea, and Taiwan is due to both political and economic factors, and is a typical 'double standard'."

　　However, Tsinghua Unigroup is also making adjustments accordingly. "As the external environment changes, Tsinghua Unigroup's response methods will naturally change accordingly. However, Tsinghua Unigroup's development goals and strategic core have not changed," said Zhao Weiguo. Tsinghua Unigroup's goal is to build a world-class high-tech industrial group, and its capital operation is to serve the development of the real economy.

　　The “Heavy Technology” Cluster is Taking Shape

　　In fact, since Zhao Weiguo took over Tsinghua Unigroup in 2009, Tsinghua Unigroup has developed very rapidly. At that time, although Tsinghua Unigroup had many subsidiaries, it lacked core technologies and dominant industries, with an asset scale of only about 1.3 billion yuan, an annual revenue of only 300 million yuan, and negative profits. However, by 2017, Tsinghua Unigroup's asset scale had approached 200 billion yuan, with revenue of about 60 billion yuan. On July 21 this year, under the guidance of the Ministry of Industry and Information Technology, the China Electronics Information Industry Federation released the "2017 (31st) China Electronics Information Top 100 Enterprises", and Tsinghua Unigroup was included in the list of China's top 100 electronic companies, ranking 13th, 5 steps higher than the 18th in 2016.

　　The most important thing is that Tsinghua Unigroup has clarified the company's main business and development direction. In Zhao Weiguo's view, there are two main development paths for Chinese technology companies: one is the "heavy technology" route similar to international technology industry giants, driving endogenous growth through technology research and development; the other is the business model innovation route, relying on business transformation to recreate growth momentum. "The United States has a group of technology companies like GE, Google, Boeing, Qualcomm, Intel, and IBM, while China lacks 'heavy technology' companies." Zhao Weiguo said. In Zhao Weiguo's plan, Tsinghua Unigroup is to become an independent innovative technology company with a place on the world map.

　　Since June 2013, Tsinghua Unigroup has invested heavily in acquiring Spreadtrum , RDA Microelectronics, and H3C through mergers and acquisitions; started the construction of Yangtze Memory Technologies through independent investment; and formed strategic partnerships with global giants such as Intel, HP, and Western Digital through capital docking. Through this series of operations, Tsinghua Unigroup has gradually built an industrial chain from "chips to cloud".

　　In the layout of this "heavy technology" industrial chain, chips occupy an important position. In Zhao Weiguo's view, Tsinghua Unigroup has three reasons for investing in the integrated circuit industry. From a national perspective, the current vigorous development of the integrated circuit industry is a national strategy, a need for national information security and national industrial security, the key to the rise of China's science and technology industry, and the key to China becoming a truly great and powerful country. In 2015, the global integrated circuit output value was 345 billion US dollars, and China imported 230 billion US dollars; in 2016, the global integrated circuit output value was 350 billion US dollars, and China imported 227 billion US dollars. At present, China's local integrated circuit manufacturing accounts for about 10% of the global output value, of which Chinese companies account for about 5%, and the other 5% is created by foreign companies such as Samsung and Intel in their factories in China.

　　From the perspective of industrial security, China imports more than 2/3 of its chips. If the international situation changes, China's electronic information industry, which is worth more than 10 trillion yuan, and even China's entire modern industry will face catastrophic effects. From an industrial perspective, the development of the integrated circuit industry is related to the core competitiveness of the electronic information industry. As a core component, chips have captured most of the profits of electronic information products and directly determined the competitiveness of China's electronic information companies. Integrated circuits are equivalent to steel skeletons in modern industrial buildings. Without a local chip industry, there would be no independent modern industry and information industry.

　　When talking about Tsinghua Unigroup, Zhao Weiguo used a common business saying, "Don't do something you're not familiar with." "Tianjin Unigroup didn't choose semiconductors at the beginning. At the beginning, I looked at many industries, including the biomedical field. However, I always lacked a sense of it, and I found that I couldn't understand the industries I was not familiar with, and I was very confused. If you don't have a sense of an industry, you can't enter it. Li Ka-shing once said, 'Don't do something you're not familiar with,' and I personally agree with this. In the end, I still found that I only had the best sense for the IT industry."

　　In recent years, although Tsinghua Unigroup has encountered some setbacks in its overseas mergers and acquisitions, it has still achieved rapid development on the road of "heavy technology" with integrated circuits as the core. According to data, in 2016, Tsinghua Unigroup provided more than 2.5 billion chips to the world, and nearly 700 million mobile phones in the world use Tsinghua Unigroup chips. Tsinghua Unigroup's chips have also made great progress in many fields such as smart cards, televisions, and the Internet of Things. Shenzhen Tsinghua Unigroup Tongchuang has become one of the main suppliers of programmable logic devices in China. At the same time, Tsinghua Unigroup began to enter the chip manufacturing industry. The No. 1 plant of the first phase of the National Memory Manufacturing Base in Wuhan with a total investment of US$24 billion was capped ahead of schedule on September 28. In addition, Tsinghua Unigroup is also planning to promote the construction of chip manufacturing bases in Nanjing and Chengdu. Although there is still a gap in scale and strength with the world's high-tech giants in different fields, the current Tsinghua Unigroup has gradually built a pan-IT industry chain from "from chip to cloud", and has gradually become a high-tech enterprise dominated by integrated circuit design ( Spreadtrum , RDA, Tsinghua Unigroup Guoxin), storage (mainly Yangtze Memory), and IT information system (H3C).

　　Benchmarking Intel's integrated chip business

　　Affected by mobile Internet and the Internet of Things, the global integrated circuit industry is strengthening its adjustment. The large-scale semiconductor mergers and acquisitions that occurred from 2015 to 2016 are a realistic reflection of this trend. Although there were no large-scale mergers and acquisitions in 2017, it does not mean that the industry adjustment has ended. On the contrary, major companies are stepping up internal integration.

　　For Tsinghua Unigroup, starting with the privatization of Spreadtrum and Draca in 2013, Tsinghua Unigroup has built an industrial chain from "chip" to "cloud" with the integrated circuit industry as the forerunner. However, so far, this industrial chain formed through acquisitions still appears relatively loose. Therefore, in the future, in line with the international industry trend, Tsinghua Unigroup will further strengthen and integrate the businesses of different sectors such as Spreadtrum, RDA, Unigroup Guoxin, and Yangtze Memory, and strengthen independent research and development capabilities, so as to organically combine with the group's "cloud" business (such as 21Vianet, etc.) and "network" business (such as H3C, etc.).

　　This can be seen from the development trajectories of several core companies under Tsinghua Unigroup in recent years. Before Spreadtrum was acquired in 2013, its product line was single, mainly oriented to 2G and 3G TD-SCDMA (excluding 3G WCDMA and 4G LTE), with baseband chips and RF chips as its product categories, and its terminal solutions were mostly feature phones. After the acquisition, Spreadtrum has quickly changed the situation of single product (2G/3G feature phones) and single market (focused on China's TD-SCDMA market).

　　At present, Spreadtrum's products not only have complete baseband and RF chips covering 2G (GSM/GPRS/EDGE), 3G (TD-SCDMA/WCDMA) and 4G (TD-LTE/FDD-LTE), but also wireless connection chips have been commercialized on a large scale, among which WiFi/BT has passed the quality certification of terminal manufacturers such as Samsung; the annual shipment of GPS and Beidou chips exceeds 200 million, laying a solid industrial foundation for the large-scale commercial use of my country's Beidou positioning system. In addition, Spreadtrum has also joined hands with RDA to expand the Internet of Things market, focusing on connection technologies and products such as NB-IoT/eMTC and Bluetooth speakers.

　　Tsinghua Unigroup Guoxin, the outside world's understanding of it is mostly focused on the private placement and memory chip research and development. In fact, Tsinghua Unigroup Guoxin has been deeply involved in the field of integrated circuits for many years and is competitive in the smart chip market. Its chip products cover identity recognition, mobile communications, financial payments, and smart terminals.

　　With the development of the Internet of Things market, there is a lot of room for expansion in the field of network information security. Unigroup Tongchuang, a subsidiary of Unigroup Guoxin, is currently one of the main suppliers of programmable logic devices in China. In September 2016, it officially launched the first high-performance FPGA chip with a built-in high-speed interface (Serdes) in China, with a gate count of tens of millions. It is at the leading level in China in terms of both scale and performance.

　　As for Yangtze Memory, the total investment exceeds US$24 billion, mainly producing memory chips, and is the largest single investment project in China's integrated circuit industry. According to public information, Yangtze Memory Technology has developed a domestic 32-layer 3D NAND flash memory, which is expected to be mass-produced between 2018 and 2019. In addition to Yangtze Memory, in the field of chip manufacturing, Tsinghua Unigroup has also planned investments in Chengdu and Nanjing, and the total investment scale of the three major bases will reach about US$100 billion in the next 10 years. "Intel, TSMC, and Samsung's capital expenditures on chip manufacturing each exceed US$10 billion each year. If they cannot reach the investment scale of US$10 billion per year, they will not be able to enter the first group of chip manufacturing at all; an investment of US$100 billion in 10 years is an average of US$10 billion per year. This industry must not only have advanced technology, but also have production capacity, and only with production capacity can they have a say." Zhao Weiguo said.

　　Based on the above, Tsinghua Unigroup's intention to further integrate its chip business and develop towards the direction of "mobile network and Internet of Things overall solution provider" is very obvious. If we compare Tsinghua Unigroup with Intel, we can find that the two have certain similarities in industrial layout. Although Intel has long been the world's largest chip supplier, in recent years it has made great efforts to integrate its various business segments. On the one hand, Intel uses its monopoly in the data center field to adopt a comprehensive product coverage strategy to consolidate its server chip market share, while actively developing network communication chips and NAND Flash chips, and laying out artificial intelligence and autonomous driving. In 2015 and 2017, Intel initiated two acquisitions of more than 10 billion US dollars (acquiring FPGA giant Altera for US$16.75 billion in 2015 and acquiring Israeli technology company Mobileye for US$15.3 billion in 2017), which are important strategies adopted to transform into a "data company" in the field of smart cars and the Internet of Things.

　　"If a market cannot generate data, analyze data, or use data to provide value-added services, Intel will not enter." Intel CEO Brian Krzanich stated the purpose of its "data-driven" strategy.

　　A statement by Zhao Weiguo in a recent media interview is also worth noting: "As we all know, we are now in the Internet age, the Internet is everywhere, information is everywhere, and actually behind it are chips. Tsinghua Unigroup is a company that stands behind the Internet. We provide basic products and key technology services for the entire information industry and Internet industry."

　　Unleashing the power of “three-in-one”

　　In the face of unfavorable overseas mergers and acquisitions, Tsinghua Unigroup has accelerated its layout in different industrial clusters in China. On February 12, the Tsinghua Unigroup Nanjing Semiconductor Industrial Base started construction. The project is invested and constructed by Tsinghua Unigroup, and its main product is memory chip manufacturing, covering an area of ​​about 1 million square meters. In addition to building a chip factory worth up to 30 billion US dollars, Tsinghua Unigroup will also invest about 30 billion yuan to build a supporting IC International City, including science and technology parks, design and packaging industrial bases, international schools, commercial facilities, international talent apartments and other comprehensive supporting facilities.

　　On March 31, Tsinghua Unigroup signed a cooperation agreement with the Tianjin Binhai Hi-Tech Industrial Development Zone Management Committee to build a financial leasing company, an information big data platform, a public cloud data management center, an Internet smart park, and a high-tech industry research and development base in Tianjin, and jointly initiate the establishment of a technology transfer fund. The two sides will give full play to their respective advantages, deepen strategic cooperation in six aspects, and achieve mutual benefit and win-win results.

　　On April 22, Tsinghua Unigroup and the Chengdu Management Committee of the Tianfu New Area in Chengdu, Sichuan signed a cooperation agreement on the Tsinghua IC International City project, targeting the weak links in my country's high-end integrated circuit product design and manufacturing, and building sub-projects such as semiconductor manufacturing plants, Tsinghua Unigroup Technology Park and international communities, bringing together the global high-end technology industry chain and creating a world-class semiconductor industry base.

　　On June 16, Tsinghua Unigroup signed a strategic cooperation framework agreement with the Kunming Municipal Government. Tsinghua Unigroup will invest no less than 6 billion yuan to build the Tsinghua Unigroup Core Cloud Industrial Park in Kunming. According to the agreement, the Tsinghua Unigroup Core Cloud Industrial Park will carry out a series of layouts in the field of information technology to enhance industrial agglomeration and talent attraction, including in the fields of integrated circuits and Internet equipment manufacturing, giving full play to the leading role of Tsinghua Unigroup's leading enterprises, attracting upstream and downstream enterprises in the industry to settle in the industrial park; and building regional R&D bases for industries such as big data, cloud computing, and integrated circuits.

　　Affected by the Western countries' tightening approval of integrated circuit investment and mergers and acquisitions in China, it will be more difficult for Chinese IC companies to acquire overseas in the future. Influenced by this, Tsinghua Unigroup has set its sights on the domestic market. In Zhao Weiguo's development plan, local governments will be an indispensable support force. If you look closely, this is actually one of Tsinghua Unigroup's important development models. "National strategic promotion, local strong support, and enterprise market-oriented operation" are the models adopted in the construction of Wuhan Yangtze Memory and Nanjing Memory projects.

　　In fact, in addition to policy and funding considerations, these industrial parks located in the domestic electronic information industry clusters are also Tsinghua Unigroup's layout of the industrial ecology. Once these industrial parks are built, a large number of electronic information companies will gather. They are part of the future Internet of Things industry, both data producers and data consumers. The organic integration of these companies will form a huge ecological system and become the cornerstone of future development.

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