This is a result of the bet is not yet clear, Buffett, and Wang Chuanfu to side, Buffett has bet on to win, but Wang Chuanfu the time being, not yet.
Early and early winter evening darkness, Ningbo Beilun Port, Ningbo Bonded Area of BYD Semiconductor Company (formerly Ningbo weft) are still braving the hot and juicy, the company walls covered with the names of new employees, due to the large number of Many people have no time to apply for the factory documents. A large number of staff wearing a BYD factory clothing factory out of the door into the vast darkness, where there are many young engineers from Shenzhen, who are trying to adapt the first one in Ningbo, spent the cold winter.
These employees who, carrying Wang Chuanfu ambitions and dreams. “King of the total (Wang Chuanfu) this year already I’ve seen several times, and showed that he had high expectations of us here.” Ningbo BYD an employee told the reporter.
Original Ningbo latitude left nearly 10 Taiwanese executives still manages the production of this plant, while in the plant side of a large undeveloped land, has quietly put up a construction equipment – there is likely to be BYD Electric Driving equipment, new production lines.
This, however, is that even Warren Buffett was Wang Chuanfu high hopes for factories, the industry has recently attracted quite a lot of speculation.
November 16, there are media reports huge loss of Factory, Ningbo, BYD, BYD shares of stock immediately dropped all the way, from a peak of 88 Hong Kong dollars all the way to test a low 64 Hong Kong dollars. November 19, BYD Company Limited (1211.HK) released to clarify the announcement that BYD Ningbo Semiconductor Co., Ltd. (the former Ningbo latitude integrated circuit) in the amount of actual loss is far less than the media reported 50 million per month amount. As of December 1 closing, Zambia shares rose nearly 10%, to close at 71.8 Hong Kong dollars.
BYD capital market seems to have accepted the explanation, but around its electric vehicle strategy, until today, the true state of the plant is still like a mystery.
171 million of cost-effective trading?
BYD acquisition in the plant prior to the fate of Ningbo latitude can be described as bumpy.
In 2002, Taiwan’s Tsai Nanxiong living in America, Dr. Feng Mingxian and they both went to Ningbo, advocating their market theory: the state should not blindly support the high-end projects neglect of mature and cost-effective and better low-end market. In their view, were already slightly out of date although the low-end 6-inch production lines, but the basic market is large and efficiency should be good.
In early 2002, registered in the Cayman Islands in latitude IC Co., Ltd. Ningbo Free Trade Zone of Ningbo in the Wei-circuit set up factories, sub-sub-invest 249 million U.S. dollars, the introduction of TSMC in the 1980s 6-inch semiconductor production line, becoming the first Ningbo a semiconductor manufacturer.
Ningbo reporter in the original data in the latitude of the business to see a year’s project feasibility report, mentioned in the report, the plant is expected to produce 6-inch chip, 240,000, realized an output value 84 million U.S. dollars, of which 50% for export.
However, it did not, until the mid-latitude Ningbo, bankruptcy, its effectiveness is best only when the monthly production is also more than ten thousand pieces.
Ningbo Free Trade Zone in an internal analysis reported that mid-latitude structure of companies such as congenitally deficient funding, capital chain tension, because the registration number in order to import equipment replenishment, money invested very little, although our legal requirement, but the funding structure, causing birth defects , resulting in lack of liquidity, together with other risks, many companies insolvent.
Due to insufficient funds, the production line aging and other reasons, Ningbo latitude capacity has been unable to effectively enlarged. During this period, there came some Taiwanese executives cash in the event the company’s assets, further exacerbating the plight of the company.
Second half of 2008, Ningbo in the Wei finally insolvent, declare bankruptcy. In September 2008, Ningbo mid-latitude formally real estate-related assets, including industrial and electronic equipment, machinery and equipment, transport equipment and know-how transfer of technology projects packaged auction.
However, including the Founder Microelectronics, Shanghai Belling Microelectronics many domestic IT companies such as Ningbo, mid-latitude in the investigation of the situation, in view of its serious aging production facilities, are only a handful of interest in this matter, its first auction in order to stream the subject of an embarrassing situation ended.
A month later the second auction, BYD shares to 171 million yuan in Ningbo, the price looks latitude plant, equipment and other assets. At this point, from Warren Buffett’s MidAmerican Energy shares BYD shares, less than a month’s time.
Trade and Industry statistics, October 23, 2008, BYD money funded registered in Ningbo Free Trade Zone “Ningbo BYD Semiconductor Co., Ltd.”, registered capital of 2 billion yuan, including shares of BYD (1211.HK ) invested 180 million, accounting for 90% shares in Shenzhen BYD Lithium Battery Co., Ltd. invested 20 million, accounting for 10% of the shares.
Since then, Ningbo BYD Semiconductor has begun to take over the former Ningbo weft business. But the voices of doubt soon followed.
“Antique” is vertical integration?
Some analysts believe that the production line BYD purchased from TSMC the 1980s, second-hand products, dating back more than 20 years of history in the domestic semiconductor manufacturing can be called “antique” in the lower domestic competitiveness.
“As far as I know, BYD, after the acquisition of Ningbo in the Wei, discouraging a lot of the original OEM customers, no longer wafer foundry as its main business, but is integrated into the industry as a whole BYD chain them. “semiconductor industry analyst at research firm iSuppli China Gu Jun told reporters, in line with BYD has always been the” vertical integration “strategy.
Prior to this, Wang Chuanfu high-tech production line has been turned up their noses. The BYD’s IT business, its production line equipment, 60% by their own development model is to break down every process into a number of stations, and use a lot of manual instead of mechanized production, thereby lowering production costs. In automobile production, BYD also used the same way.
BYD whether this can be used in their own way of backward production lines and effective transformation is unknown.
BYD’s semiconductor plant in Ningbo understand that the current semiconductor production in the plant has reached 7000 per month – the highest latitude of the original Ningbo monthly production of about 10000. However, this production relative to other semiconductor companies is still too small. BYD orders within the group is still not sufficient to sustain the entire production line Ningbo latitude, so far it is still engaged in some of the plant’s external foundry business.
November 19, BYD notice that because just at the plant, Ningbo, the cause of the initial stage, we are still losing money. The question of whether the specific amount of loss the amount of the outside world has been the focus of debate, BYD claims that the actual amount of losses is far lower than the previous reports referred to 50 million yuan a month.
Ningbo BYD a finance official told reporters that the plant is far less than the actual loss, as reported in the outside world, the plant is currently running all good, the financial indicators of health, many of the original Ningbo latitude of the older employees have chosen of the stay.
Gu Jun analyzed, as has begun to integrate into the plant, Ningbo, BYD whole industrial chain, so the loss amount can be controlled within a certain range, can not, as rumors of so much. In addition, Ningbo plant is very low acquisition cost, and therefore can be saved a lot of financial depreciation.
Newspaper access to industrial and commercial data show that since 2002, played by the end of 2006, registered in the Cayman Islands in latitude IC Co., Ltd. Ningbo is divided into seven sub-latitude to invest 249 million U.S. dollars (including some of the equipment and patent funding), The BYD acquisition of the factory, only to spend 171 million yuan.
Due to equipment purchased under BYD more than 20 years of history, so the financial cost of the equipment depreciation of the flat piece, is almost negligible. In addition, the BYD also received, including 34,315.72 square meters of real estate, and is located in Ningbo Free Trade Zone of 131,054 square meters of land.
“Ningbo BYD factory is just a small 6-inch plants, there are orders on production, if the shutdown is not impossible to produce such a huge loss.” Gu Jun analyzed the current costs of Ningbo BYD only equipment maintenance, personnel costs, purchase costs of raw materials, there may be a part of R & D expenses.
Gu Jun said that if BYD not to be transformed into OEM production line, Ningbo, business purposes, but only with the production line BYD Group, the lower end of the internal demand of IC components, the transformation of the cost of its production lines will be greatly reduced.
Wang Chuanfu wishful thinking?
For the BYD factory in Ningbo, the second uncertainty is that, this old line’s ability to produce high-tech electric car drive module, and form a stable production in order to reduce costs.
Wang Chuanfu has said, Ningbo BYD semiconductor products in the future will be the core of the IGBT (Insulated Gate Bipolar Transistor) – This is considered to be one of the core technology of electric vehicles. In electric vehicles, IGBT is the role of AC and DC conversion, but also bear the high and low voltage conversion.
Currently there is no manufacturer can produce and package such a cutting-edge IT components, all the dependence on imports, while the use of large-size electric vehicle IGBT current import costs as high as more than 10,000 yuan each, which greatly hindered the Wang Chuanfu lower electric car costs. Wang Chuanfu has claimed, BYD Ningbo factory IGBT cost is only about 1,000 yuan, but the industry pointed out that this is likely only his wishful thinking.
“We know that acquisition of Ningbo BYD latitude, it has been hoped that the development and production in the IGBT to achieve a breakthrough, but this process is not easy.” Nanjing Yin-mao Microelectronics one executive told us – of the company by the United States, Dr. returnees MIT team was founded, is considered the highest level of domestic R & D IGBT technology, one of the enterprises.
According to him, the current domestic piece of technical bottleneck in the IGBT is mainly IGBT chip manufacturing and packaging processes – especially in this part of chip manufacturing, there are no any one company has the strength in this regard.
So now this piece of technology in the accumulation of BYD To what extent has it in the end?
The Nanjing Yin-mao micro executives pointed out that technically speaking, BYD to buy the production line is already very old, which means that engineers should be in accordance with existing old equipment a good match, spend more energy go to debug and select the appropriate parameters – which further increased the difficulty of development and production of BYD.
If you choose to update BYD production lines, it means a huge additional expenditure. From the previous construction of the domestic chip plants cost point of view, is willing to spend the billions of dollars of cost.
“BYD immediate Ningbo factory could only produce a few simple IC products, I guess have to make the use of electric vehicles in line with specifications of the IGBT module at least two years.” BYD Microelectronics, one dealer told reporters .
BYD sold on the market today IGBT products from ABB and other foreign companies to import the chips, in the factory in Shenzhen BYD Microelectronics complete package. BYD IGBT products of smaller sizes, compared to foreign products and the stability and there is still a gap, is mainly used for welding, inverter, industrial control and other fields.
The field of electric vehicles need IGBT product is a completely different concept.
Electric vehicles are more than IGBT-life requirements are ordinary IGBT products for industrial use more than 10 times. This technology vendors for the world is both a great challenge, only Germany’s Infineon Technologies and a few other foreign manufacturers to master this technology.
The BYD electronics distributor, said it is selling low-end BYD IGBT products in the market’s response is also very general, indicating at least so far, BYD in the IGBT on the production process has not yet reached a very good state.
For BYD and Wang Chuanfu, the Ningbo project is more like a big chip bet, once a major breakthrough in its core technology will greatly enhance its competitiveness in the field of electric vehicles, even with regard to its IGBT advantages of radiation other industries.
October 16, the internationally renowned investment bank Barclays Buffett nearly 10 times the subscription price of 78.145 Hong Kong dollar holdings of 3232.75 million BYD shares. Capital market, sought after, making BYD get more R & D investment.
However, the special nature of this industry is that capital investment alone will not necessarily bring flew into outputs.
Previously, the country started very early in the research and development in the IGBT, the central project and allocate funding has also been a wave of another wave, but at present, domestic manufacturers in the IGBT technical level and market share and abroad, there is still a a large gap.
“To solve the IGBT’s not just throwing money at R & D and production processes can be solved, and will take time and accumulated experience.” Nanjing Yin-mao Microelectronics executive said, foreign countries against China in the technological blockade imposed by a very strict, domestic R & D and manufacturing talent is scarce, and even the import of equipment is also subject to layers of restrictions that may affect the progress of BYD’s research and development.
BYD, semiconductor
