Rebirth 99 to become a car giant

Chapter 594 A new chapter, China Auto Parts enters the 2.0 era

As the largest auto parts group in China, Nanshan Group's Nanshan Engine, Nanshan Transmission and Nanshan Auto Parts will be involved in any big moves made by almost all China's auto OEMs.

Naturally, various parts and components companies will hear some rumors more or less.

Especially this time, Nanshan Group's actions are so special. It has domestically replaced a large number of chips for key components such as ECU (engine control unit), TCU (transmission control unit), and ESP (electronic stability system).

This is something that no supplier has done in the past.

Although Nanshan Group only simultaneously reduced the prices of related parts by 3%, it brought great stimulation to many OEMs and competitors.

"Mr. Li, the Volkswagen Group in Shanghai is asking us how much we can achieve this year's annual price reduction?"

"Is there any VA proposal that we can move forward with?"

United Electronics, as a supplier of ECU, TCU and other parts to Modu Volkswagen, naturally felt the pressure this time.

As a joint venture of Bosch in China, United Electronics is quite popular among various OEMs in China.

It can be said that they do both joint venture car companies and independent brand business.

Compared with companies such as Continental and Denso, some measures taken by United Electronics will appear more flexible.

So even if the main shareholder is Bosch, they are more popular than Bosch in China.

"What we supply to Volkswagen are various functional parts. In addition to making some generational changes when developing new models, where can we usually get VA?"

As the sales director of United Electronics, Li Jiating doesn't like to be asked such questions by customers.

Because they have no satisfactory answers to these questions.

Fortunately, United Electronics' competitors, such as Delphi, Hitachi and Denso, basically have the same virtue.

So it is not possible to lose orders for this reason.

But now with Nanshan Group, the situation has begun to become different.

Although these core control parts of Modu Volkswagen are not supplied by Nanshan Group, in the case of Modu Passenger Cars, the relevant parts are supplied by Nanshan Group.

The deputy director of the Purchasing Department of Modu Volkswagen is a person assigned by Modu Automobile Group, and will have various exchanges with Modu Passenger Cars from time to time.

Therefore, the Magic City Volkswagen naturally knew about Nanshan Group's chip switching.

There was even some pressure put on them to reduce costs.

"I replied to the other party in the same way, but people say that Nanshan Group can change chip suppliers during mass production to achieve this year's annual decline. Why can't we?"

When Tang Zimu said this, Li Jia's mood became even worse.

Obviously, he had also heard about the fact that Nanshan Group replaced the chips of some parts with chips produced by Nanshan Semiconductor within its own group.

I didn't expect that the customer would take action so quickly.

"Zimu, I don't think you should be led by your customers on this issue."

"Nanshan Group previously used chips from manufacturers such as Texas Instruments, Infineon and NXP. These chips are relatively mature models on the market and the prices are not very high."

"Now Nanshan Semiconductor has begun to produce automotive-grade chips, so they will switch."

"The switching logic behind it is to support the development of Nanshan Semiconductor, and it is definitely not to reduce costs."

"Even in my opinion, after their chips are switched, the cost may become higher."

"For products such as clothes, shoes and socks, products produced in China are much cheaper than those produced in Germany."

"But for high-tech products like chips, those produced by Chinese companies may be more expensive than those produced by German companies."

"Especially now that Nanshan Semiconductor has just started mass-producing chips, and various amortization expenses are relatively high."

"Not to mention a price reduction of a few points, even if the price is not increased, I think they have absorbed part of the cost impact internally."

Li Jia is also an expert in the automobile industry and is relatively knowledgeable about various situations.

In his view, the localization of chips at this time will not reduce costs at all.

There is also a VA proposal, which should not have anything to do with cost reduction at all.

At least that's what it looks like at this stage.

Of course, he also knew that when a company like Nanshan Semiconductor first started mass production, it would definitely quote a lower price for its chips, so that it could reflect its cost competitiveness.

Otherwise, no one will use you at all, and then there will be no point in talking about it.

Tang Zimu can naturally understand Li Jia's statement.

He even thinks that the procurement of OEMs should also know this truth.

But in the end, the price offered by Nanshan Group to the OEMs did drop, which put other competitors in line!

Reducing the price is not the case, and it seems inappropriate not to reduce the price!

Of course, Cao Yang would definitely not care about the depression of competitors like United Electronics.

Even the more depressed the competitors of Nanshan Group are, the better Cao Yang's mood is.

"We in the industry are all aware of this logic. The cost of Nanshan Semiconductor's chips is definitely much higher than that of manufacturers such as Infineon. Even if it is sold to sister companies such as Nanshan Auto Parts at cost price, the final selling price will not be Low."

"Unless Nanshan Group specifically allocates some funds to subsidize parts in this area, there will be no cost reduction effect."

When Tang Zimu said this, Li Jia did not directly refute.

However, after all, this matter cannot be decided by him as a sales director.

So soon, he formally reported the matter to the upper management and communicated with Bosch.

As the main supplier of Mercedes-Benz, BMW and Volkswagen, Bosch will naturally take corresponding actions after learning the relevant news.

"Mr. Liu, does the headquarters still have no plans to purchase chips in China?"

"Many customers are now asking us to investigate the source of the chips."

"The purpose should be to promote the localization of chips."

As the sales manager of Bosch, Ren Cai naturally knows the first-hand requirements of the OEM.

However, she couldn't make any decisions on these requirements by herself. She still had to take them back and discuss them with Sales Director Liu Zhenbo.

Bosch now regards China as its most important overseas market and attaches great importance to its development here.

Even under the influence of the financial crisis, Bosch's expansion in China has not stopped.

Therefore, Rencai pays more attention to the requirements of customers.

"Our chips are either produced by ourselves or purchased from Infineon. No matter which type of chips we produce, it is impossible to achieve localization."

"This kind of investigation conducted by the customer has no practical significance."

Ren Cai naturally understood what Liu Zhenbo said.

But it is of no use for her to understand. The client must also understand.

"Mr. Liu, I have already explained it to the customer, but the other party still wants to know our chip models, suppliers and other information, and hopes that even if we are unable to localize it now, we will list our future localization plans."

Ren Cai explained a little depressedly.

A few years ago, if a customer had made such a request to Bosch, Ren Cai would have ignored it.

But now the situation in China's auto parts industry is beginning to change, and many things can no longer simply follow the strong practices of the past.

Bosch, which has never regarded itself as Party B, is slowly adjusting its attitude towards OEMs.

Otherwise, Ren Cai would not have reported this matter to Liu Zhenbo and would have refused.

"Have you figured out why the customer suddenly has these requests?"

"Our quotation method has always been a fixed price without providing quotation details. This was the case before, it is still the case now, and it will still be the case in the future."

"It's not like those customers don't know."

In the automotive industry, OEMs definitely want suppliers’ quotations to be as detailed as possible when purchasing.

It is best to have specific details of material costs, specific calculation methods for processing fees for each process, and specific conditions for various purchased parts.

There are also accounting and explanation processes for various factors such as packaging fees, transportation fees, and development fees.

Generally speaking, relatively weak suppliers can only listen to the OEM's procurement instructions and submit these detailed information.

But for most auto parts giants, they are not used to OEMs.

My quotation for parts is a fixed price. Even if I split it up for you, it is just a simple split, and it cannot be so detailed.

It’s not that they can’t split it up. As a parts giant, their internal cost management must be in place.

But they simply don't want to tell the OEM so much information.

In particular, the prices of some parts are quite outrageous. Once they are separated, there will definitely be some unclear prices.

For example, you are using ordinary JSC270C steel plate, and the dosage is 1 kilogram, but your material fee quotation is tens of dollars. Even if you talk nonsense, you can't explain why it is so high.

So these giants simply don’t break up any details, you can use it or not.

Because suppliers at the same level basically adopt similar methods to deal with OEMs, a strange and not surprising situation eventually forms.

Within the same OEM, the level of detail in the quotations provided by different suppliers is completely different.

"Mr. Liu, I also inquired about it. This matter should be related to Nanshan Group."

"It's even because Nanshan Group has proposed a plan to localize chips, talking about reducing costs and ensuring supply, and is reporting to many customers."

"Taking this opportunity, customers naturally hope that more manufacturers will follow Nanshan Group's approach and provide relevant chip details and localization plans."

"Many customers even regard this measure as an annual price reduction policy this year."

After Ren Cai explained this, Liu Zhenbo probably understood what was going on.

However, I understand that Bosch will definitely not provide this information to the OEM.

To put it bluntly, some parts are purchased directly from the German headquarters and then resold to the OEM.

Even Bosch China does not know the component information of these parts.

Even for parts made in China, many component information is only known to their production factories.

There is no relevant information in the sales department.

Thinking of this, Liu Zhenbo felt that he had found an explanation.

Just leave the blame to the headquarters.

If you have the ability, go to the Bosch headquarters. Anyway, these information headquarters must be there.

If the headquarters is willing to provide it, it has nothing to do with him.

…

Just when many OEMs began to approach component companies to discuss chip localization, as the general manager of Autohome, Yu Yu also felt that he needed to exert some influence on this matter.

The semiconductor business is the focus of Nanshan Group's future development. It has invested tens of billions so far, and plans to further expand its investment.

Under this circumstance, Autohome must find a way to make some contribution to the development of this cause.

"He Ling, please arrange for a few people to go to Nanshan Semiconductor to learn about the chip production process and application scenarios."

"Then we will make a special topic, focusing on popularizing chip-related knowledge and the development of the chip industry at home and abroad."

"Through this special topic, we want to make everyone realize that although the domestic automobile industry is already the world's largest market, 99% of the chips installed in our cars are still imported."

"We are a big automobile country, but we still have a long way to go before becoming a strong automobile country, and we are even further away from being a powerful chip country."

"In the special article, we have to find ways to guide everyone to support the localization of chips."

"The best thing is to interview experts and scholars from some ministries and commissions and promote some incentive policies related to chip localization."

"Also give the OEMs an early warning and deduce what will happen in the market in the event of a chip crisis."

"Perhaps a chip that can be bought for 5 yuan now will not be available for 500 yuan a piece by then."

“I believe that OEMs don’t want to see such a scene.”

Yu Yu quickly found an entry point.

Although this report will make everyone feel Autohome's support for Nanshan Group's semiconductor strategy, the content of the report leaves people speechless.

After all, everything they say is true.

Even if you want to refute, you can't.

The most important thing is that Autohome has stood on the moral high ground this time and is not afraid of refutation at all.

It would even be best if a few celebrities jumped out to oppose Autohome's views, and everyone could debate it and increase the popularity of this topic.

"The localization rate of chips is so low that even many cars do not have a single chip produced domestically."

"It is estimated that many OEMs were not aware of this situation before."

"After all, there are no parts like chips in the parts list they manage."

"Even the drawings they issued are not as detailed as the chip model."

"I have seen the TCU drawings of Nanshan gearbox before. It only introduces some shells and main units of the TCU, and then stipulates some main testing indicators."

“Many of the remaining things cannot be seen on the drawings.”

“For example, what type of chip is used and which supplier it is purchased from, none of this information can be seen.”

"Since there have been no problems with the supply of chips in the past many years, the OEMs did not pay attention to this situation in their procurement."

"After we raised this topic, it was just a show. There should be some actions from the OEM."

Regarding Yu Yu's arrangement, He Ling was also able to understand the situation very well.

There are so many parts on the car, but not many are actually designed by the OEM.

Most of the functional parts are drawings drawn by professional suppliers, which are then submitted to the OEM for design approval and are considered final drawings.

In this case, the OEM's procurement is certainly not familiar with the specific composition of the parts and components.

This is especially true for things like chips.

"Yes, this is the effect we want."

“Even if it’s just a show, it’s a good thing for Nanshan Semiconductor.”

"At least the various OEMs will not always be so resistant to the chip change plan proposed by Nanshan Group."

He Ling could understand what needed to be done and the purpose of the matter by simply mentioning it, which made Yu Yu feel very comfortable.

To gain the trust of a leader in the workplace, a person often needs He Ling's ability to observe words and emotions.

Otherwise, the leader has to worry about everything. Unless you have a strong background and have the resources the leader needs, you can’t expect to be reused.

With the actions of Autohome, there is slowly a discussion about the localization of chips in the Chinese automobile industry.

Even because of the Autohome report, many people suddenly realized that the domestic chip industry is so weak.

Almost all of the chips used in more than 10 million cars need to be imported.

The news that China’s chip imports exceeded crude oil last year was also revealed.

Naturally, this topic quickly became a hot topic.

"Mr. Park, I think that in addition to investing in memory production in China, the company can also arrange some production lines for car-grade chips in China."

"Now China seems to be more enthusiastic about the localization of car-grade chips, but the technology of these chips is actually not that high."

"So we don't need to worry about advanced technology being stolen after production in China."

As the person in charge of Samsung's first semiconductor factory in China, Li Zailin naturally hopes that the business he is responsible for can develop and grow.

If the advanced chip production line is placed in China, there will definitely be a lot of controversy.

But it doesn’t matter what is relatively backward.

"Although the process of automotive-grade chips is not very high, many are still using 200 nanometer processes."

"There is really no risk of leaks in this regard."

"But car-grade chips have many unique features, and these technical thresholds are not mastered by many Chinese companies."

"If we produce car-grade chips in China, other chip companies in China may soon be able to break through the threshold of car-grade chips."

Park Chung-hee expressed his worries.

The focuses of automotive-grade chips and chips used in consumer electronics are completely different.

The temperature range in the engine compartment is -40°C~150°C, so vehicle chips must meet this larger temperature operating range, while consumer chips only need to meet the operating environment of 0°C~70°C.

In addition, vehicles will encounter more vibrations and impacts when traveling, and the indoor environment has problems such as high humidity, dust, and corrosion, which are far beyond what is needed for consumer chips.

In addition, the life cycle of mobile phones is generally 3 years and no more than 5 years at most, while the design life of automobiles is generally around 15 years or 200,000 kilometers, which is much longer than the life requirements of consumer electronics products.

Therefore, the product life cycle of automotive chips is required to be more than 15 years, and the supply cycle may be as long as 30 years.

Under such circumstances, how to maintain the consistency and reliability of the chip is the first issue that must be considered for automotive-grade chips.

There is a lot to know here.

Also, if the mobile phone chip dies, it can be shut down and restarted, but once the car chip goes down, it may cause a serious safety accident, which is completely out of the question for consumers.

Therefore, when designing automotive chips, functional safety must first be placed at the beginning of the architecture design to become an extremely important component of automotive chips. An independent safety island design should be adopted in key modules, computing modules, buses, memories, etc. There are various data verifications, including the entire production process using car-grade chip technology to ensure the functional safety of the car-grade chip.

"Your concerns are reasonable, but car-grade chips have never been what our company is good at before, and we have basically not been involved in the production of car-grade chips before."

"Taking advantage of the localization of chips in China's automotive industry, I think it is the best time for Samsung Electronics to officially enter automotive-grade chips."

"At this time, China's OEMs should have relatively low requirements for car-grade chips. As long as we can produce them, there will be OEMs who dare to try them out."

"If we go to automobile giants such as General Motors and Ford to sell automotive-grade chips, it will probably take less than five or six years. It will be very difficult to complete various verifications and then finally install them on cars."

Li Zailin can be regarded as pointing out one of Samsung's weaknesses.

Companies such as NXP, Texas Instruments and Renesas Semiconductor have always been the giants in automotive-grade chips.

Chip companies such as Intel, Samsung, and Qualcomm that everyone is familiar with rarely involve the production of automotive-grade chips.

Of course, with the advent of electrification and intelligence, these manufacturers have all set their sights on car-grade chips and want a piece of the pie.

Now, because of the chip localization boom that has emerged in China's automobile industry in advance, it has brought some extra touches to Samsung.

"What you said makes sense. Come back to the headquarters with me next week to report on this plan."

“Let’s see if we can pick this peach planted by Nanshan Group!”

Park Chung-hee knows very well who started the wave of chip localization in China’s automobile industry.

As long as Samsung stays put, perhaps Nanshan Semiconductor can get the biggest piece of the pie.

But now that Samsung is ready to end, Park Chung-hee feels that the situation will naturally change.