Reinventing the Millennium

How much is a chip company based in Austin, Texas worth?

Fang Zhuo is very familiar with Texas. To be precise, he is very familiar with Houston, Dallas and San Antonio in Texas.

He heard the cheers of the team's promotion in the arenas in these three cities.

But Austin...

Never been here before, not familiar with it, no impression at all.

It just so happens that this city is the capital of Texas.

Fang Zhuo had an urgent understanding of the city and the company while sitting on the Qingzi.

As a result, Austin-based Intrinsity is somewhat a carbon copy of P.A. Semi.

Intrinsity was established as early as 1993. At that time, it was still called Exponential. It specially built a PowerPC architecture chip X704 for large customers. However, this large customer did not choose this one.

Therefore, Exponential went bankrupt and reorganized.

In 1997, the remaining employees of the company reunited and founded EVSX, which was renamed Intrinsity in 2000.

That former big customer was Apple!

The reason why Intrinsity is in Austin is because the cost of housing and living here are much lower than in Silicon Valley.

For the same reason, Austin is home to a number of semiconductor and computer companies, and many well-known companies have chosen to open branches here.

This situation gave Austin a nickname - Silicon Hill.

A proper downgrade of consumption!

Without P.A. Semi from Silicon Valley, Intrinsity from Silicon Mountain was found.

Fang Zhuo landed in Austin with an inexplicably funny mood.

The main body of Yike's current chip department comes from acquisitions, which are derived from the mobile chip department sold by Intel. Now it has changed its direction and is studying the ARM architecture that is more in line with the low power consumption requirements of mobile phones.

Everyone is a little regretful that they failed to acquire P.A. Semi this time, because several people in this company are well-known in the industry and can carry the company's core competitiveness. It would be even more impressive to continue flying to Austin with Mr. Fang. …

Does an unknown small chip company still need to mobilize everyone like this?

However, after real contact, the situation changed.

First, the asking price was not cheap. Mars was unable to stop its pre-sales in October, and the other party quoted a price of US$200 million.

Second, Intrinsity has demonstrated a very high level of technology. Their latest project in cooperation with Samsung is a processor design based on the Cortex-A8 core, aiming to create an industry-leading single-core chip - Cortex-A8 only supports single core.

Intrinsity named the technology related to this collaborative project Hummingbird.

Fang Zhuo was originally immersed in his team's praise of this chip company. He didn't react when he heard "Hummingbird". He hesitated after translating it into his native language in his mind.

Hummingbird, hummingbird.

Is this the Samsung Hummingbird?

Is Hummingbird made by Intrinsity, not developed by Samsung?

Or, cooperate with each other and absorb nutrients?

If I remember correctly, the first product of Samsung’s world-famous Galaxy S series is the Hummingbird processor.

Fang Zhuo once used a Samsung mobile phone, which is translated as "Galaxy" in China. The Hummingbird processor and the A4 chip of iPhone 4 are suspected to be twin sisters in media reports. It is said that Apple has drawn a lot of nutrition from Samsung as a partner.

Of course, the reverse is also true. The patent entanglement between the two companies can be called the battle of the century, with claims of US$500 million or US$1 billion frequently occurring.

While Fang Zhuo listened to the judgment of his team, he extremely suspected that the person who was pushed in front of him by Schmidt was the real owner or one of the real owners.

As for why Samsung did not directly acquire Intrinsity, perhaps it is because Intrinsity’s capabilities have not been fully verified, or perhaps it is confident that its own team can fully digest it before innovating.

Fang Zhuo briefly reviewed the logic of Samsung, a mobile phone manufacturer that has evolved from feature phones to smartphones. The internals are already good enough, and the outside world just needs to maintain cooperation.

He kept himself from getting too hung up on the price and asked Intrinsity the question.

"If it is acquired, how will the cooperation with Samsung be handled?"

Adrian, CEO of Intrinsity, responded: "Our cooperation with Samsung has always been very good. There is no need for Yike to break the contract. The development of the Cortex-A8 core is a very interesting thing. Yike mobile phones can fully refer to and absorb the experience." "

He felt that Mr. Fang might have come here because of his cooperation with Samsung, trying to prove his status: "There is no need to worry about this at all. Samsung is only worried about the progress of this project. This research and development is definitely beneficial to Yike."

Fang Zhuo thought that he didn't have to worry.

And Samsung did exactly what Adrian said. When Intrinsity notified the other party of possible changes in the cooperation, Fang Zhuo received a contact from Samsung.

Even though Hummingbird has not yet produced results, Samsung attaches great importance to Intrinsity based on its past cooperation with Intrinsity and its optimism about the Cortex-A8 core, and is therefore very concerned about Yike's acquisition.

Samsung hopes that if Yike successfully acquires the company, it can continue to cooperate in accordance with the contract.

Fang Zhuo did not hesitate and gave Yike the most effective guarantee that their cooperation would not be hindered in any way. On the contrary, Yike would give great support.

There is no reason for an excellent processor to give up the experience of excellent manufacturers. This can be used as a record for Qualcomm chips. You can even learn from Samsung's approach. Europe and the United States use Qualcomm chips, and your own country uses its own chips.

Intrinsity's past cooperation has been guaranteed, and this acquisition has not been hampered by administrative obstacles.

Fang Zhuo was afraid of long nights and long dreams, so he did not make too many counteroffers to the price. He offered stocks + cash for the acquisition. Compared with the other party's offer of US$200 million, he paid back US$20 million and came up with an offer price of US$180 million. .

He knew that if he sharpened it again, the price would definitely go down, and the company team also suggested not to rush.

However, due to DoD’s previous intervention + Samsung’s disguised endorsement + Hummingbird’s confidence, the speed of this premium acquisition is unprecedentedly fast.

In just four days, in the unnoticed secondary Silicon Valley, the two parties signed a contract in a low-key manner and made brief information disclosures to the U.S. Securities and Exchange Commission (SEC) in compliance with regulations.

On the second day after signing the contract, Fang Zhuo received a call from Jobs.

"We have acquired P.A. Semi."

Fang Zhuo was surprised, and his impression of Teacher Qiao was somewhat broken, and he said in surprise: "Because of the successful acquisition, did you make a special trip to inform me of the news?"

"Because of Yike, Apple had to pay a premium to acquire it. I think someone should be responsible for the nearly $100 million premium." Jobs was in a good mood, "The price of this phone call is very high."

Fang Zhuo thought to himself, you pay a premium, I pay a premium too, they are all about the same.

Since Jobs made this call, he also wanted to talk about the recent mobile phone market and asked: "How is the pre-sale effect of Yike Mars?"

Fang Zhuo calmly threatened: "One million units have been sold."

Jobs asked companies and carriers to evaluate competitors, saying: "This number is impossible. I don't believe it."

"Yes, I lied to you." Fang Zhuo was very honest.

Jobs suddenly felt that the dialogue between the two parties was likely to be childish, so he promptly terminated the phone call with his competitor and only said: "I will wait until next month to see the real machine of Mars."

"Okay, I will give you the millionth mobile phone." Fang Zhuo was very generous.

Jobs ended the call with his emotional recollections of millions of iPhones.

However, he soon received a notice from the supplier Samsung that there was an important change in the partners involved in the research and development of a chip that had been approved. One of the chip designers provided by Samsung and Apple in the agreement had traces of Yike.

Only in the evening did Jobs call Fang Zhuo for the second time.

"Yike suddenly acquired Samsung's partner company?" Jobs asked, "Isn't P.A. Semi your real target?"

Fang Zhuo felt wronged and said openly: "No, I want both of them. This is actually a small company, with a total of 22 people. Unlike P.A. Semi, which has 140 people, we work in a very unfair way. The fair way is gone from the P.A. Semi negotiation table, and you are the beneficiary."

He asked: "Apple has been strengthening its chip department recently, why didn't you take a fancy to Intrinsity?"

It's not that Jobs didn't take a fancy to it, but he really didn't know who Samsung's chips would be for external cooperation. The chip contract between Apple and Samsung included a supply plan for the next three years, but there was no such detail.

There are only three choices on the market now, TI, Qualcomm, and Samsung.

"Apple will not target partners' collaborators." Jobs gave an answer.

"It makes sense. Fortunately, Yike is not a partner of Samsung, so we can take action." Fang Zhuo said with a smile, "Oh, from now on, Yike is considered a partner of Samsung."

Yike's chip department provides some design support to Samsung. Apple takes core chips from Samsung, an industry rival, and Samsung selectively polishes and learns from experience.

Competition where there is competition, cooperation where there is cooperation.

As for how to sum up experience and introduce new ideas after such cooperation, that is another matter.

Fang Zhuo is very grateful to Schmidt, CEO of Google and director of Yi Kezhen, for judging and recommending Intrinsity, a small chip company with real talents and knowledge, through his channels.

He would like to name Schmidt the head of the Iron Triangle!

Now, Yike's chip department is composed of the backbone of Intel's original mobile device department + the Intrinsity Hummingbird team, which can be regarded as a wave of version enhancements for the ARM architecture.

This enhancement belongs to the future competitiveness. To what extent it can be achieved requires investment in research and development and careful planning. It also requires careful selection of the list during the financial crisis.

However, as the release of Mars was getting closer and closer, bad news spread again in China, and Morningstar Semiconductor's tape-out failed again.

Fang Zhuo has high expectations for Morningstar Semiconductor. Now, he also hopes that Yike's chip department can be transformed into the original three parts of Intel + Hummingbird + Morningstar.

It’s time to make helping Morningstar progress a serious matter.