AWB Chapter 420 Year-End Summary Meeting
Chapter 420 Year-End Summary Meeting
January 15, 2003, Jinan, Xinghuo Group headquarters.
The conference room was packed with people: heads of various business units, general managers of branch offices, and senior executives of the group. Each person had a thick annual report in front of them, the cover bearing the Spark's five-pointed star logo, with "2002 Annual Summary" printed below.
Ling Yun sat in the main seat, while Chen Zhongming stood up and walked to the projection screen.
"Xinghuo Electronics achieved annual revenue exceeding 8 billion yuan and profits of 1.8 billion yuan. It ranked first globally in keyboard and mouse shipments and among the top three in domestic computer shipments. MP3 shipments exceeded 5 million units, including 2 million units under the Xinghuo brand and 3 million units driven by the supply chain of reference design solutions."
"Spark Internet Cafe's total number of directly operated and franchised stores exceeded 800, with annual revenue of 1.2 billion yuan and profit of 300 million yuan. Starlight Notebook shipped 200,000 units throughout the year, and Alienware shipped 500,000 units. Spark Systems Technology's operating system and software revenue reached 300 million yuan. Nebula Technology's database and cloud service revenue reached 150 million yuan."
He turned to a page; it was a summary table. "The group's total annual revenue exceeded 11 billion yuan, and the total number of employees exceeded 130,000."
The meeting room was silent for a few seconds, then someone started clapping, and the applause grew louder and louder.
Ling Yun stood up and walked to the whiteboard. He pressed his hands down as a gesture, and the applause stopped.
"In 2002, we established ourselves. In 2003, we set off. We had only one goal—to become a world-class technology company."
His tone was calm, but everyone could hear the weight in it.
Ling Yun wrote eight characters on the whiteboard: "Technological independence, market openness." He drew two lines below it, writing "chip" on the left, "operating system" in the middle, and "database" on the right.
"The strategy for 2003 was called 'Three-pronged Approach.' The first direction was chips, where we aimed for technological self-sufficiency and were not afraid of any supply disruptions. The second direction was operating systems, where we aimed to seize market share from StarCraft and keep pace with Microsoft. The third direction was databases, where we aimed to catch up with the world's most advanced levels and lead the world in cloud databases. Over the next three years, we wanted to achieve self-sufficiency and control in every key area. We didn't require control over every aspect, but we had to be able to control over the key aspects. Chip design, chip manufacturing, operating system kernels, and database kernels—these were the lifelines. We had to hold those lifelines in our own hands."
He turned to a page; it contained specific numerical targets.
"Starlight Notebooks have shipped over 1.5 million units. Spark Systems have been installed on over 30 million computers. ARM chips have shipped over 30 million units. Nebula Database has over 300 major clients."
Chen Zhongming raised his hand, "President Ling, we have 1.5 million Starlight notebooks, which is more than seven times the number from last year. Production capacity, marketing, and after-sales service cannot keep up."
Ling Yun said, "Right now is the stage of rapid expansion and market dominance. If production capacity is insufficient, we will continue to expand. Our marketing personnel need to cooperate with local enterprises. We provide products, technology, and solutions, while they handle the market and build relationships. It's a win-win situation for everyone. The Starlight Education Edition has already been approved by the Ministry of Education, and a number of pilot schools will be established this year. We are also in talks with the government regarding procurement. 1.5 million units is the minimum, not the target."
He looked around and was about to continue when there was a knock on the conference room door. Chen Lingling peeked in, looking somewhat nervous.
"Mr. Ling, there's a phone call that needs your attention. It's from Shenzhen Customs."
Ling Yun frowned slightly. He put down his pen, walked out of the conference room, and took the phone from Chen Lingling.
"I am Ling Yun."
The voice on the other end of the phone was a businesslike male voice, "Mr. Ling, this is the Shenzhen Customs Anti-Smuggling Bureau. Yesterday, we seized a batch of export goods at Shekou Port. The goods were declared as 'electronic components,' but upon inspection, we found that they were 50,000 ARM main control chips manufactured by Xinghuo Electronics Factory. This batch of goods did not have an export license and is suspected of being smuggled."
Ling Yun's hand tightened slightly. "Fifty thousand ARM chips? Who shipped them?"
"Shenzhen Xiongfeng Electronics Co., Ltd. However, during our investigation, we discovered that the original source of these chips may be related to Xinghuo Electronics Factory, and the specifics are still under investigation."
Ling Yun paused for two seconds, then said, "We will cooperate with the investigation. If you need any materials, just contact our legal department, and I will arrange for someone to liaise with you."
After hanging up the phone, he stood in the corridor, not immediately returning to the conference room. Xiongfeng Electronics. Liu Zhenxiong's company. They'd been cut off from supplies. Where did the chips come from? Fifty thousand chips—that's no small number. There's only one possibility—someone in Xinghuo's supply chain is secretly supplying them.
He picked up his phone and dialed Ma Baoguo's number.
"Manager Ma, immediately conduct a full inventory check of the chip inventory at the Shenzhen factory. Check every single chip, from receipt to shipment. I need to know if there are any discrepancies."
Ma Baoguo asked, "What happened?"
"Hsiung Feng Electronics obtained 50,000 of our chips from other channels."
There was a two-second silence on the other end of the phone. "I'll check right away."
Ling Yun hung up the phone and leaned against the wall. When SCM went live, they caught a warehouse manager. He thought that was the end. Now he knew it was just the tip of the iceberg. Spark's supply chain had been gnawed through by parasites.
He took a deep breath, pushed open the conference room door, and walked back. Everyone was watching him.
"Let's continue. This year's goals are: 1.5 million units, 30 million chips, and 300 suppliers. Each vice president should go back and break down these goals, and develop concrete plans and solutions."
After the meeting, the executives left one after another. Ni Guangnan stayed behind and walked to Ling Yun's side.
"Mr. Ling, there's been a problem with the lithography machine project at the Changchun Institute of Optics, Fine Mechanics and Physics."
Ling Yun looked at him. "What's the problem?"
"The preliminary research on the light source system is two months behind schedule. Their director called to say that a key engineer in the team had been poached. Not by a domestic peer, but by ASML's office in China. The offer was five times higher than what they're getting here."
Ling Yun didn't speak.
Ni Guangnan continued, "ASML has never set up R&D positions in China before. This is the first time, and they just happen to be poaching people from our lithography machine project."
Ling Yun looked at him. "What do you think?"
"This is no coincidence. They are watching us, trying to get our project plans, and deliberately trying to trip us up."
Ling Yun was silent for a few seconds. "How much information did the person who was poached know?"
"He's only taken part of the design concept for the light source system. But the core parameters haven't been finalized yet, and he can only take a limited amount with him. The main problem is that this will affect team morale. Others will think, 'ASML can poach him, but they can poach me too. Everyone wants five times the salary.'"
Ling Yun said, "We told the Changchun Institute of Optics, Fine Mechanics and Physics to renegotiate the contracts of all core team members. Their salaries were doubled, the non-compete clauses were tightened, and the penalties for breach of contract were set so high that they couldn't afford to poach them. In addition, the project teams were reorganized, and the core parameters are now only in the hands of a very small number of people. It's not a matter of distrust; it's a necessary safeguard."
Ni Guangnan nodded. "I'll go to Changchun tomorrow."
He turned to leave. Lingyun called out to him.
"Mr. Ni, please don't spread this matter. Within the team, just say it's a normal salary adjustment."
Ni Guangnan said, "I understand."
He pushed open the door and went out. Ling Yun stood alone in the conference room, looking at the numbers on the whiteboard. Eight billion, eighteen billion, five million, thirteen thousand. These numbers were impressive.
But ASML's poaching reminded him of something—Spark was no longer that unknown little factory in Jinan. They had been seen. Being seen meant being studied, targeted, and attacked.
He picked up his phone and sent a text message to Liang Mengsong: "The core team in Singapore needs to be careful. TSMC and UMC won't just stand by and watch."
A few seconds later, Liang Mengsong replied: "It's already in progress. Last week, someone from UMC contacted one of our process engineers, but he was rejected. But it's not just one company trying to poach him."
Ling Yun glanced at the text message and put his phone back in his pocket. A protracted war is never just a war of technology.