sovbooks Chapter 465 Patent War
Chapter 465 Patent War
The heating in the conference room was on too high, so someone opened a window a crack, and a cold draft rushed in, making the edges of the reports on the table rustle.
Chen Zhongming stood up and went through this year's data from beginning to end.
"The group's annual revenue is 15 billion, and its profit is 2.5 billion." He turned a page. "StarPhone pre-orders reached 300,000 units, with a 92% activation rate in the first week. The number of installations of the Spark system exceeded 20 million, including 16 million in China and 4 million overseas."
Ma Baoguo interjected, "The production capacity at the Shenzhen factory is still ramping up, but the yield rate has stabilized at over 95%."
"What about the supply chain?" Lingyun asked.
"The screens and cameras are both stable. After the last incident of unscrupulous stockpiling, we are now using a dual-supplier model. If one has a problem, the other can step in." Chen Zhongming closed the folder. "Overall, this year is the fastest-growing year since the group was founded."
Ling Yun didn't reply. He turned the water glass in front of him halfway around. Outside the window, Jinan's winter was gray and hazy. Construction had stopped at the distant construction site, and the crane's boom swayed slightly in the wind.
"But," Chen Zhongming said. Everyone in the conference room sat up a little straighter. Chen Zhongming pulled a fax sheet from under his folder. The sheet bore the letterhead of the U.S. Department of Commerce: "Last Friday, the Bureau of Industry and Security of the U.S. Department of Commerce added Spark to the Entity List."
No one speaks.
"Starting today, any software, equipment, or technology originating from the United States, if its content exceeds 25%, will require an export license if sold to Spark. The application process takes three to six months, and there's a high probability it won't be approved." Chen Zhongming placed the fax in the middle of the table. "Our two chip IP suppliers in the United States sent letters yesterday saying they're suspending technical support."
Li Mo threw the pen he was twirling onto the table.
"Goldman Sachs hasn't been idle either," Fiona said via video call, her voice coming from the conference phone in the middle of the conference table. "They teamed up with three patent troll companies and filed a lawsuit last week in the U.S. District Court for the Eastern District of Texas, claiming that Spark's power management technology and touch algorithms infringe on a number of their patents."
"What patent?"
"It was applied for in 1996. It originally belonged to a small company that went bankrupt and was just bought by Goldman Sachs last month. The scope of the patent is written very vaguely, but the Eastern District of Texas is notorious for favoring the plaintiff, with a historical success rate of over 70%."
Lingyun picked up her water glass and took a sip. The water was already cold.
Zhao Weiguo couldn't hold back any longer, "They're robbing us by force!"
"Yes, it's outright robbery." Ling Yun put down his cup. "What does everyone think?"
Silence fell over the meeting room.
"EDA software," Ni Guangnan was the first to speak. The old man was wearing a faded blue cotton jacket today, with loose threads on the cuffs. "The EDA tools we bought from the US have a license that expires next March. Renewal is out of the question. As soon as the Entity List was released, Synopsys and Cadence both sent letters saying they were suspending cooperation."
"Where are our backups?"
Wang Jianguo chimed in, "Our self-developed EDA tools can already complete the basic design process. They only have about 70% of the functionality of foreign software. They're fine for processes above 130 nanometers, but struggle with 90 nanometers. But—" He paused, "they can make chip design work."
Ling Yun nodded. "Just don't stop. Add whatever is missing; the functionality can be improved gradually."
"There are also problems with the lithography machine." Ni Guangnan took out a report from his bag, turned to the page with the folded corner, and said, "The optical system of the Changchun Institute of Optics, Fine Mechanics and Physics has been installed, and the precision mechanical part of Shanghai Microelectronics will begin joint testing next week. But there are a few key components—deep ultraviolet laser light source and high-precision grating ruler—that were previously imported from the United States, but now they can't be imported."
"What about alternatives?"
"The Institute of Optics and Electronics, Chinese Academy of Sciences, is working on the light source. We found a small German supplier for the grating ruler, who is willing to supply it privately. But the price has increased by almost three times." Ni Guangnan put the report on the table, took off his reading glasses, and wiped the lenses with his fingers. "President Ling, I have to be frank with you. Technically, we have a way to work on the lithography machine, but the time will be one or two years later than expected."
"It doesn't matter if it's late. The important thing is whether it's feasible."
"It's feasible." Ni Guangnan put his reading glasses back on; the frames were a little crooked. "But they're very expensive."
Ling Yun leaned back in his chair and didn't speak immediately.
"Speaking of money," Sophia's voice came through the phone, "the $20 billion strategic reserve fund that President Ling asked me to allocate arrived last week. Mr. Ni, just give me your budget."
Ni Guangnan was taken aback. He looked down at the documents spread out on the table, then looked up, not at Sophia, but at Ling Yun.
"Lingyun, are you really going to throw two hundred billion dollars into lithography machines? We might not make a single penny back on this stuff within ten years."
"You told me last time that a lithography machine might take twenty years." Ling Yun turned to look at him. "What I told you then was—give me ten years, and I'll give you a Ni Guangnan who can make the world's most advanced chips. That's what I said."
Ni Guangnan took off his reading glasses and held them in his hand. He didn't wipe them, nor did he put them back on.
Just then, Chen Zhongming's phone vibrated. He glanced at it, stood up, and walked to the window to answer it. When he returned after the call, his expression was as if he had just seen a message that left him unsure whether to laugh or sigh.
"What's going on?" Ling Yun asked.
"The National Development and Reform Commission and the Ministry of Industry and Information Technology jointly issued a document. Xinghuo has been included in the list of key national technology enterprises, enjoying tax incentives, low-interest loans, priority procurement, and—countermeasures against foreign companies included in the Entity List." Chen Zhongming handed his phone to Ling Yun to see, "There's an attached note. Goldman Sachs is under investigation by the State Administration for Market Regulation for allegedly colluding maliciously in patent litigation."
Ling Yun glanced at the contents of the file on the screen and handed the phone back to Chen Zhongming.
"The Entity List is something we fought for ourselves." He stood up, walked to the window, turned around, and said, "The fact that our adversaries see us as a threat means we're on the right track."
The wind outside the window stopped, and a small patch of pale blue appeared on the gray horizon. The tower crane began to slowly turn.
When the meeting ended, Ni Guangnan stayed behind. He carefully collected the scattered documents on the table, one by one, and put them back into his old canvas bag. The zipper was a bit stiff; it took him three tries to zip it up. Ling Yun was waiting for him at the door.
"President Ling."
"Please speak."
"The German supplier of that grating ruler replied to my email last night," Ni Guangnan said, slinging his canvas bag over his shoulder. "He's willing to take our order. The condition is that the goods will be delivered in Hong Kong, no invoice will be issued, and no written records will be kept."
Ling Yun looked at the wrinkles on Ni Guangnan's face. "So cautious?"
"He's afraid too. In the current environment, anyone involved with China's semiconductor industry could be investigated. But he's still willing to sell—three times the price is a considerable sum for him." Ni Guangnan walked to the door. "Not everyone in this world wants to hold us by the throat. Some people just want to do some business and support their families. What we need to do is to increase the number of these people. The day our lithography machines roll out their first batch of wafers—no one will be able to use this to hold us back."
Several technicians pushed a cart full of server racks down the corridor, the wheels making a clattering sound as they rolled over the seams in the floor. The elevator doors opened, Ni Guangnan stepped inside, pressed the button for the first floor, and the doors slowly closed, his blue cotton jacket disappearing through the crack. Ling Yun stood in the corridor, picked up his phone, and dialed Liang Mengsong's number.
"Mr. Liang, how much can the production capacity of the Singapore line be increased next year?"
There was a moment of silence on the other end of the phone. "You want the truth?"
"truth."
"After the Entity List was created, we couldn't get spare parts for some of our equipment. Production capacity will be affected, but it won't stop. I'm thinking of a workaround—"
"What method?"
"We'll move some of the back-end processes back to China. The Shenzhen factory still has some space; I sent someone to check it out, and it can be easily modified."
"Go ahead and do it," Ling Yun said, then hung up the phone.