Rekindle 2003

Chapter 982 A New Chapter in Qishan
Yun Di believed that if the foundry in Qishan could master the second stage within three years and enter the fourth stage after five years, it would be considered as "taking too big a step and absolutely bullshitting".

Long Xingyuan was puzzled by this, frowning and choosing his words carefully, "Why do I feel that the fourth stage is much simpler?"

Family members know their own business. When he saw Qing Yun took out the cell phone, he reacted.

The young man in front of him is going to make an electronic product that is known for its precision.

Even when it comes to the metal frame and internal panels of the phone, to be honest, he doesn't have much confidence that he can get started right away.

This processing seems simple, but it actually requires very high precision.

He also uses a mobile phone himself, so if there are burrs on the frame or something, it would be a joke.

Qing Yun shook his head and patiently explained: "Brother Long, FATP looks simple because it is mainly assembly and testing.

But in fact it involves the management of the entire supply chain, including material procurement, inventory management, production scheduling, quality control, etc. Each link requires meticulous management and a lot of experience accumulation.

In this regard, we may not be able to catch up with the lead of the island in a short time."

After hearing this, Long Xingyuan was still puzzled, "Mr. Xiaoqing, I still don't quite understand.

What you said is actually also true for the second stage. Even if it is just a body plan, it involves so many things.

Besides... labor and capital intensity should be our strengths."

It’s not that he was getting cocky and thought he was rich just because of the several hundred million interest-free loans from Qing Yun.

It is because if we can really convince the leaders, especially Mr. Nan Bowan of Sanqin Province, to let Qishan or more specifically the "Qinchuan-Yanhuang" consortium to develop this industry, then this consortium will definitely not lack money.

This is a move that can save Qishan, the second most economically powerful city in Sanqin Province, from decline.

Emperor Yun smiled upon hearing this and said, "Brother Long, you didn't notice that when I was talking about the fourth part, I mentioned a sentence. I said:

'The final assembly factory buys the products from the first two links, assembles the final product on the production line, and then tests and packages it to meet the standards for sale.'

OEM is the supplier, right? I provide you with the structural parts and modules, and ask you to assemble them together. What if you damage them? "

He raised his finger and shook it, and continued, “In other categories of supply chains, if you don’t make something well, you can just throw it away and not make any money.

But in the electronics industry's final assembly outsourcing, you are producing based on the parts I provide.

If I buy something and ask you to assemble a product, if you don't assemble it well, you will have to compensate for the scrapped parts.

This is the yield rate that I have repeatedly emphasized before.

If the yield rate of suppliers in the first three links, such as raw materials, structural parts and modules, is 1 point lower, for example, it drops from 99% to 98%, then it is roughly equivalent to a one point loss in profit, which is actually insignificant.

But under FATP, suppose you earn 5 yuan for assembling a mobile phone, but if you break a mobile phone and unfortunately have to scrap some or all parts for repair, then you will have to pay 2000 yuan in compensation.

This means that all the 400 mobile phones you assembled previously were wasted.”

In fact, it is very rare to encounter direct failure in a foundry.

What is really frustrating is the yield rate after quality management.

Especially for Huawei and Apple, two OEMs known for their abnormal requirements, even the slightest flaw will be judged as defective and scrapped.

Of course, it wouldn’t matter if it was a grain factory instead.

You get what you pay for. A grain factory that emphasizes extreme cost-effectiveness has poor suppliers in the first link, so naturally it doesn't have the nerve to demand anything from the final assembly plant.

Consumers also naturally don't want bicycles because they are cheap enough.

For foundries, what really matters is the yield rate of assembly testing.

The key to ensuring good products is quality management, and low-cost quality management at that. This is the strength of small island companies represented by Foxconn, Quanta Computer and Pegatron.

As an aside, although everyone says that Foxconn is a sweatshop and workers are treated very averagely, their middle and lower-level management backbones, the so-called island workers, are treated very well and far exceed the income of the same level in domestic OEM factories, and the turnover rate is very low.

Because Foxconn knows that this group of small island management talents are the foundation of their competitiveness.

What is the difficulty in managing a foundry?

Affected by the "unspeakable power", Hua Wei dare not say it, because Hua Wei's OEM factory cannot say it either.

From the perspective of Apple's R&D process, the work of the foundry is divided into two stages.

The early stage is the trial production of new products, which is NPI (new product introduction), which is the part that requires investment.

The later stage is the mass production and shipment of products (MP), which is also the profitable part.

What is the core of mass production?
Control costs, improve efficiency and reduce defective rates.

Just these three points.

If for this part of the work, domestic OEM factories still have the capital to fight by squeezing the grassroots, then the NPI stage will completely rely on the factory's management capabilities.

For Apple or any other party A, a foundry is only qualified to do MP if it does NPI, and the two are highly bound together.

The logic is very simple. If everyone wants to eat meat and not gnaw bones, Apple will not be able to find anyone willing to be NPI.

The main reason why NPI is difficult to make is that it is in a rush to be listed. NPI has a short production time and high labor intensity. At the same time, because there is no mass production, all the testing and assembly fixtures are not finalized, and many rely on manual work and experience. The confidentiality requirements of the entire production line are high. The most important thing is that there are many types of products produced and the demand changes greatly.

Apple's product design uses a variety of different technologies for parallel research and development during the NPI stage, and the design is also modified on the fly. Many materials are arranged and combined in different ways on the production line for trial and error.

This requires that the factory must have strong forward-looking planning and execution capabilities on the one hand, while being able to change and optimize the production plan at any time.

Imagine changing parts on a truck traveling at high speed, and even changing wheels when some vehicles are in the air. This trial production mode is a disaster for inexperienced management.

At the same time, during the trial production stage, the foundry must try its best to solve or define possible problems that may arise in mass production. It must clearly know whether it can make money after entering mass production based on the existing yield rate, and where and how much room there is for yield improvement. Otherwise, it will lose money if it is not careful.

Simply put, before entering mass production, the foundry will negotiate with Apple's operations team.

What to talk about?
Talk about yield.

The foundry will set an acceptable yield rate based on the trial production conditions and future improvement plans.

For example, 95%.

This 95% is the basis for Foxconn to earn $1 from every iPhone.

If the actual yield rate is only 94.5%, according to the 400-fold leverage principle mentioned earlier, Foxconn may not make any money at all. If the yield rate is only 94%, Foxconn will lose money. If it is 93%...

Sorry, this will never happen in real life.

If the foundry finds that the yield rate is a certain point lower, they will choose to stop the production line to solve the problem, and the losses caused by stopping the production line are often astronomical.

Luo Yonghao, the founder of Smartisan, suffered a loss at this step.

The OEM factory couldn't meet his requirements, and the hammer was too small, so no one wanted to accommodate him.

But the yield rate is the opposite. If the yield rate is a little higher, for example 95.5%, Foxconn's revenue may double.

If it can reach 96%, Foxconn's revenue may be ten times the forecast.

If it reaches 97%…

This situation will not occur either, as Apple will definitely re-sign the yield contract.

In this case, the competition among foundries is naked competition for yield.

If the yield rate of domestic foundries is just a little bit lower, even if it is only 0.5% overall, they will be completely excluded from the competition.

Unfortunately, when it comes to yield, the more you do it, the more experience you gain.

That’s why Foxconn has reached the pinnacle in this area.

Since Yun Di wants to launch an attack on Foxconn in the domestic market, he must continuously improve the yield rate.

Therefore, even if Long Xingyuan and his colleagues could barely reach the fourth stage and start doing final assembly outsourcing, he would force them to hone their skills to perfection in the second stage.

“So, Brother Long, FATP needs to bear higher risks. Once there are quality problems with the products or changes in market demand, the final assembly plant will be the first to bear the brunt.

Without sufficient experience and preparation, it is easy to cause huge losses.”

Emperor Yun tried his best to speak sincerely to dispel the desire to "catch up quickly" that was ingrained in Long Xingyuan's mind.

There is no way, the man in front of him is the madman who opened up the era of overseas shopping for Qin Chuan.

20 years later, this man was fired, but he left behind Qinchuan, a company that makes world-leading grinders.

Those charges that make people laugh so hard that they cry are enough to prove:

This guy is a ruthless person who is willing to sacrifice his life for great things.

Long Xingyuan listened to Qingyun's explanation and gradually understood the truth.

He realized that every step Qing Yun mentioned was necessary and laid the foundation for the next step.

"Boss Xiaoqing, I understand." Long Xingyuan said in a deep voice, "I will start from the second stage, accumulate experience, gradually transition to the fourth stage, and then go back to break through the third stage."

Emperor Yun looked at him deeply, and there was a hint of complicated emotions in his eyes.

Sure enough.

He thought that if Long Xingyuan could run the final assembly factory well, it would be a great achievement for Yu Guo. However, he did not expect that what this gentleman was talking about was the third link module.

This is a man full of ambition and determination, a captain who dares to sail in the wind and waves.

His way of thinking is full of romanticism, which is a bit ridiculous, but at the same time one cannot help but admire him.

In this world full of uncertainties, there are not many people who can have such lofty ambitions.

"Brother Long, I hope we can work together to face future challenges together."

"Then, Mr. Xiaoqing, let's start from here and open a new chapter for Qishan together."

……

(End of this chapter)