111: Chapter 111: Qualcomm was found! 2 million!

"I meant 85 dollars."

The stinging words, combined with the doubled price, did not change the expression on Lei Jun's face.

Lin Bin, however, had already calculated the answer.

At the current exchange rate, this price was about 580 Chinese Yuan, which was 13 dollars more expensive than MediaTek's MT6575 at 72 dollars.

This price was more expensive than the cost of a screen.

Compared to the previous generation of chips, this price was a significant increase.

"Mr. Wang," Lei Jun began, his tone tinged with hesitation, "this price is quite a bit more expensive than MTK."

"Performance has increased by 40%. It is absolutely the strongest mobile processor." Mr. Wang did not back down. "Mr. Lei, Qualcomm does not do cost-effectiveness; we focus on technological leadership."

He switched to the next PPT slide, which showed the communication module of the MSM8255.

After speaking, he picked up the teacup on the table and drank confidently.

Since he dared to quote this price, he was betting that the other party would definitely agree to this plan; as for the price, that was another matter...

"And we are offering a bundled package. CPU + GPU + baseband, an integrated solution. MTK's chips require an external baseband, which entails extra costs, extra power consumption, and extra PCB space."

He looked at Lei Jun.

"Mr. Lei should be able to calculate this account more clearly than I can."

The conference room was silent for quite a while!

Mr. Wang sat there confidently, looking at Lei Jun. Qualcomm's CPUs did not restrict the adaptation of other communication basebands, but adapting them and ensuring a good network experience did indeed take time, and the cost of the baseband was not low, nor was it as good as this solution.

This was a big trap he had no choice but to agree to.

After a while of silence, Lei Jun suddenly smiled.

"Mr. Wang, the way you say that, it sounds like I came here today to haggle."

He stood up and walked to the window to look at the scenery outside.

"I am here today to discuss a partnership."

He turned around.

"1 million units, first launch in China. This order is not small."

Mr. Wang's expression twitched slightly. If he wasn't here to haggle today, then what was he here for!

Partnership? What a joke!

Since when could a new factory like this talk about partnership with Qualcomm? Unless it was named Honor...

Of course, he had indeed arranged a meeting with Big Mouth Yu, and they were also a bit interested in the MSM8255...

While Mr. Wang was deep in thought, Lei Jun had already begun to tell a new story, his speaking speed still unhurried.

"Our first Xiaomi phone will use a Qualcomm single-core processor and sell for 1999..."

When he said that number, something reignited in his eyes.

"To be honest, Honor's plan was actually designed by us; I don't know how it was stolen by peers... But they only stole the plan, not the real core. I am confident that I can take them down with the 1999 price point."

By then, a single series will sell at least 10 million units annually; this is a huge contract.

"But to achieve this, a certain layout is needed, so I need a three-month exclusivity period. Before Q3 next year, the MSM8255 in the Chinese market can only be used on Xiaomi phones for the first three months."

Mr. Wang was silent for a few seconds, then laughed disdainfully.

Lei Jun was known as the Cash King of Beijing, and his first round of financing sold 10% of the shares for 25 million USD... The start was very good, and he was very optimistic about it.

But after today's conversation, he felt that this person seemed a bit crazy... Could he have misjudged him?

"Mr. Lei, this request..."

"I know this request is a bit excessive," Lei Jun said, not letting him finish. "But Mr. Wang, think about it... The MTK6573 was touted by Transsion and Huawei as the 'Kirin 1'. Most people only know their optimization is good, but they have forgotten the design capabilities of the chip manufacturers themselves."

"And it also made MediaTek a bit conceited, because the chip that raised prices is now ignored by everyone."

"The real big customers buy the MTK6573 and then modify it themselves. They also have their own Chip Design departments; who knows when they will kick them out."

"Now, whenever anyone sees Mr. Zhang from MediaTek, they laugh."

He paused for a moment to let the other party think carefully. Would Qualcomm become a vassal, or find a better partner to open up a broader market?

Mr. Wang laughed disdainfully again. If Xiaomi doesn't choose them, it means they are ignored?

Seeing the other party hesitate, Lei Jun spoke again with his magical mouth.

"Let's get what we each need."

The negotiation lasted for three hours, and the final agreement terms were as follows:

The domestic first launch right for the MSM8255 was granted to Dami Company, exclusive until the third quarter of 2010.

The unit price of the chip was 55 dollars (bundled solution), with an initial order of 2 million units.

Qualcomm provided the full set of reference designs and technical support.

Dami Company would refer to the MSM8255 as the Dragon S2 at the launch event, incorporating it into Qualcomm's Dragon brand series.

When signing, Mr. Wang said one last honest sentence:

"Mr. Lei, 2 million units is not a small number. What if it doesn't sell..."

Lei Jun put down his pen: "Then I will bear the burden."

Mr. Wang smiled: "I mean, the value of this order has already exceeded the valuation of Dami Company, so we need your company to pay 20% of the payment in advance as a deposit..."

...

That evening, Lei Jun and Lin Bin were eating at a Chinese restaurant near Qualcomm's headquarters in California.

The restaurant was very average; the stir-fried chicken tasted like sweet and sour pork, but Lei Jun ate very quickly, as if he had been hungry for a long time.

Lin Bin, however, didn't really touch his chopsticks.

"Old Lei, 2 million units at 55 dollars each, the chip cost alone is 110 million dollars, and 20% of the payment is 22 million dollars."

"Adding in other BOM, screens, memory, batteries, cameras, and casings, it all adds up to at least 1500 yuan per unit."

He looked at Lei Jun.

"Selling at 1999, the gross profit is less than 500 yuan. After deducting R&D, marketing, after-sales, and channel costs, even 100 yuan of net profit would be considered good."

"2 million units to earn 200 million yuan is not as much as you earn in a month at Joyo, and the risk is too high."

The 2 million order was indeed a bit high, but this was Qualcomm's requirement. After all, this corresponded to their super big client; otherwise, they would rather die than lower the price, as if they had Dami Company firmly in their grasp.

Lei Jun put down his chopsticks.

"Brother Bin, let me ask you a question."

"Go ahead."

"How much do you think the gross profit is on a Transsion phone right now?"

"They... Power max in Africa, the BOM cost is about 70 dollars, selling for 149 dollars, the gross profit is 80 dollars, which is also about 50%."

According to their investigation, this was a very standard profit model. After all, one needs to consider the issue of inventory backlog or product sales.

Plus, considering the market issues, merchants in the Africa market making half is already very conscientious.

[Transsion: More than half!]

"Right," Lei Jun nodded. "But what about honor play? The cost exceeds 1500, with a gross profit of less than 500 yuan, not much better than us."