vrcanaries Chapter 79 Next Puzzle Piece
Chapter 79 Next Puzzle Piece
Throughout August, Hongyuan entered a state of outward calm but inward high-speed operation.
On the surface, F4 monthly sales remained stable between 2,500 and 2,800 units. The SDK Alliance signed three new customers, bringing the total to 53. Southern Power Grid Smart's procurement approval process successfully completed its first-level procedure at the group level, with the second-level procedure expected to yield results in early September. The long-term agreement with AgriNusa has also entered the final stage of contract term negotiations.
Inside—Su Chen's own schedule was rearranged. Every morning from 10 a.m. to 12 p.m., he studied semiconductor processes related to IMU in the virtual disassembly lab. Not to start working immediately, but to be able to determine—at some point in the future, which of the four domestic alternative suppliers would be most worthy of support or in-depth cooperation.
The virtual teardown lab didn't offer a direct solution to this problem. It can disassemble Bosch's IMU down to the process level, identifying key MEMS structural design points and temperature drift compensation circuits. However, it can't help Su Chen determine which domestic manufacturers are worth investing in, which have stable boards of directors, or which have the production capacity to withstand three years of mass production expansion.
Su Chen needs to learn these judgments on his own.
After half a month, his understanding of IMUs, from principles to processes, had deepened by three levels compared to a month ago. However, in a meeting one evening, he frankly told Zhou Ming:
"There's a vast ocean between understanding something and actually accomplishing it. MEMS isn't flight control. Flight control is code. We can complete code through iteration. MEMS is manufacturing. Manufacturing relies on production experience. Production experience—we don't have that factory yet."
Zhou Ming looked at the analysis on the whiteboard and remained silent for a few seconds.
"So in this round, we should focus on building the bridge first, and not rush to cross the river."
"Yes. Let's build the bridge first. That way, when we actually need to cross the river, at least we won't be standing on the bank helplessly."
Zhou Ming nodded. He closed his notebook, turned, and walked out of the conference room. It was already ten o'clock at night. The August night in Shenzhen was as sultry as a piece of cotton cloth soaked in water.
At the same time, the finance department is also conducting a comprehensive review.
Every Friday night, Meng Xiaoying sends Su Chen an updated cash flow statement. She is the company's VP of Sales, but after the Series B funding round, she also began to liaise with the newly brought in financial advisors.
This month's inventory shows—
The gross profit margin of the consumer-grade F4 remains stable at 25%. Monthly revenue is approximately 8.7 million.
The Plant Protection SDK Alliance generates approximately 1.2 million RMB in monthly licensing fees and 3 million RMB in orders for complete machines, resulting in a total monthly revenue of 4.2 million RMB for plant protection-related products.
There is currently no formal revenue from the industrial-grade products. However, if the intended orders from Southern Power Grid Smart are fulfilled as estimated in the fourth quarter, it will bring in approximately 25 million yuan in contract revenue in one go.
The 30 million from the Series B funding round is still in the account. The company's total cash balance is approximately 42 million.
In the remarks column of the report, Meng Xiaoying wrote: "Cash position is good and can support regular operations for the next eighteen months. However, if new heavy asset projects are to be launched, advance planning is required."
Su Chen smiled after seeing the remarks. Meng Xiaoying was subtly reminding him that if he really wanted to acquire a contract manufacturer, a large portion of his cash reserves would be eaten up.
He replied to Meng Xiaoying's WeChat message: "I received the note. We'll have a small meeting next week to discuss the asset-heavy project."
In the third week of September, Zhou Ming's list was released.
There were eleven contract manufacturers in Shenzhen and the surrounding areas that met the screening criteria. Three of them made it onto Su Chen's shortlist—he personally flew to each of the three companies and spent half a day there. The first company was large enough, but its equipment was outdated; its SMT production line was five years old. The second company had new equipment, but its management was chaotic, and its rework rate last year was more than three times the industry average.
The third company is located in Shajing, Bao'an District. It has 480 employees, two SMT lines, and one automated testing line. After being cut off from high-end consumer electronics orders last year, it transformed into an industrial PCBA manufacturer and reduced its rework rate from 8% to 1.2% within three months.
The boss, surnamed Zheng, was forty-six years old and had been a contract manufacturer for twenty years. Su Chen and he sat in a conference room with only a wooden table and two folding chairs and talked for four hours. Boss Zheng didn't use any tricks; he directly laid out all the financial statements, production logs, and customer lists from the past three years for Su Chen to see.
"President Su, I won't hide anything. We've invested a lot of money in the consumer electronics business, and we've essentially given up on it this year. The industrial PCBA line is our lifeline. If Hongyuan is interested in us, I'm willing to negotiate to the bitter end."
Su Chen only asked him one question.
"If one day we need to switch a production line from assembling module A to assembling module B within three days, can you do that?"
Boss Zheng thought for two seconds, then said, "If the solder joint density of A and B is about the same, it can be cut in three days. If there's a big difference, we'll need five to seven days. But we can start reducing that time now."
"To what extent should it be compressed?"
"Ideally, any switchover should be completed within 48 hours. But this would require us to redesign the production line layout and tooling library."
Su Chen nodded.
How much money will it cost to make this happen?
"Approximately three million for equipment upgrades plus two million for tooling inventory. Five million is the maximum."
"Can it be done within six months?"
"Can."
Su Chen stood up. He extended his hand. Boss Zheng also stood up and shook hands.
The main terms of the negotiations were finalized within two weeks. Hongyuan acquired 51% of Zheng's OEM factory for 38 million. Boss Zheng retained the remaining 49% and continued to serve as general manager. In addition, Hongyuan initially injected 5 million into the production line renovation fund after the acquisition to achieve the "48-hour switchover capability" required by Su Chen.
The transaction was completed on September 26.
Hongyuan's cash reserves dropped from 42 million to the safe level of approximately 2 million. In the remarks section of the report sent that evening, Meng Xiaoying wrote: "Entering a period of intense operations. Need to wait for the Southern Power Grid contract to be finalized in the fourth quarter to recoup cash flow."
Su Chen called Boss Zheng that evening.
"Mr. Zheng, starting tomorrow, we're family. Please continue operating the industrial PCBA line as you normally would. However, starting next week, could you please reserve SMT line 2 for us? This line will be dedicated to assembling Hongyuan's flight control modules and sensor modules."
"clear."
"Furthermore—regarding the 48-hour switching capability you mentioned, I hope to complete the first full rehearsal by the end of March next year. The goal is to allow for interchangeability between any two modules."
"I'll oversee it personally."
After hanging up the phone, Su Chen stood in his office for a while. Late September in Shenzhen already carried a hint of autumn chill. The skyline of Longhua District remained a dense cluster of lights.
He returned to his desk, pulled the white paper with the word "wall" written on it out of the drawer, and put a checkmark on the circle for "PCBA OEM".
The remaining three paths—independent research and development, domestic substitution, and equity investment—have not yet been explored. But the first stone has already been laid to build the bridge.
He put the blank sheet of paper back into the drawer. Inside lay the sentence he had written himself on July 23rd: "The wall hasn't collapsed yet. But I need to start preparing the ladder."
Two months have passed. The first rung of the ladder is complete.
There's still a lot to do tomorrow. But the direction is clear.