"Professor Zhao's last wish, and the last wish of our entire Jiangnan Group!" Boss Huang said excitedly, patting the table. "How can our Jiangnan Group be controlled by others? What others have, we can also possess. Since the Europeans won't let us use their high-energy particle collider, we'll build a stronger one ourselves. Once it's built, we won't let the Europeans use it either!"
"..." The executives present were all a bit stunned. It sounded like they were actually going to start building it?
So, one executive couldn't help but speak up. Liu Xiangjiang was the first to ask, "Boss, wouldn't it be too wasteful to spend a huge amount of money building a high-energy particle collider for these matters? Moreover, R&D in high-energy particles doesn't have a significant positive impact on our Jiangnan Group's main business!"
"I heard that the budget for the American equipment has already ballooned to 200 billion US dollars, which is why it was rejected by the US Congress. Even the US cannot afford such equipment, so should we be more cautious?"
"Well, we do need to be cautious!" Boss Huang nodded, then looked at Yang Yunhe and asked, "How much do you estimate it will cost to build this equipment?"
"At most, it will only cost 18 billion... Actually, let's be generous and say 20 billion US dollars will be enough!" Yang Yunhe said very decisively.
"Good!" Huang He nodded, then looked at the head of the finance department and asked, "How much of our research budget is left this year?"
"Boss, the originally planned research budget for this year was 9.8 billion US dollars. There are currently 4.2 billion US dollars remaining, and we expect to have about 3 billion US dollars by the end of the year!" the supervisor replied.
"Oh, so we're still short by 17 billion US dollars!" Huang He nodded, then asked again, "How much cash does the company have on its books? I mean, cash that can be used immediately!"
"Not much, a bit less than last year!" the finance supervisor shook his head. "The cash we can still use is less than 300 billion US dollars!"
"Pfft..." Many executives present, upon hearing this figure, spat out whatever they were holding.
Yes, although they were all top executives of Jiangnan Group, they had never understood the company's financial situation, because Boss Huang kept it strictly confidential. Apart from the relevant executives in the finance department, no one knew the company's specific economic situation.
Therefore, this was the first time they had heard about the group's actual financial situation, and they were all stunned. The company actually had 300 billion US dollars in liquid funds. Such a terrifying number truly bewildered all the executives. Had our company become this rich?
It felt so unreal. How could a company have so much cash? Even writing a novel wouldn't describe it like this!
But in fact, this figure was real. The finance supervisor had only reported the cash amount and had not reported the funds from securities and other financial products held by the company, otherwise the actual figure would have been even more terrifying. This was because, at this very moment, Jiangnan Group had completely brought the entire terminal system under its control.
In another world, Apple was exposed by the media in 2016 as holding up to 600 billion US dollars in freely usable cash. This figure surpassed all companies worldwide.
To put it bluntly, if this money were deposited in a bank, it could generate 20 billion US dollars in interest annually. And the number of companies worldwide with profits exceeding 20 billion US dollars combined was less than five. Apple's cash flow was indeed that terrifying.
So, why did Apple earn so much money?
Of course, it was because the profit margin of Apple phones was extremely astonishing. In 2016, the model Apple sold externally was the iPhone 7, with an average selling price of 6,000 yuan in the Chinese market.
At this time, the competing Android flagship model was the Xiaomi 6, with an average selling price of around 2,600 yuan. The price difference between the two was more than double.
So, was the manufacturing cost of the Xiaomi 6 lower than that of the iPhone 7?
The answer is that the manufacturing cost of the Xiaomi 6 was far higher than that of the iPhone 7.
This might sound unbelievable: how could the cost of a phone priced at 2,600 yuan be lower than the cost of a phone priced at 6,000 yuan?
But that was the reality. Firstly, any iPhone model had global sales starting from 100 million units. This meant that all the parts needed were also in units of hundreds of millions, with very strong demand and huge orders. This naturally drove down the cost of each part to an extremely low level.
Conversely, even the Xiaomi 6, at its sales peak, sold less than 10 million units annually. The demand for orders was less than 1/10 of that of the iPhone 7. This meant that its unit price negotiation power was far lower than Apple's, and its procurement prices were naturally higher than Apple's.
Simply put, for the same part, if the original price was two dollars, and Apple needed to buy 100 million units, it could boldly tell the supplier, "I'll pay at most 40 cents per unit. If you don't sell to me, I'll buy from someone else."
Although the supplier looked distressed, upon careful calculation, even though 40 cents per unit was a 20% discount, with a total of 100 million units, costs could be suppressed to a very low level through mass production. Even at 40 cents, the supplier could still make a 10-cent profit. For 100 million units, that would be a profit of 10 million US dollars, which was still money.
If this order was given to a competitor, the supplier would essentially lose 20 million US dollars on this transaction. And this 20 million US dollars could be a fixed annual loss. Who could withstand that?
Therefore, despite the ridiculously low price, the supplier had no choice but to agree.
In a similar situation, if Xiaomi negotiated and also offered 40 cents per unit, but only for 10 million units, then the actual cost of each part could only be compressed to around 60 cents. And the supplier would want to make at least a 10-cent profit per unit.
So the supplier would hold firm, demanding at least 70 cents or even 80 cents per unit. Otherwise, they would tell Xiaomi to find someone else, as they weren't lacking orders thanks to Apple.
So, Xiaomi had to accept it and purchase the same parts at 70 cents per unit. As the quantity of each part increased, the cost naturally followed.
In addition, there were R&D costs. Although it was disheartening to mention, it had to be admitted that Apple was one of the few companies globally capable of independently completing the entire phone design.
As for Xiaomi and other domestic Android phone brands, they basically played the role of assembly factories.
This led to a huge profit gap.
The most obvious example was mobile phone chips.
As everyone knows, almost all mainstream Android phones currently use Snapdragon chips developed by Qualcomm, while Apple uses its own A-series chips.
This means that the cost of chips is completely different. Apple directly completed the entire A-series chip design and manufacturing plan, then handed the entire plan to chip packaging and manufacturing suppliers like TSMC, asking them to produce according to their design. TSMC only charged for materials and processing fees, with the cost of the entire set being less than 50 US dollars.
If it were Snapdragon chips, the initial process would be the same: Qualcomm would complete its own chip design plan and then entrust TSMC with the OEM.
Unless there were huge differences in the materials used and the lithography process, the material and processing costs would be roughly the same, around 50 US dollars per set.
But the problem was that this was Qualcomm's cost, not the cost for Xiaomi and other Android phones. In fact, Qualcomm sold such a set of Snapdragon chips to those Android manufacturers for a staggering 250 US dollars per set.
This was not fabricated; it was revealed by TSMC in an accidental product quote. They quoted a full set of Snapdragon 875 at 50 US dollars, while Qualcomm's quote to Xiaomi was 250 US dollars, a fourfold profit margin.
And 250 US dollars is approximately 1,800 Chinese yuan, which is almost half the price of an entire smartphone.
Even if this data was exposed, Xiaomi could only grudgingly accept the 250 US dollar price because, in order for their new flagship model to use the most advanced Snapdragon 875 chip as soon as possible and thus lead other competitors, they had to accept this almost extortionate price from Qualcomm.
Of course, after half a year or a year, the price of a full set of Snapdragon 875 would drop to around 150 US dollars to 100 US dollars, returning to a normal price range. But by then, both Apple and Qualcomm would have launched newer chips with even stronger performance, and the flagship models of various Android brands would have no choice but to continue buying the latest and most advanced Snapdragon chips, otherwise they would fall behind the first tier. This was the biggest pain point for most domestic Android manufacturers at this time.
So, you see that when Xiaomi and other domestic phone manufacturers hold their flagship model launch events, they say that they are not making money at this price and just want to make friends.
They were not lying. If you factor in promotional costs and other expenses, perhaps these phone manufacturers were truly making friends at a loss!
In contrast, Apple watched these competitors as if they were watching a joke.
Apart from chips, the situation for many other components in phones was similar. Apple's procurement costs were almost half of those for Android phones.
So, when an iPhone 7 priced at 6,000 yuan and a Xiaomi 6 priced at 2,600 yuan were placed side by side, the manufacturing cost of the Xiaomi 6 might be 2,500 yuan, but the manufacturing cost of the iPhone 7 would not exceed 1,000 yuan. The gross profit per phone could reach an astonishing 5,000 yuan.
And Apple sells at least 100 million such phones globally every year, which translates to 500 billion Chinese yuan, or about 80 billion US dollars in profit.
In fact, the average sales volume of Apple's phones of various models combined reaches about 150 million units per year. This would mean an actual gross profit of possibly 120 billion US dollars annually.
And Apple doesn't just have phones as its only product. Thanks to the traction from phones, Apple is also making a fortune in other product lines, such as watches, iPads, desktops, and laptops. Making several tens of billions of dollars more per year is not unreasonable, is it? Earning over 150 billion US dollars in net profit annually is also not unreasonable, right?
It would only take 4 years to accumulate 600 billion US dollars in cash. So easy!