"Has your company also broken through the silence?" Potter asked excitedly. If so, he would have nothing to fear and could continue to fight Intel.
"It's hard to say for now, and it's hard to say!" Suzuki Jirokichi shook his head slightly, still smiling. "But if everything goes smoothly, we will also hold a press conference next month. Mr. Potter, you must attend!"
"Certainly! Certainly!" Potter said quickly, and then a sense of anticipation arose in his heart, hoping that Nikon could also launch its new generation of lithography machines, otherwise A...
"Gentlemen, according to the research of our relevant market departments, the market price of the 1700i should be around 150 million to 200 million US dollars per unit," the president of AmsL reported at the board meeting.
"So expensive?" Even the directors present were stunned by the price, shocked by it.
"I remember that when it was most expensive, a top lithography machine sold for no more than 80 million US dollars. How did it double all of a sudden?" The representative from TSMC frowned and asked somewhat excitedly.
He naturally had to be excited. Although TSMC was also a shareholder of AmsL, and even the second largest shareholder after Intel, the agreement between the directors stipulated that major shareholders also had to settle their accounts clearly.
Although AmsL's products would be sold to the company's shareholders first, the price had to be completely at market price. At most, it would be the lowest price in the market, without any additional discounts.
The reason was simple: AmsL had so many shareholders. If a company could procure goods at an internal price much lower than the market price, it would directly harm the interests of other shareholders. After all, when these machines were sold to non-shareholder companies, the price could be 20-30% higher, and these would all fall into the dividends received by the shareholders. Naturally, the shareholders could not tolerate their interests being harmed.
Therefore, even though TSMC was the second largest shareholder, if the price was determined to be between 150 million and 200 million US dollars, TSMC would still have to pay the cash at the price of 150 million US dollars to purchase it from AmsL.
Among these shareholders, as the world's largest semiconductor foundry, TSMC would definitely take the largest number of lithography machines. So, in fact, Intel had the right to take the most lithography machines, but Intel no longer processed chips itself, and entrusted everything to them. Therefore, these purchase quotas would ultimately fall on TSMC itself, and TSMC would have to pay for these machines themselves.
And the products processed by the equipment belonging to Intel could only be sold to Intel, which was particularly annoying.
Originally, TSMC thought that if the selling price was around 80 million to 100 million US dollars, it would be an acceptable price. But now the price had soared to 150 to 200 million US dollars per unit. If TSMC took 10 units, it would have to pay 1.5 to 2 billion US dollars in cash, which would be quite a blow to TSMC.
"Distinguished directors, the previous prices were indeed no more than 80 million US dollars at most. But that was during the most intense period of competition, and companies from Fusang were also engaged in fierce price wars with us, so we could only lower the prices to an extremely low level. During that period, the company lost hundreds of millions of dollars every year. All directors are aware of this!"
"But now, we are the only one in the world that can produce deep ultraviolet immersion lithography machines, and only we can break the 70nm limit. We have no competitors, so our prices naturally have to be set higher. This is also to compensate for the losses incurred by the company over the past few thousand years. After all, the company still has billions of dollars in debt to repay!"
"Therefore, we must take advantage of the few years when the market is exclusively occupied by us to earn the most profit at high prices. By the time Tai's immersion lithography machines are out in three to five years, we will have no opportunity. So selling at a high price now is inevitable. We ask for the understanding and support of all shareholders!" the president said calmly, and the directors present all smiled and expressed their understanding.
Of course, they had to understand. After all, most of the shareholders present had no demand for lithography machines, so the higher the selling price of the lithography machines, the more profit dividends they could receive. Why would they disagree?
Only the representative from TSMC had a flushed face, but there was nothing he could do. It was known that in order to maintain its monopoly advantage, TSMC would inevitably have to seize control of high-precision process chips during these years when the market was unique.
This meant that in the next few years, the 1700i would inevitably be mostly taken by TSMC. Therefore, TSMC would have to accept the minimum price of 150 million US dollars per unit. It seemed that AmsL's way of compensating for losses was to cut flesh from its shareholder TSMC and distribute it as dividends to other shareholders. How could such a thing be justified!
However, this representative had no way to do anything. Although he was the second largest shareholder, his shares did not exceed 10%. When the majority of the board of directors united, TSMC's voice became insignificant.
TSMC had no other choice but to brace itself and accept this high price.
"Alright, we are all processed by TSMC among us. TSMC will eventually earn the money back from us, so don't be so petty!" The Intel representative saw the dissatisfaction of the TSMC representative and said with a cold snort.
"..." The TSMC representative opened his mouth, but could not say anything.
The logic was correct, and it seemed that the wool was indeed coming from the sheep. But the problem was that TSMC had signed a long-term procurement agreement with Intel. The price had a benchmark price, which could only increase by a maximum of 5% annually and required Intel's approval.
Previously, this benchmark price could allow TSMC to maintain a gross profit of about 20%, which was considered good. But if they really spent 150 million to buy a lithography machine, even if the processing fee increased by 5%, the final gross profit would be less than 3%, which was not making any money at all.
About half of the other companies present had also signed similar long-term procurement agreements, with prices fixed. These users combined accounted for more than 78% of TSMC's production capacity. If the gross profit of these users was only 3%, TSMC would directly turn into a beggar.
"Alas, it seems that we can only increase prices substantially and earn back the profit from the remaining 22%," the TSMC representative muttered to himself in the end.
To compensate for the profit loss of 78%, the remaining 22% would have to be increased by at least 70%. And who were these remaining 22% of customers?
Not to mention anything else, there were 10% of orders from the mainland among them. This meant they would have to trick their own people!
"Alright, the selling price is set. Our internal procurement price is 150 million US dollars, and the external price ranges from 160 million to 200 million US dollars depending on the equipment configuration. What do you think?" The Intel representative spoke, and the other representatives expressed that this plan was very good, so it was decided.
"Then the most important thing is production. Mr. President, how many units can we produce this year?" a director asked.
"Distinguished directors, according to the calculations of the production department, if everything goes smoothly, we expect to produce about 25 to 30 units of the 1700i in the entire year of 2005, and the production capacity for the entire year of 2006 should be around 100 units!"
"Huh? Why is it 10 more units than expected? I remember at the beginning of the year it was said that the maximum production capacity this year would be only 15 to 20 units?" The TSMC representative asked excitedly upon hearing the result, but his expression was hard to tell if it was surprise or joy.
"Yes, the reason why we previously thought the production capacity would be at most 20 units was because of the supplier's capabilities. For the most critical deep ultraviolet light source, the production capacity was at most 20 units. But just last month, we found another supplier who can provide 10 laser sources this year, so we can increase the production capacity to about 30 units!" the AmsL president said with a smile.
"That's wonderful!" Upon hearing this news, most of the directors were all smiles, because in another 3 to 5 years, Fusang's lithography machine companies would be able to launch similar products, and then they would not be able to sell them at such a high price of 150 million US dollars.
Therefore, they had to take advantage of the current exclusive business to sell, the higher the output, the higher the profit. If they could sell 10 more units, they could earn another 1.5 billion US dollars, which was a good deal!
Of course, there were also some with unpleasant expressions. For example, a director present stood up and asked, "Mr. President, how reliable is this news? Isn't TRUMPF the only company in the world that can mass-produce deep ultraviolet light sources required for lithography machines? Where did the second one come from? Don't be fooled!"
This person was a bit agitated. Although he was not the representative of TRUMPF, TRUMPF was one of the subsidiaries of his group, and TRUMPF had always been the world's strongest laser light source manufacturer. The whole world only had them to produce high-precision deep ultraviolet light sources for lithography machines, which could be called the pride of Europe.
But now, there were other companies that could produce deep ultraviolet light sources, which made TRUMPF feel creepy!