On the morning of August 28, ZTE Corporation (000063) held an extraordinary shareholders meeting at its headquarters. The reporter of the e company noticed on the spot that the voting session of the two proposals ended in only 10 minutes. Then, investors asked the new chairman of ZTE, Li Zixue, and CEO Xu Ziyang. The questions were mainly about ZTE's recovery of production, 5G market competition and the company's strategic planning direction.
As the stock price rebounded and brought some confidence to investors, the entire dialogue between investors and executives was very rational and the dialogue became open.
Investors want to know as much as possible about the recovery of ZTE after more than 40 days of recovery from shock. The question and answer session, which was originally scheduled to end in 20 minutes, was extended to nearly 50 minutes.
Xu Ziyang, who attended the shareholders' meeting as CEO for the first time, also talked about ZTE's plan to resume rapid growth from production to the future. It indicates that the current production capacity has returned to normal, and the research and development progress has now caught up with the target set at the beginning of the year. The 5G test progress has fully caught up with the national test progress and the after-sales service capability has been fully restored.
Talking about business recovery: production tasks have returned to normal
Investors are most concerned about the recovery of ZTE's production and operation. Li Zixue, chairman of ZTE Corporation, gave investors some confidence in this answer. He said: "As of today, the main business has been fully restored, the production tasks in August have returned to normal, research and development work is still in rapid recovery, and 5G network testing has kept pace.”
ZTE’s CEO Xu Ziyang further added that in terms of R&D, ZTE’s core R&D talents have not been lost, and the number of employee turnover has remained at the same level as last year. After the ban was lifted, the company quickly invested in infield, field testing and national testing of 5G networks. As of the end of this month, ZTE's 5G test all rushed to the national test requirements.
"It is certain that the company is still in the first camp of the communications industry. The current order is in good condition and is basically the same as last July and August.Xu Ziyang said.
Xu Ziyang introduced the recovery of ZTE's business in the sub-region. The company's domestic business recovery is good. The international business has suffered from the loss of orders due to the rejection of the order. Most of the current international operators still maintain confidence and patience with ZTE. Conducted peer-to-peer negotiations with important global operators and received good feedback.
Xu Ziyang also introduced the approximate time plan for ZTE to resume production. Based on the business recovery in 2018, ZTE plans to return to the normal growth track of the carrier network business in 2019. It will continue to rank in the first camp of 5G and grasp the 5G scale in 2020.CommercialOpportunity and rapid development.
Talk about strategy: focus on the main business contraction of the main channel
Since the lifting of the ban, ZTE has made great adjustments in its business. It is obvious that a large number of outsourcing businesses have been reduced. Xu Ziyang also talked about ZTE's strategic adjustment plan at the shareholders' meeting.
He said that the "ban event" has given ZTE a lot of lessons. In this process, the company conducted a systematic and new review of its products, technology and strategic direction. At present, ZTE's strategic adjustment is mainly to focus on the main channel and key business. ZTE has tried many commercial directions, but it has made great adjustments in the 5G arrival company. The outsourcing business adjustment is the contraction of the company outside the 5G main channel.
The core issue of the ban is the chip. Xu Ziyang also talked about the development of ZTE's chip business. "The upstream and downstream of the industry chain of the communications industry is the relationship between 'you have me and me in you'. In this context, we will increase investment in two things in the future. First, increase the key components of ZTE. The research and development of the chip, while increasing cooperation with third-party chip manufacturers in the industry, we believe that only two ways to go together is the best way to control system risks and maintain healthy development."
Specific to ZTE's semiconductor business strategy subsidiary ZTE Microelectronics, Xu Ziyang said that ZTE Microelectronics will increase its investment in chip research and development, focusing on the R&D business of ZTE main equipment chips, such as baseband chips and 5G transmission switching chips. , IP chips, etc., these chips are a key part of the core competitiveness.
In addition, Xu Ziyang mentioned the planning of ZTE's terminal business. First of all, it is clear that the terminal business is an indispensable part of ZTE's 5G main industrial chain and continues to be firmly invested. It also indicated that in the short term, the terminal business also needs to adjust its business focus.
On the one hand, the adjustment of the terminal business should focus on the market that it is good at. On the one hand, he mentioned that ZTE had occupied the top four market in the US market. After the ban, ZTE is still observing and studying whether the US market can recover normally. Restructuring and sales of the US market. For the mobile phone business in the domestic market, “Is it necessary to evaluate whether it can meet our requirements.” In the second aspect, he proposed that the mobile phone business should focus on the core models, and he believes that the current mobile phone models are still too much.
Xu Ziyang said that in the strategic future, ZTE is pursuing efficient growth, focusing on key businesses to be practical and thorough, and then cutting into new areas. As long as the focus on 5G core competitiveness is unwavering, I believe it will resume growth quickly. confidence.
Talking about 5G applications: need business model breakthrough
After the ban on the issuance of the 13 billion yuan for 5G R&D that was previously thrown out, can ZTE's 5G R&D funds be effectively guaranteed?
Xu Ziyang said that the company is now concentrating resources on 5G construction and reducing the investment in non-main channel products. At present, the company's 5G expenses mainly come from R&D expenses and other businesses to create profits. Whether additional investment will be judged at an appropriate time, the relevant company's financing for 5G financing will be considered at the appropriate time according to the consumption of R&D resources. New information disclosure.
Xu Ziyang also analyzed the business model of the future 5G market. He believes that in the three scenarios faced by 5G technology, only the "big bandwidth" application scenario has a clear business model, and the application scenarios facing industrial applications and IoT application scenarios still take time to explore.
"At present, it can be seen that the formation of the business model is 'large bandwidth', because consumers' demand for bandwidth is endless, but this scenario also has constraints. As the tariffs are gradually reduced, operators are highly invested in low-return business models. It may be difficult to continue.” He made two suggestions for operators in the business model of large bandwidth. First, operators provide differentiated services to adopt membership system for individual users and increase single-user revenue. Second,DevelopmentMore suitable office scenevideoCommunication needs to expand revenue business.
Xu Ziyang said that in the low-latency application scenario and the Internet of Things application scenario, if the business model that meets the application scenario cannot be solved in a short period of time, operators and equipment vendors will face enormous challenges in the future. However, with the deployment and application of a large number of sites in the future, it will bring a rich application scenario, and the market will gradually change for operators with sufficient time and space.