Inspur rushes away from the new bottle of the Metaverse and continues to fill the old wine

There is still no new story about selling servers.

In the past two years, it seems that it has become a consensus in the industry that any company that is involved in technology should take advantage of the popularity of the Metaverse.

In March last year, since Roblox wrote the “Metaverse” into its prospectus, the wind has been blowing. Half a year later, foreign Facebook changed its name to Meta, the three domestic BATs followed in its footsteps, and super giants such as Microsoft and Apple finally let go.

Recently, in the domestic market, there is an upstream company that is the closest to these science and technology companies, and it has also begun to develop the Metaverse, which is the leader in the server field – Inspur Information.

As early as the early 1990s, Sun Pishu, the current chairman of Inspur Group, led the team to develop the first minicomputer server in China. This was a unique approach when all kinds of IT players gathered in the PC field at that time.

As the first person to eat crabs in the server industry, Inspur Information has become one of the most powerful server manufacturers in China with the development of the domestic server market, standing on the top of Inspur.

But just when Inspur Information was desperately selling server equipment. Peers such as Huawei and Sugon have turned and started to develop further upstream in the supply chain.

Because the homogenization of domestic server manufacturers is extremely serious at present, and as a midstream enterprise in the supply chain, if it lacks core technology, it is essentially a large assembly plant, which will eventually lead to it will not become stronger even if it grows bigger. This is also Inspur information Difficulties in the current situation.

Inspur Information once had countless opportunities in the development of the times, and could continue to invest in solutions and chips, but Sun Pishu, who was a technical worker, still insisted on the relatively mature and conservative path of “trade, industry and technology”.

However, Sun Pishu is a person who is good at “eating crabs”. Under the tuyere of the Metaverse, Inspur Information became the first company in the industry to enter the Metaverse. However, Inspur Information without core technology may still not have much room for imagination.

big but not strong wave

As the second largest server manufacturer in the world and the largest in China, Inspur Information, which is rooted in Miaohong, is undoubtedly the representative of the independent server industry.

But after a little observation, you will find that selling servers twenty years ago was just like Lenovo selling computers. It was a fat man who was very rich. Now it is actually a brick-moving job that only makes money and does not make money. Summarize with up-and-down breath.

Because Inspur information has shortcomings whether it is the upstream supply chain that determines the fate or the downstream customers, and directly determines the dilemma of “big but not strong”.

From the upstream point of view, Intel, Nvidia, Samsung, Seagate, and Western Digital are all companies with monopoly power that supply the three key equipment CPU, memory and disk for Inspur Information Server.

According to the statistics of the annual report, since 2019, the total procurement proportion of the top five suppliers of Inspur Information has exceeded 60%, with a total of more than 29.1 billion yuan. By 2020, this value will reach 38.1 billion.

As the largest suppliers, Intel and Nvidia’s two core chip manufacturers have a total supply of 24 billion yuan, accounting for 41%; in addition, hard disk and memory suppliers such as Seagate and Samsung have a supply of more than 4 billion yuan. This also makes Inspur Information almost have no bargaining power in the face of upstream supply chain manufacturers.

Inspur rushes away from the new bottle of the Metaverse and continues to fill the old wine

Although the data for 2021 has not yet been announced, it is foreseeable that Inspur Information has not made breakthroughs in the three core equipment of the server, and no new suppliers have been found according to the new products released.

Excessive reliance on upstream manufacturers can also easily make them fall into the risk of supply interruption.

On July 1, 2020, Intel announced that it would temporarily suspend supply to Inspur. Affected by this, the stock price of Inspur Information plunged sharply in the afternoon that day, and was quickly smashed to the lower limit.

Later, it was confirmed by Intel and Inspur Information that this move is only because Intel needs to make some corresponding adjustments to the supply chain according to relevant US laws, so it has to temporarily suspend the supply to this customer, and the suspension period is expected to be two weeks.

Although it was a false alarm, it exposed the weakness of the wave information. An industry insider also said, “According to the consistent style of the US government, even if it does not suppress you today, it is difficult to guarantee that it will do something to you one day. Any Chinese server manufacturer will have the risk of being cut off by the US at any time. imminent.”

Inspur information seems to disagree. An investor once asked on the open platform, what is the company’s response to the short-term supply interruption of Intel in the United States? Whether to lay out the chip and processor industry, whether to use the domestic processor Godson instead, is it easy to be controlled by others?

Inspur Information responded that the company’s current production and operations are normal, and Intel has resumed supply. The company’s business is positioned in the research and development, production and sales of complete servers. The server products can be adapted to processors of various architectures including domestic processors.

Such an answer is obviously difficult to satisfy the netizens. Many professionals pointed out: If you understand the current international situation, especially the supply chain situation, it is not difficult to see that it is obviously not safe for Chinese manufacturers such as Inspur or Lenovo to put their eggs in one basket. .

Of course, Inspur Information does not want to master the core technology. It has also explored in the field of high-end technology before.

In May 2009, Qimonda Technology (Xi’an) Co., Ltd. was acquired by Inspur and changed its name to Xi’an Huaxin. At that time, Inspur’s move was interpreted as Shandong’s vigorous development of the integrated circuit industry.

Authoritative experts in the industry also said that Qimonda Xi’an R&D Center has the world’s most advanced semiconductor memory product design and development capabilities. This acquisition enables Inspur to have a memory chip design and development team that is synchronized with the international advanced technology level, in order to build China’s independent memory. The industry has taken a substantial step.

It’s just that the story behind it is very sad. Inspur no longer follows the “wave” of semiconductor development, and voluntarily gave up Xi’an Huaxin, which has a high gold content, and continued to start the server business.

The reason behind this, an insider once revealed, “The research and development cost is too high, the research and development cycle is too long, and the result is unknown. These are the factors that Inspur gave up on Huaxin.”

Looking at the customers of Inspur Information, they are relatively concentrated, and most of them are powerful Internet companies and government-related units. Data shows that more than 65% of Inspur Information’s revenue comes from Internet companies. Among them, more than 90% of domestic cloud service providers such as Alibaba Cloud, Baidu Cloud, and Tencent Cloud are their customers.

At present, Inspur Information mostly adopts the JDM (Join Design Manufacture) development mode, that is, joint development with enterprises, which makes its R&D and supply cycle must be greatly shortened. In addition, for these large customers, the required payment period is generally also longer.

As a result, these customers can bring good market share and revenue to Inspur on the surface, but in terms of actual profitability, the value that can be reflected is very small. Some people in the industry also said that these Internet customers and Inspur Information are basically making money at a loss, and they have almost no bargaining power.

This is true. Judging from the past financial reports of Inspur Information, its net profit has stabilized to less than 3%, and even Sugon, which ranks far behind Inspur in terms of shipments in the domestic market, has a net profit margin of 6.7%.

It can be considered that the so-called growth and leadership of Inspur Information in the domestic and even global server market is not because its products have extremely high technical barriers and irreplaceability, but more because of this “price-for-volume” model. Gained a first-mover advantage in the market.

At present, peers in the industry, including Huawei, Sugon and other companies are developing their own chips, taking the “technology, industry and trade” route, and they have achieved certain results. Although it is still difficult to achieve independent control of high-end chips in the short term, but For the capital market, self-developed chips represent space for imagination and growth to a certain extent.

However, Inspur Information has no plans to develop high-end technologies by itself. That is to say, if we want to maintain growth, we need to tell more new stories in the server market. The Metaverse that our downstream service providers are doing seems to be the most important thing to tell right now. good story.

Is the Metaverse an opportunity?

At the beginning of March this year, Inspur Information IPF2022 Conference was held as scheduled. In this conference to show itself to the outside world, Inspur Information brought out the industry’s first Metaverse server MetaEngine.

It cannot be denied that this time Inspur Information has become the crab-eating enterprise again.

However, looking back on the company’s strategy in recent years, whether it is smart computing, open computing or smart computing centers, the fields that these waves first entered, only provided them with bigger capital, and there was not much breakthrough in core technical barriers. The main thing, of course, is that these new businesses didn’t help the poor earnings report.

From 2019 to the first three quarters of 2021, Inspur Information’s revenue was 51.6 billion yuan, 63 billion yuan, and 46.2 billion yuan, respectively, and there was no significant growth. In addition, the annual net profit margin was still pitifully low.

Industry insiders said that in recent years, Inspur Information has been able to be the first enterprise that “eats crabs” frequently. In fact, the main reason is the demand from customers.

Because most of Inspur Information’s customers are the world’s top Internet companies, these companies are increasingly demanding for computing power, and Inspur’s JDM model enables them to understand customer needs in a more detailed manner. This means that Inspur information can get product feedback faster than peers to a certain extent, and the frequency of product updates will naturally be faster.

Entering the Metaverse, launching MetaEngine is the same. Many customers of Inspur Information Service are exploring the Metaverse, and they need higher computing power when building and running the Metaverse. Traditional servers are already stretched thin, and Inspur Information, which has a closer relationship with customers, can be faster and more targeted. Launched Metaverse Server to meet customer demand.

Therefore, the foresight of Inspur Information can be understood to a certain extent as an act of downstream service providers forcing midstream suppliers.

However, although Inspur Information can rely on such advantages to take the lead in entering new fields and occupying the market, it cannot change its core problem of being big but not strong in essence, and it cannot even change the status quo of low profits. No exception.

First of all, the actions of Inspur Information in the Metaverse have not changed the status quo of upstream and downstream. Not now, and at least not for a long time in the future.

Because according to the chips and storage units matched by MetaEngine, its main core components still rely on old suppliers such as NVIDIA, Intel, and Seagate; not to mention downstream buyers, the Metaverse server is a product based on their needs.

Even the wave information entering the “Metaverse Era”, whether upstream or downstream, is still similar to the previous one, and it belongs to both ends.

In addition, the Metaverse is still in its infancy, and even the most radical founder of Meta, Zuckerberg, said, “It may be a few years before a functional Metaverse can be realized. The Metaverse we know and witness at present , also in the conceptual Metaverse.”

Layout ahead doesn’t seem like a good option in this case. As a midstream enterprise in the industrial chain, the upper limit of its products is still determined by the upstream enterprises in the supply chain. In essence, the Metaverse server, which can be understood as Inspur Information, is to assemble and optimize more and higher-end processors and storage media together.

That is to say, even if Inspur Information can rely on the Metaverse to expand its revenue in the future, it may still be in a difficult position in terms of net profit.

Of course, the outside world’s disapproval of Inspur information actually stems from the word “chip”. Because unlike other industries, in the server field, China has a variety of so-called independent core chip genres, but there is no name of Inspur information among them.

Sugon has Haiguang, Huawei has Kunpeng, and both have the ability to develop their own chips. Although they are still far from the world’s top chips, they are obviously more imaginative than Inspur Information without this ability. Level 2 This is reflected in the market very well.

The market share of Inspur Information is much higher than that of Sugon, but the market value of Sugon is several billions higher than that of Inspur. In terms of price-earnings ratio (TTM), as of the close of the press date, the price-earnings ratio of Sugon is 43 times. There are 18 times. To a certain extent, this can also reflect that Dawning is relatively more imaginative.

Years ago, Inspur Information had tried the “technology, industry and trade” model, although it was eventually abandoned with tears. But now, Inspur Information has occupied a leading market share. Under this circumstance, the “trade, industry and technology” model is obviously out of date, and it is imminent to resume “technology, industry and trade”.

Because if the profit rate is suppressed for a long time, it will greatly limit the growth space of Inspur information, and the story of assembling the server will be finished sooner or later. Without core technology, it will inevitably become a mine that may be detonated at any time.

Inspur Information is the first company that is good at “crab-eating”, but it likes the tide of eating crabs so much, but it has never been able to create a set of tools with core patents. There is very little meat that can be eaten.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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