Tech giants start by disassembling systems

Chapter 105 The Game Changer

2020 5 Month 8 Day.

An in-depth report from 36Kr has caused a stir in the drone industry.

The title is: "Flying Bird Platform: 320 Signed Contracts in One Month – How Did Hongyuan Intelligent Use a Flight Control Module to Drive the Entire Industry?"

This 8,000-word report details the entire process of the Feiniao platform from its launch to its distribution, and for the first time fully reveals to the public the strategic plan laid out by Su Chen.

The first part of the article is the data.

As of early May, the Feiniao platform had signed contracts with over 320 clients, covering five major application areas: plant protection, surveying and mapping, inspection, logistics, and security. Total pre-orders for modules exceeded 40,000 sets, with the advanced version accounting for 63%, making it the most popular model.

The first batch of 20,000 modules has been shipped, and the second batch of 20,000 modules is being produced at the new factory in Songshan Lake, Dongguan, with workers working overtime.

The second part of the article is a review.

The reporter spent two weeks visiting four cities—Shenzhen, Dongguan, Wuxi, and Chengdu—and interviewing more than twenty industry professionals, ultimately piecing together the complete chain of events that Su Chen began laying out in the fall of 2019.

Step 1: Micro-sensor semiconductor.

In October 2019, Su Chen personally went to Wuxi and stayed at MicroSense Semiconductor for nearly two months. He did not bring any business team, only a suitcase and a laptop. There, he participated in the process improvement of MicroSense MEMS sensors in an almost obsessive way, reducing the low temperature drift index from five times that of Bosch to 10 times.

This step addresses the supply chain security issue—by having a domestically produced IMU supplier with performance close to Bosch's and costs less than half that of Bosch, the BOM cost of the Feiniao module is directly more than 35% lower than that of its competitors.

Step Two: Zheng's OEM Factory.

In September 2019, Hungyuan acquired a 51% stake in Zheng's PCBA foundry in Shajing, Bao'an District for 38 million yuan and invested 5 million yuan to upgrade its SMT production line. This factory has a "48-hour switchover capability"—it can switch its production line from consumer-grade to industrial-grade products within two days.

This step addresses the issue of production capacity flexibility—mass production of the Flying Bird module does not need to wait for the completion of the new factory in Songshan Lake, Dongguan; Zheng's contract manufacturer can immediately undertake the first batch of production.

Step 3: SDK four-level authorization system.

Back in October 2019, Hongyuan established a four-level SDK licensing standard—interface level, parameter level, source code level, and architecture level. This standard was initially designed for the Lianchuang Group alliance, but its real target is actually the Feiniao platform.

This step addresses the issue of ecosystem stickiness—customers of different sizes receive different levels of SDK access; small workshops can use interface-level access, while large integrators can customize it in depth. Once customers invest development resources in the Feiniao SDK, the cost of switching will become increasingly high.

Step 4: Secure your airworthiness certification.

In March 2020, Hongyuan submitted three versions of its Feiniao platform airworthiness pre-certification application to the Civil Aviation Administration of China. At the time, no one in the industry noticed this—because the draft of the airworthiness management regulations had not yet been released for public comment, and no one realized that airworthiness certification would become a life-or-death hurdle.

But Su Chen knew.

He learned from industry associations at the end of 2019 that the general direction of low-altitude airspace management reform was to tighten access and raise standards. Therefore, he started the airworthiness certification process six months in advance, getting ahead of all his competitors.

When the draft for comments was released in April, the entire industry was in a panic, but Hongyuan had already completed the initial review.

The last paragraph of the article is the reporter's commentary:

"From MicroSense's IMU to Zheng's production line, from the SDK licensing system to the strategic positioning for airworthiness certification, Su Chen's moves may seem independent, but in retrospect, they are precisely interlocked, forming a complete closed loop. By the time the Flying Bird platform was released in mid-April, this strategy had been in place for more than half a year."

People only saw Su Chen working on the first level, but they didn't realize he was already preparing for the third level.

……

Within 24 hours of its publication, the article had been read over 400,000 times.

Subsequently, tech media outlets such as Jiemian News, Huxiu, and TMTPost followed up with reports. By mid-May, even CCTV's financial channel aired a special report titled "The Breakthrough Path of Domestic Flight Controllers."

For the first time, the name Su Chen stepped out of the small circle of the drone industry and into the public eye.

……

May 15, 2020, Longhua District, Shenzhen, Hongyuan Intelligent Headquarters.

Su Chen sat in his office with a camera and two microphones in front of him—one from 36Kr and the other from Southern Daily.

This was his first formal, in-depth interview with the media.

"Mr. Su, the Feiniao platform has signed over 300 clients in just one month, a speed far exceeding industry expectations. However, some outsiders question whether Hongyuan is using low-price dumping to seize market share. What's your opinion?"

The reporter from 36Kr was the first to ask a question.

Su Chen smiled slightly.

"The premise of dumping at low prices is selling at a loss. I can tell you definitively that every version of the Feiniao platform is profitable, and the gross profit margin is quite healthy. The reason we can achieve this price is not because we are subsidizing, but because we have made fundamental innovations in our cost structure."

Could you elaborate?

"The core issue boils down to two things. First, domestic sensor replacement. We collaborated with Wuxi Microsensor Semiconductor and spent nearly two months bringing the performance of their MEMS inertial sensors close to the international top-tier level. This reduced our IMU costs by 60%. Second, standardized design. The 5x5 cm standardized interface of the Flying Bird module wasn't chosen arbitrarily. We studied the mounting structures of over two hundred mainstream racks on the market and selected the solution with the highest compatibility. Standardization brings economies of scale, and economies of scale lead to cost reduction."

A reporter from Southern Daily picked up the conversation:

"Mr. Su, many people compare the Feiniao platform to the Android system of the drone industry. Do you agree with this comparison?"

Su Chen thought for a moment and then shook his head.

"Not entirely accurate. Android is a pure software platform, while Feibiao is a combination of hardware and software. But from an ecosystem perspective, we do want to do something similar."

He stood up, walked to the whiteboard behind him, picked up a marker, and drew a pyramid.

"Look, a drone, from bottom to top, has five layers: frame, power system, flight control system, mission payload, and application software. Which of these five layers is irreplaceable?"

The two reporters exchanged a glance but did not answer immediately.

"It's the flight control system."

Su Chen drew a circle on the middle layer of the pyramid.

"The frame can be replaced, the motors can be replaced, the gimbal can be replaced, and even the payload can be replaced. But the flight control system cannot be replaced—because the flight control system determines how a drone flies, whether it can fly, and whether it flies safely. It is the only irreplaceable core component of the entire drone."

"When an irreplaceable core becomes an open platform, it ceases to be a component; it becomes infrastructure."

Su Chen put down his pen and turned to face the camera.

"What we really want to do is not sell modules, but become the infrastructure of this industry. Just like Qualcomm is to smartphones, and Intel is to PCs. When more than 60% of drones in the industry are running on the Flybird platform, the standards we set become the industry standards, and our SDK becomes the industry's development language."

"That sounds very ambitious."

"It's not ambition, it's responsibility."

Su Chen's expression turned serious.

"Do you know why the draft airworthiness management regulations were released for public comment at this time? It's because the country has begun to prioritize the low-altitude economy. In the next five years, the low-altitude economy could reach a trillion-yuan scale. But a trillion-yuan scale is predicated on safety. And the foundation of safety is a standardized flight control system."

"If foreign companies set these standards, China's low-altitude economy will be like the PC industry twenty years ago, completely dependent on others. I don't want to see that happen."

This statement was later quoted by countless media outlets and became one of Su Chen's most well-known public statements.

……

At the end of the interview, the 36Kr reporter asked a question that everyone was concerned about.

"President Su, the Feiniao platform has achieved initial success. What are Hongyuan Intelligent's next plans?"

Su Chen leaned back in his chair and pondered for a second.

Three things.

"First, we are in talks with a leading drone integrator about an acquisition. If successful, Hongyuan will possess full-chain capabilities, from flight control platforms to complete drone integration. We cannot disclose the specific company at this time."

"Secondly, our next-generation flagship consumer drone, the F5, will be released in the second half of this year. The F5 is positioned in the high-end consumer market above 5,000 yuan, directly competing with DJI."

"Third, we are developing a dedicated low-altitude communication module, codenamed H-Link. This module will provide drones with reliable beyond-line-of-sight communication capabilities and is a crucial component of future low-altitude economic infrastructure."

After the three things were said, both reporters were stunned.

Acquiring a complete system integrator means that Hongyuan is transforming from a component supplier into an end-product manufacturer.

The F5 is positioned to compete with DJI – this means that Hongyuan is directly challenging the absolute leader in the consumer drone market.

H-Link low-altitude communication – this means that Hongyuan is not satisfied with just making flight control platforms, but also wants to extend into communication infrastructure.

Any one of these three things, if applied to any drone company, would be a strategic move capable of changing the industry landscape.

Su Chen had to do three things at the same time.

"Mr. Su, forgive my bluntness," the 36Kr reporter hesitated for a moment before voicing his question, "Hongyuan's brand image is currently mainly focused on the consumer and agricultural protection sectors. The outside world's perception of Hongyuan is still largely limited to 'that F4 company.' Do you think Hongyuan has the capability to simultaneously advance so many lines? Especially the high-end consumer market and the industrial equipment market, which is quite different from Hongyuan's current brand positioning."

Su Chen wasn't angry; instead, he smiled.

"You're right. Four years ago, Hongyuan was just a startup team of four, making our first drone in a residential house in Longhua. Two years ago, everyone thought we were overestimating ourselves by making agricultural drones. A year ago, everyone thought we were burning money by developing our own flight control system."

"But what about now?"

He pointed to the bustling office area outside the window.

"Currently, Hongyuan has over 500 employees, its own sensor supply chain, its own OEM system, a flight control platform with over 300 signed clients, and a new factory under construction with an annual production capacity of 90,000 complete aircraft and 300,000 modules."

"Brand positioning can change. But technological barriers, supply chain barriers, and ecosystem barriers—once these are established, they become permanent moats."

"As for how others see it, that's their business. My job is just to get the product made."

After the interview, Su Chen saw the reporter off and returned to his office to sit down.

On the table was a document—"Acquisition Plan of Zhongyi Aviation Technology (Third Draft)".

He turned to the first page, which stated the valuation range: 500 million to 600 million.

This will be the largest acquisition in Hongyuan's history. If successful, Hongyuan will transform from a flight control and consumer drone company into a drone group covering the entire industry chain.

But what if it fails...

Su Chen closed the file and looked out the window at the distant green mountains.

It won't fail.

He's come this far; he won't stop here.