Royole Technology, a company that once made angel investor Xu Xiaoping regret that he "did not follow the investment". The former "unicorn" was once well-known in investment circles, and after the 2019 Series F financing, the company was valued at $6 billion (about 38.2 billion yuan).
On the last day of 2020, Royole Technology submitted an IPO application for the Science and Technology Innovation Board to the Shanghai Stock Exchange, with a proposed fundraising of 14.434 billion yuan and an overall valuation of 57.7 billion yuan. According to the prospectus (filing draft), Royole Technology, which has been losing money for many years, does not have the ability to "make blood" itself. From 2017 to 2019 and the first half of 2020, the company's cumulative revenue was only 517 million yuan, but the cumulative loss reached 3.195 billion yuan.
In February 2021, Royole Technology withdrew its listing application. Since then, Royole Technology has not submitted an IPO application. It was also after the withdrawal of the IPO application that the problem of royole technology's tight funds began to appear, and gradually affected the normal production and operation.
The 18th floor of the Joint Headquarters Building of the High-tech Zone, No. 63 Xuefu Road, Nanshan, Shenzhen has been emptied
Image source: Photo by reporter Wang Jing
On the morning of April 13, Liu Shuwei, director of the China Enterprise Research Center of the Central University of Finance and Economics, shared his public article "Saving Royole" in the circle of friends. According to the article, it is recommended that governments at all levels actively help Royole Technology to solve the shortage of funds and help Royole Technology introduce strategic investors in order to open up the application market of flexible technology in the mainland.
The independent director issued a document recommending that the government help solve the shortage of funds
Recently, the problem of wage arrears of Royole Technology has repeatedly appeared on the hot search list, triggering heated discussions from the outside world. "At the end of last year, the company's production line began to maintain a minimum operation." Li Yanhong (pseudonym), an old employee who is still working for Royole Technology, told the "Daily Economic News" reporter at the beginning of the month that months of unpaid wages led to the departure of a large number of royole technology employees. "Since the beginning of 2022, the number of employees in Royole Technology's OA system has been decreasing, from 1800 to about 700 people."
According to public information, Liu Shuwei has been the independent director of Royole Technology since 2020. In the article, she listed a series of technological innovations achieved by Royole Technology and the funding situation of the company since its inception. During the nearly ten years since its establishment, the company has "conducted 8 rounds of financing, obtained equity investment of about 6.197 billion yuan, debt financing of about 3.653 billion yuan, and the company's cash inflow from operating activities of 1.717 billion yuan." Cash inflow totaled $11.628 billion."
Among them, the investment expenditure of Royole Technology Longgangpingdi Industrial Park construction project (including equipment/buildings/land) accounted for 65.7% of the total cash inflow; the company's total R&D and production operation expenses accounted for 16.3% of the total cash inflow; and the total accumulated expenditure of employee compensation and benefits accounted for 14.2% of the total cash inflow.
"Since the flexible screen production line was put into operation in 2018, and some of the application of innovative technology research and development results were completed in nearly one or two years, royole technology has not yet had time to open up the market and create sufficient operating cash flow, the company has a shortage of funds." Liu Shuwei said.
In this regard, she suggested that governments at all levels actively help Royole Technology to solve the shortage of funds, and help Royole Technology introduce strategic investors in order to open up the application market of flexible technology in the mainland.
In addition, she also revealed that "in the fourth quarter of 2021, the Shenzhen Municipal Government hired a number of professional institutions to conduct on-site assessment of Royole Technology's full-flexible screen projection production line, and the yield of the assessment was 81.6%".
For issues such as the yield of the film, the reporter asked Royole Technology to understand the situation, as of press time, has not yet received a response.
Some employees take three months off at the minimum pay
Previously, Li Yanhong, a former employee of Royole Technology, told every reporter that in March 2021, when VP (Vice President, vice president, reporter's note) level executives had been owed salaries. Management posts below the VP level will be paid in May for salaries owed in March of the year, and 50% of their wages will be paid in September; salaries in August will be paid normally in September, and only 40% of September salaries will be received in October. Since then, payroll has become increasingly confusing.
By November 2021, the problem of wage arrears of Royole Technology will break out in full swing. "Because the full payment of the October salary (2021) was suspended, the company promised to pay back the October salary on November 30 but did not honor it, and received the November salary at the end of December. And the salaries from December to the present month have not been received. Li Yanhong said. From unpaid wages to now, she has become numb to excuses such as "investment is coming soon, and re-pay is expected next month".
Royole Technology salary payment
Image source: Respondents provided screenshots of Excel spreadsheets
Before the Qingming holiday this year, the problem of wage arrears of Royole Technology has been on the hot search list many times, which has once again triggered heated discussions. But what Li Yanhong did not expect was that the "self-help" method of the company's senior management was to give employees a "long vacation".
On the afternoon of March 31, various departments of the company successively notified that the holiday began after the Qingming Festival, and the time was three months. Among them, April is paid according to full salary, May and June are calculated according to shenzhen's minimum wage standard, and the social security of these two months must also be adjusted according to the minimum base. ”
What makes most of royole technology employees, including Li Yanhong, even more dissatisfied is that royole technology has never issued a formal notice about the three-month holiday. "The company is worried about the negative impact of this kind of news being released by employees, but employees are very worried, if the company does not issue a formal notice in the official name, will the follow-up company interpret the three-month period as employee absenteeism?"
On the afternoon of April 6, Wang Miao (pseudonym), a current employee working at Nanshan Royole Technology in Shenzhen, told reporters that the company's approach is equivalent to layoffs in disguise. "Some old employees have original shares, and if they want to leave, the company will buy back their shares, but some (people) buy back the money and do not give them. Some overseas Royole department leaders are dissatisfied with the company's practices and have not notified employees of their long vacations, so some people still come to work. Today, there are also dozens of people in the Nanshan office area of Shenzhen to work. ”
Li Yanhong added to reporters that Royole Technology is not the first time to pay wages in accordance with Shenzhen's minimum wage standard. Another Royole technology employee said: "Even the minimum standards have not been issued."
After the 80s, Stanford scholars are difficult to solve the problem of "hematopoiesis"
According to public information, Liu Zihong, the founder of Royole Technology, was born in 1983, and was admitted to the Department of Electronic Engineering of Tsinghua University at the age of 17 with the results of the science college entrance examination in Fuzhou City, Jiangxi Province, and obtained a doctorate in electronic engineering from Stanford University at the age of 26. From 2009 to 2012, he worked as a consultant engineer and research scientist at IBM's Global R&D Center in New York.
In 2012, Liu Zihong began to establish the multinational company Royole Technology in many places. Just two years later, Royole Technology released the world's thinnest full-color AMOLED flexible display with a thickness of only 0.01 mm, with a curl radius as small as 1 mm.
Royole Technology, which has emerged with flexible displays, has quickly become the object of competition in the investment circle, and leading institutions such as IDG, Shenzhen Venture Capital, and Songhe Capital have come down. According to Qixinbao data, Royole completed a $300 million Series F financing in the fourth quarter of 2019.
In March 2017, Liu Zihong, the founder of Royole Technology, appeared on the Hunan Satellite TV entertainment program "Every Day Upwards" with products such as rollable keyboards, with the sentence "My dream is to bend the world", gaining many fans outside the circle.
However, while continuous financing, Royole Technology has always been difficult to achieve profitability. Since its inception 9 years ago, Royole's screen has not appeared in the products of any mainstream mobile phone manufacturers, and its own brands are difficult to find in public channels. Its technical ingenuity, mass production ability and customer acquisition ability are also beginning to be questioned.
At present, there are two main technical routes for flexible screens, one is the polysilicon (LTPS) technology mainly expanded by COMPANIES SUCH AS BOE, TCL Technology, Samsung, etc., and the main folding screen mobile phones and other products on the market are almost all supplied by these companies; the other is the ultra-low temperature non-silicon process integration technology (ULT-NSSP) independently developed by Royole.
According to Liu Zihong, the above two technologies are fundamentally different. "ULT-NSSP technology is better than LTPS in mass production capacity, because of the use of different material systems and different processes, the overall production process is greatly simplified, equipment investment costs are greatly reduced, yields are significantly improved, and product bending reliability is extremely strong." In contrast, LTPS technology requires a relatively high temperature and a more complex process, resulting in a very low yield and bending reliability of the full flexible screen foldable screen, and basically only a curved surface can be made before, and the number of folds is very limited. ”
Due to the use of self-developed new technology routes, royole has been difficult to open the market in the past few years. According to the prospectus (draft declaration) data, from 2017 to 2019 and the first half of 2020, royole technology operating income was 64.7267 million yuan, 110 million yuan, 230 million yuan and 120 million yuan, and the corresponding net profit attributable to the mother was -360 million yuan, -800 million yuan, -1.07 billion yuan and -960 million yuan, respectively. As for the main reason for the continuous loss, Royole explained: "The product is still in the market expansion stage, the sales scale is small and the research and development needs to invest a lot of money. ”
For royole's mass production capacity, a Royole insider once introduced to reporters: "The first phase of royole's production line in Longgang, Shenzhen has been completed, about 2.8 million pieces / year, the size is about 7.8 inches. The company will make full use of the production line in Longgang. "However, the scale of 2.8 million pieces/year is still small in the industry (mass production).
At present, Huawei, Samsung, Xiaomi, etc. have not reached a cooperation with Royole, and only ZTE has publicly admitted to cooperation, but the follow-up actions have not been disclosed so far. In addition to mobile phones, Royole tries to apply flexible screens to B-end industry customers such as consumption, sports events, and conferences, but the effect is not obvious.
Reporters | Wang Jing| Sun Zhicheng, Du Bo, Wang Jiaqi
Proofreading | He Xiaotao