Chapter 1084: Being beaten and breaking through plan

After the plan to obstruct Kumho and Microsoft's cooperation was rejected, Li Jae-soo, on behalf of Samsung Electronics, held an emergency meeting with the Wenzhou Municipal Government under Hongxin's rubbing, to discuss Samsung Electronics' joint venture plan to build a wafer factory in Wenzhou. In almost half a month, it basically agreed to the joint venture agreement of Samsung Hongxin Fab, and hurriedly announced the cooperation plan on the day after the US authorities passed the review of the Kumho and Deyi Technology Transfer Association.

Compared with the long preparation period for the construction of Zhongjing Microchip and Huaxia NEC, the negotiation speed between Samsung Electronics and Wenzhou Municipal Government and Hongxin Investment on the joint venture of Samsung Hongxin Factory is amazing.

Wenzhou Guanhai Hotel, a 36th floor premium suite, Li Jae-soo stood in front of the floor-to-ceiling glass window, looking at the sea water in the distance, the busy harbor nearby and the neat and vast Lingang Industrial Zone.

In Beijing, Jianye, Wenzhou, and Li Zaizhu all deeply felt that although there are still problems in this country under his feet, it cannot deny the fact that it is rapidly rising.

As an HG person, we must be proud of HG's economic achievements in the past 30 years, but we must also see that when China truly rises, the status of HG, which is squeezed into a corner of Northeast Asia, will be quite embarrassing and embarrassing. From a geopolitical perspective, HG does not have the opportunity to become a big country, but ordinary HG youth have the confidence to expand their economic achievements for 30 years and will never admit this.

Lee Jae-soo closed his eyes in a complicated mood. From his personal feelings, he never wanted to see China rise one day, but his ear-covering denial was of no help in solving practical problems. In actual situations, Samsung Electronics must look at the competitive threat from Kumho.

At this time, choosing to jointly build a wafer factory with the Wenzhou Municipal Government and Hongxin seemed a bit hasty and was carefully considered. Li Jae-soo knew that his uncle came to China in the summer and had always paid close attention to the Chinese market and should have thought deeply. Whether it was a matter of whether Samsung Electronics directly broke the plan to cooperate with Kumho and Microsoft, or decided to build a wafer factory in China, the decision time was very short and resolute, which was undoubtedly correct.

The joint venture to launch Samsung's Hongxin construction plan is on the one hand, and it can cooperate with Mitsui to run Zhongjing Microchip, so that Zhongjing Microchip's new factory construction costs can increase costs from equipment procurement, financing, policy support, market competition and other aspects. It is best to force Zhongjing Microchip to give up its new factory construction plan. Even if Zhongjing Microchip still sticks to the bullet and builds a new factory, it will squeeze out resources from Kumho to invest in other industrial fields, which is also beneficial.

On the other hand, Samsung Electronics has long decided to gradually shift the center of manufacturing to China to reduce manufacturing costs. However, wafer manufacturing belongs to the foundation of the electronics industry. Whether to transfer and when to transfer, not to mention that there is controversy within Samsung, the HG people and the government authorities are also controversial about this. It seems that if we continue to be entangled in these disputes without actual actions, Samsung's disadvantages in manufacturing costs will become more and more obvious. This is the fundamental reason why Samsung decided to build a wafer factory in China.

Kim Nam-yong knocked on the door and came in. Seeing Lee Jae-soo standing in front of the window and looking at the sea, he walked over and said to him, "Secretary Kim and Mayor Han are about to arrive at the hotel. Should we go down to greet him?"

"Kim, Han..." Lee Jae-soo smiled faintly and said jokingly, "It sounds like us HG people."

Jin Nanyong also smiled, thinking in his heart that it was really amazing that there was a vicious competition within China.

The reason why I decided to build a factory in Wenzhou instead of choosing the factory site in Jianye is that the Wenzhou Municipal Government and Hongxin Investment promised that financial institutions such as Xintong Bank and Wenzhou Commercial Bank would provide all low-interest loans for the huge amount of money needed to build the factory. Moreover, the Wenzhou Municipal Government will all bear the heavy responsibility of building the supporting projects. In addition to providing technical and engineering management technicians, Samsung Electronics has almost no need to bear any additional risks for this. In fact, the so-called Samsung Hongxin actually only relocated Samsung Electronics a 0.35 micron eight-inch wafer factory in HG Water Source City to Wenzhou. The equipment price will also be calculated according to the current price of the new equipment. When the equipment of the HG Water Source Factory is cleared, it can make room for the 0.13 micron four lines. Jin Nanyong really couldn't think of any reason to refuse to cooperate with Wenzhou.

No wonder Lee Jae-soo joked that the city party secretary of Wenzhou City, Jin Liping, and mayor Han Qigeng, looked like an HG person.

"How long will it take Yan Wenjie to come?" Lee Jae-soo picked up the suit on the sofa and put it on, preparing to go down with Kim Nam-yong to greet Wen Zhou's owner.

In the joint venture to build a wafer factory, Yan Wenjie and Hongxin are in a relationship. Li Jae-soo knew in his heart that it was Chi Zuoxue who was behind his back. Some time ago, Ji Zuoxue stayed in Jianye and had close contact with Yan Wenjie, otherwise how could Yan Wenjie catch the itchy spot of Samsung all at once?

For joint venture wafer fabs, Hongxin's shareholding ratio will reach 25%. Xintong Bank controlled by Hongxin Group will also provide the same proportion of low-interest loans for wafer fab construction. This is also an extremely cost-effective transaction for Hongxin Group. The investment risk is actually passed on to Xintong Bank to bear it.

In addition, Wenzhou Urban Construction Investment Group, which is directly controlled by the Wenzhou Municipal Government, holds 25% of the shares, and Samsung Electronics holds 50%. In name, Samsung Electronics does not control the joint venture wafer factory. In fact, the entire technical team and management of the wafer factory will be directly controlled by Samsung Electronics in the future. Is there any more direct and stricter control?

"Yan Wenjie's meeting and Director Yan may have to delay some time," said Jin Nanyong.

The Yan family's power in eastern Zhejiang is really terrifying. Yan Yi, as Yan Wenjie's cousin and Yan Kuanhe's nephew, once served as a leadership position in Wenzhou for a long time. After the Hongxin Group surfaced, Yan Yi was transferred from Wenzhou to serve as the director of the National Industrial Machinery Commission. There are also reports that Yan Yi will join the China Planning and Development Commission as the deputy director in charge of industry.

Yan Wenjie received a call and heard that Jin Liping and Han Qigeng had already arrived at the Guanhai Hotel. He also urged the driver to drive the car faster. After all, it was a bit rude to let Jin Liping and Lee Jae-soo wait for too long.

Yan Wenjie was very satisfied with Samsung Hongxin's investment plan. Hongxin actually didn't need to directly bear any investment risks. All the things to do was to provide a registered capital of 2.5 million US dollars in proportion. Samsung Hongxin, as Samsung Electronics' 0.35 micron thread chip production base in China, will receive internal orders from Samsung Electronics and cannot worry about the harsh conditions in the external market.

The reason why Zhongjing Microchip can live a prosperous life and the market prospects after Huaxia NEC are worrying is nothing more than that Zhongjing Microchip has obtained a large number of internal orders from Kumho.

How could Yan Wenjie let Hongxin miss this kind of business that is stable and profitable? When Jianye met with Chi Zuoxue, he heard Chi Zuoxue's suggestion, Yan Wenjie saw many benefits hidden inside at that time.

Although fighting against Kumho together makes people feel happy, as a businessman, the first thing they consider is interests.

Yan Wenjie knew very well that Samsung Hongxin would give Samsung strict control after the joint venture. Samsung has enough financial means to maximize Samsung's profits. Although it is a stable profit for Hongxin, the actual profit is extremely limited. This profit is really worth fighting for this, but what chain reaction will happen if the 25% equity of Hongxin in Samsung Hongxin is held by Haisu Technology controlled by Hongxin?

In Jinshan Qinyuan, in the luxurious living room by the Yinma River, Zhang Ke was in the study, staring at the stock trend chart on the computer screen for a while, then walked to the window and watched the rippling waves on the Yinma River under the sunset.

Ye Jianbin sat on the sofa with his legs on his legs, smoking a cigarette like a gentleman, and was proudly spitting out smoke rings there. Seeing Zhang Ke's eyes leaving the computer screen, he said to him: "Yan Wenjie has a very smart mind, and his brain is better than him. I don't see it often..." He also stretched out his fingers and pointed to his temples.

Zhang Ke turned around, stood against the windowsill, and smiled and said, "He has great ambitions, and his only disadvantage is that he is too greedy and doesn't know how to leave some bottom line."

"He probably thought that using a small trick to achieve a huge tremendous amount of effort can really build Haisu Technology into a leading technology enterprise with bright lights." Ye Jianbin said disdainfully.

The Shanghai and Shenzhen stock markets are still fluctuating and adjusting today. Due to reports that Hongxin Investment will allow Haisu Technology to participate in Samsung Hongxin's joint venture factory building plan, the stock price will be paid to the daily limit as soon as the market opens today. Since Haisu Technology implemented a share delivery plan in the third quarter, the stock price has dropped in the past two months, and its actual market value has nearly doubled.

"Oh," Zhang Ke shook his head and sighed, "It's going to rain, and my mother wants to get married, let them do whatever they want. As long as we break the rules and do not break them on the head of Kumho, can we still reach out to stop them?"

Obviously, according to the normal rules of the game, Haisu Technology is not qualified to participate in investment in such a major project in wafer fabs, at least its capital strength is far from enough.

In addition to huge financing from financial institutions and banking consortiums, Zhongjing Microchip Xinpu factory construction funds, Kumho and other shareholders jointly assumed a capital contribution obligation of about US$600 million. Losses or other operating risks will also be borne by the shareholders' investment part first; generally speaking, when there are operating risks, the equity losses far exceed the debt losses.

Samsung Hongxin has completely passed the investment risks to financial institutions. The joint venture shareholders have not invested much money in it and there is almost nothing to lose. Haisu Technology can participate in the joint venture of Samsung Hongxin by using the method of making a big difference. It only provides 2.5 million US dollars of registered capital and holds 25% of Samsung Hongxin's equity.

Although Samsung Hongxin's joint venture plan has broken the bottom line of the game rules, the local governments of eastern Zhejiang Province and Wenzhou City support it. Even if Zhang Ke and others want to do damage, they also have unmatched regrets.

In the long run, Wenzhou's economic development has been the best in East China. Zhejiang Province's economy was also better than the East China Sea in 1997 and 1998. The rise of Huishan, Jianye and Haizhou in recent years, especially in the strong rise in high-tech industries, has raised the economic development level of Donghai Province to a new stage, making Eastern Zhejiang Province a little overshadowed. In addition, Xinting's Dongshan Island port construction project is in full swing, and will also disperse the competitive advantages of many coastal cities in Zhejiang Province, including Wenzhou, in the field of seaport industry.

Against this background, it is not difficult to understand that the local government in Zhejiang East came out to finalize Samsung Hongxin's joint venture plan with Samsung Electronics; as a representative of traditional local forces in Zhejiang East Province, Hongxin is not a difficult thing to understand.

Fu Jun knocked in and said, "Secretary Zhao has arrived at the hotel."

"Ah, Zhao Youlun is here," Ye Jianbin then stood up from the sofa, slapped off the ash on his body, and said with a smile, "He probably wanted to lobby us to build a wafer factory in Kingsoft, and he didn't think about how we united Mitsui, Samsung, TSMC, Huaxia Electronics, and Hongxin to fight together..."

Ye Jianbin's tone was relaxed, but it did not mean that Kumho's situation was relaxed at this time.

The production capacity of Asian wafer companies has expanded greatly. Once the news was announced, the prices of wafer manufacturing equipment in Europe and the United States rose sharply. The main investment of wafer factories is these expensive manufacturing equipment. Zhongjing Microchip was forced to give up its original factory construction plan. To specifically revise the factory construction plan, it also needs to sit down with other shareholders such as Deyi, Yunyuan and Singapore Innovation to discuss it slowly.

Just like Microsoft will not mind spending hundreds of millions of dollars to purchase equity in Global Music Online for the overall interests of the industrial layout, Deyi will not mind taking on an additional US$100 million in investment task for the construction of a new factory; Guo has a close relationship with Kumho, but Guo Yunyuan Group is still a family-owned enterprise after all, and its real capital strength is limited. If it undertakes an additional US$100 million in investment, it will seriously affect its investment plans in other fields...

"It's so interesting that others are coming to fight, we want to break through," Zhang Ke shook his head and smiled bitterly, "I'll invite Mr. Guo, you go and deal with Zhao Youlun first?"

Zhang Ke and Ye Jianbin walked to the corridor. Guo Songyan was also walking out of the room with his wife. When he got off the plane, his blood pressure was a little high. He was also tired of running around these two days. When he arrived in Qinyuan, he went back to his room to rest for a while. At this time, he came to regain his energy. When he saw Zhang Ke, he said, "Singapore has the intention of retreating..."

Zhang Ke nodded and expressed his understanding: "The prospects of the chip market are unknown, and the chip production capacity in the Asian market will increase greatly. When the investment budget may rise sharply, a conservative investment attitude is appropriate..."

"Although it can be understood, it's just quite tricky." Guo Songyan sighed slightly. For this matter, Sun Shangyi still stayed in Singapore to consult with relevant parties. Singapore retreated. According to the previous factory construction budget, an investment gap of nearly 400 million US dollars will be directly generated. After the equipment price rose sharply, the investment gap may expand to 600 million US dollars, which is not ordinary tricky.

"I was wondering if there is such a possibility... After Zhongjing Microchip has been operating for a year, it has actually proved that Kumho's internal orders can ensure profitable operations. Can the equity held by Singapore be transferred to Chartered Semiconductor directly? "

"The franchised has been losing money for six quarters. Without the support of the Monetary Authority of Singapore, the franchised has neither the ability to take over the equity of Zhongjing Microchip held by the Monetary Authority of Singapore, nor the ability to undertake the investment task of the new factory..."

Singapore Franchise Semiconductor is the fourth largest chip foundry manufacturer in the world. It is only due to the small local area of ​​Singapore, limited human resources, and electronics industry structure, which is far less than that of Japan, South Korea and Taiwan. The competitiveness of the foundry market is far lower than that of TSMC. After the completion of many franchise fabs, they will make small profits even if they make profits, and most of the time they are losses. Since the second half of 1997, they have been directly impacted by the Asian financial crisis. The currency exchange rate of Japan and South Korea fell sharply, which on the one hand caused losses to the Japanese and South Korea economy, and on the other hand, stimulated the development of Japan and South Korea's export processing industry. In the chip foundry market, franchise semiconductors are at a disadvantage. Even if the current wave of new technology is surging, it is far from regaining vitality.

Kumho and Singapore’s cooperation on Zhongjing Microchip was actually a cooperation with Chartered Semiconductor. The initial 0.35 micron technology mainly came from Chartered Semiconductor, but the financial situation of Chartered Semiconductor was worrying. It was the Monetary Authority of Singapore that directly invested in Zhongjing Microchip.

The financial situation of franchise is even more worrying than two years ago. Theoretically, there is no possibility of directly holding shares in Zhongjing Microchip. Guo Songyan looked at Zhang Ke in confusion, wondering why he suggested that franchise semiconductors directly hold shares.

"Now everyone is fighting against Zhongjing Microchip," Zhang Ke asked Guo Songyan to walk in front, saying as he walked, "But I think the life of Franchise Semiconductor in the past two years is not easy. Asian chip production capacity will surge next year and the market prospects are unclear. Franchise Semiconductor will have a harder life next and the year after, especially in the 0.25 micron process chip foundry market, franchise competitiveness will be worse. Even if it is judged that franchise will completely lose competitiveness in this market next and the year after... "

"Ah..." Guo Songyan grasped the key point in Zhang Ke's thinking and raised his finger to his eyes and waved it, "Franchise should avoid continuous huge losses. It is a wise choice to close production lines with poor competitiveness... Although Franchise does not have the ability to directly take out hundreds of millions of dollars in funds, do you want Franchise to ship the closed production line equipment to China as a contribution to Zhongjing Microchise?"

"Well," Zhang Ke nodded, affirming Guo Songyan's speculation, "On the one hand, the price of new equipment has soared, which makes people feel heartbroken, and I don't want to suffer a big loss on it; on the other hand, the license to transfer the production line with poor competitiveness and long-term losses to Zhongjing Microchip can be converted into profitable investments - I really can't imagine there is a more win-win solution than this..."

"Well," Guo Songyan nodded heavily, "This plan is great, and it is very hopeful to convince the Singapore authorities... Why didn't you tell me earlier? I don't have to worry about the increase in blood pressure when taking the plane."

"I also saw Samsung Hongxin's plan and only had this idea. When I had this idea, Mr. Guo, you are on the plane," Zhang Ke said with a smile. "Have you seen Samsung Hongxin's joint venture plan? This plan is actually Samsung Electronics transferring the domestic wafer production line with poor competitiveness to China... I think there is a precedent for Samsung Electronics, and Singapore will be easier to accept."

"I haven't seen Samsung Hongxin's joint venture plan yet..." Guo Songyan said.

Zhang Ke asked Fu Jun to go back to his room and take the joint venture plan of Samsung Hongxin for Guo Songyan, and continued: "In addition, as far as I know, the Singapore authorities have not given up their intention to support the franchise yet, but if the franchise wants to support it, they must grit their teeth and put on a 0.13 micron production line so as not to completely suppress the TSMC or Japanese and Korean wafer factories... In this case, the franchise needs to transfer the poorly competitive production line to resolve the pressure on operations. If the Singapore authorities are willing, we can sit down and talk about the 0.18 micron production line..."

"0.18 micron is a bit difficult, and the license is still a bit profitable..." Guo Songyan said, thinking for a while.

In Singapore, any competition in the middle and low-end market will be severely restricted by the small local market and the high human resources cost. Only in the mid and high-end markets, Singapore's electronic companies can maintain a certain competitiveness by relying on their capital and advanced technology advantages.

In fact, in the future, Franchise will actually choose to embark on a path of giving up the mid- and low-end market and maintaining competitiveness with advanced process technology. Even so, Franchise's development path will be extremely difficult and bumpy.

"If you are hard to talk about, we mainly focus on the licensed 0.25 micron threading equipment," Zhang Ke also knew that it would be difficult to eliminate the 0.18 micron production line to Zhongjing Microchip, and said: "In addition, I would like to say goodbye to Mr. Guo. The prototype of the Kumho 512M flash memory chip has been developed. It adopts a 0.13 micron thread design, which may increase some bargaining chips?"

"Ah, Oak Garden has done this?" Guo Songyan asked happily, "It's really not easy. I think there is hope for a negotiation. I will take a two-day break in Kingsoft and there will be a plane to Singapore after two days. Mr. Sun is in Singapore and can communicate directly with the senior management of the Monetary Authority of Singapore and Temasek..."

For large-capacity flash memory chips, Kumho can design and cannot produce them, so he needs to hand over the orders to the foundry factory. The market size of flash memory chips is getting bigger and bigger. Fighting for the foundry business will be a battlefield for wafer foundry manufacturers to compete for. In the flash memory chip market, Kumho is not at a disadvantage compared to Toshiba and Samsung, and Kumho's orders are definitely tempting.

Walking through the winding corridors in Qinyuan's guest rooms and walking to the front room banquet area, Kingsoft Municipal Party Committee Secretary Zhao Youlun and his accompanying officials were already waiting there. Zhongjing Microchip was facing siege of many Asian wafer manufacturers at this time. Zhao Youlun was also very clear about this situation, but he was still very confident in Deyi and Jinhu behind Zhongjing Microchip. Zhongjing Microchip wanted to build two new factories at the same time. Why did Kingsoft compete for one this time?
Chapter completed!