Chapter 32. Chairman of Yuseong Group (2)

CMIC (China National Integrated Circuit Corporation).

As China's largest foundry company, it is listed on the Hong Kong Stock Exchange but is essentially a state-owned enterprise supported by the Chinese government.

Despite semiconductors being a high-tech industry directly related to national security, China still relies heavily on imports for most of its semiconductor components.

Therefore, China declared its goal of semiconductor self-sufficiency five years ago. The fastest way for a latecomer to acquire technology is through mergers and acquisitions.

One of the companies swallowed up in this way was Dongwoo Precision.

After acquiring Dongwoo Precision, CMIC actively invested in the development of NIL (Nanoimprint Lithography) equipment technology.

There was no reason to invest a large amount of money in a technology that might not even work, especially when EUV (Extreme Ultraviolet Lithography) had already established a technological advantage.

However, the situation was different for China.

This was because the United States, wary of China's advancement in high-tech industries, imposed various sanctions. The U.S. Department of Commerce banned U.S. companies from trading with Chinese semiconductor companies and controlled the export of semiconductor equipment.

The U.S. has the world's best semiconductor technology, and since many of the core manufacturing technologies are held by the U.S., Chinese semiconductor companies suffered significant setbacks.

Ironically, these measures further fueled China's desire for semiconductor independence.

To the point where even the Chinese President, Lin Weixiang, said, "China's future depends on semiconductors. We must climb the high peaks of global semiconductor technology as soon as possible."

Chinese semiconductor companies, under the full support of the government, felt the need to develop alternative technologies that could bypass U.S. and European patents. That's why they invested in Dongwoo Precision.

Initially, the technology was intended for non-memory semiconductors, but during the development process, they discovered the potential for use in system semiconductors.

When Dongwoo Precision solved the technical challenges of NIL, other semiconductor manufacturers also joined in the technology development.

Yuseong Electronics was also included in this. As a result, NIL became the standard technology for processes below 5nm.

However...

CMIC, which had been quietly observing this, sued Yuseong Electronics for patent infringement, claiming that it had violated their core technology.

The lawsuit amount was a staggering $100 billion.

This became known as the "Semiconductor Lawsuit of the Century," drawing global attention.

The result?

A complete victory for CMIC and a complete defeat for Yuseong Electronics.

In this lawsuit, which lasted for three years, Yuseong Electronics agreed to pay CMIC $20 billion in damages and $30 billion in royalties over 10 years.

This amounted to a staggering 55 trillion won.

With the patent lawsuit victory, CMIC became the monopolist in the photolithography equipment field and continued to bully and sue Korean semiconductor companies, putting pressure on Yuseong Electronics and LK Uniques.

This was a symbolic event representing China's semiconductor rise.

From this point on, Chinese semiconductor companies flourished, and China grew into a semiconductor powerhouse, surpassing South Korea and Taiwan to become the second-largest after the United States.

An interesting fact is that the "NIL fine-pitch core technology" patent, which was the main issue in this patent lawsuit, was originally filed by Dongwoo Precision.

While there were ways to circumvent other patents, this one was impossible to avoid.

In the end, the acquisition of Dongwoo Precision by XRT Semicon was the catalyst for China's semiconductor growth and the decline of South Korea's semiconductor industry.

If Chairman Yoo Jae-ho knew this, he would do anything to acquire Dongwoo Precision, but the problem is that I am the only one who knows this at this point.

"I know that Dongwoo Precision has excellent NIL technology. NIL is simpler and cheaper than EUV, but EUV is needed for fine processes."

EUV uses light to draw circuits, while NIL is more like silk printing.

Since it involves direct contact with the wafer, there is a high possibility of wear and error, making it unsuitable for fine processes.

Chairman Yoo Jae-ho continued:

"There are many companies with good technology. The question is how useful that technology is."

Anyone can come up with good ideas, but how many of those ideas actually become commercialized?

Many technologies that are now considered good were initially thought to be inadequate. It takes time and money to turn ideas into technology.

The fact that Dongwoo Precision's NIL technology is used in fine processes means they have solved these technical challenges.

So, how did they solve it?

"..."

How would I know?

Just because I know the future doesn't mean I know everything.

All I know is that NIL will surpass EUV and become the future standard technology, and that Yuseong Electronics will be sued by CMIC for patent infringement as a result.

I can't reveal that I have come back in time, so I have to persuade him with words.

"Many of the technologies used today were once thought to be difficult to commercialize. For example, existing companies gave up on R&D for EUV, thinking it was impossible to commercialize. What was the result?"

In the past, Canon and Nikon, leaders in photolithography equipment, neglected the development of immersion ArF technology and were pushed out of the market.

CMIC started using NIL in system semiconductor production 1.5 years after acquiring Dongwoo Precision.

In other words, the equipment will be available in three years, and in two more years, they will solve the technical challenges and start using it in fine processes below 10nm.

Currently, Yuseong Electronics' semiconductor technology is several steps ahead of CMIC. If Yuseong Electronics acquires and develops it, this period can be significantly shortened.

Even if history changes and the technology fails, there won't be any loss.

At least, they won't have to pay $50 billion in a patent lawsuit to CMIC.

But that hasn't happened yet.

I recalled what I learned in school.

Companies fail not because they lack good plans but because they have too many good plans.

Some companies fail because they don't invest in time, while others fail because they invest too much. Dongwoo Precision was a case of the latter.

Every company has limited resources in terms of funds, manpower, and time.

Finding the most efficient way to use these resources is the job of a manager.

In the first round, Chairman Yoo Jae-ho missed out on Dongwoo Precision, and as a result, Yuseong Electronics fell into crisis.

What about this time?

After a moment of thought, Chairman Yoo Jae-ho smiled and said:

"I enjoyed our conversation. Unfortunately, I have to get up now. I hope we can meet again."

Is there even a chance for a next meeting?

He is in a position to decide, but I am not. So, I have to move him here.

As Chairman Yoo Jae-ho stood up first, Sung Yuna followed, bowing her head.

"Thank you for your time, Chairman."

"You're welcome. I enjoyed it too."

He extended his hand to me, and I shook it, saying:

"Please think about what we discussed today."

Chairman Yoo Jae-ho nodded.

"Understood. I'll review it."

I don't know if he will really review it or how carefully he will look at it. I can't read his mind.

So, I added:

"It might be the nail in the horseshoe."

I felt his hand pause.

* * *

We left the building and got into the car in the underground parking lot, just as we came.

After we left Yuseong Town, Sung Yuna let out a long breath, as if she had been holding it.

"Phew!"

She looked quite exhausted, as if it had been a difficult meeting.

After calming down, Sung Yuna asked me, almost accusingly:

"Did you meet Chairman Yoo Jae-ho to propose the acquisition of Dongwoo Precision?"

"Yes."

"So, everything was planned. You bought the Dongwoo Precision corporate bonds at a low price with the intention of proposing an acquisition to Yuseong Electronics, right? If Yuseong Electronics acquires it, the company will survive, and the bonds will be worth their face value."

"Right."

"Did you also buy the Dongwoo Precision corporate bonds, Mi-ru?"

"Yes, with my friends."

Actually, 100 billion out of 130 billion was my money.

Sung Yuna was now pouting.

"Um, are you angry?"

"I'm not angry."

"..."

You look angry.

"Why didn't you tell me earlier? I was surprised."

I smiled awkwardly and apologized.

"I'm sorry."

If my actions cause Chairman Yoo Jae-ho to have a bad impression of me, it will be difficult for her. Unlike me, who can just avoid problems, she will have to continue working with him.

To reassure her, I said:

"Chairman Yoo Jae-ho won't think badly of you because of this."

"Why not?"

"Because Dongwoo Precision is a company worth it."

I have a good reason for being so confident.

China's semiconductor rise is a well-planned strategy. They acquired Dongwoo Precision because they believed it was worth it, and it proved to be so.

If CMIC saw it, Yuseong Electronics should see it too.

After a moment of thought, Sung Yuna slowly nodded.

"That's a relief. But I didn't know you knew so much about semiconductors."

I shrugged.

"I studied a bit."

Actually, I struggled to pretend I knew a lot about a subject I knew nothing about.

"Thank you. If it weren't for you, I wouldn't have been able to meet him."

Sung Yuna smiled.

"I'm glad I could help. I'm suddenly very hungry from all the tension."

It was getting close to dinner time.

"Speaking of which, I promised to buy you dinner. What do you want to eat? I'll buy anything."

"I don't know Gangnam well. Do you have any recommendations?"

I said without much thought:

"There's a good tteokbokki place nearby."

Sung Yuna looked surprised.

"Tteokbokki? I took a half-day off to come here, and you're suggesting tteokbokki?"

I realized my mistake.

"Then, how about steak? There's a place I sometimes go with my friends, and it's really good."

Sung Yuna's expression softened.

"Hmm, where is it?"

"Outback."

"..."

Is that your favorite?

She then asked, as if something had occurred to her:

"But what did you mean by what you said earlier?"

"What did I say?"

"The nail in the horseshoe."

"Oh! It's just like a Western proverb."

"What does it mean?"

"If there's no nail, the horseshoe can't be attached. If the horseshoe can't be attached, the horse is lost. If the horse is lost, the battle can be lost, and the country can fall."

"Oh! It means that to achieve great things, you must take care of the small things."

"Right."

Sung Yuna tilted her head.

"But when you said that, Chairman Yoo Jae-ho's expression changed."

I pretended not to know.

"Did it?"

She nodded.

"Yes. He looked completely surprised."

It couldn't be helped.

This proverb became famous after it was included in the email Chairman Yoo Jae-ho sent to all employees after losing the patent lawsuit to CMIC.

Given the source, it must have a deep meaning for Chairman Yoo Jae-ho.

Will this saying move him?