Chapter 36. Chairman of Yuseong Group (6)

[(Breaking News) Yuseong Electronics Decides on a Surprise Investment in Dongwoo Precision!]

[(Yuseong Electronics' Surprise Large-Scale Investment)]

[(Is Trading of Dongwoo Precision Resuming?)]

[(Semiconductor Stocks Rise Across the Board!)]

[(Will Semiconductor SMES Start to Recover?)]

As soon as Yuseong Electronics announced that it would be the acquirer, news outlets rushed to report the breaking news.

Analysts quickly provided their future outlooks, predicting that investments in materials, components, and equipment would continue, causing the entire semiconductor sector to buzz with excitement.

Small shareholders who were invested in Dongwoo Precision raised their arms in enthusiastic cheers.

- Yuseong Electronics! Yuseong Electronics is acquiring it!

- Damn! I trusted it!

- Why can't I trade it? Is there no way to buy it?

- When will the trading suspension be lifted?

- It will hit the upper limit as soon as it resumes.

- It's going to soar from now on! Hold tight!

- F**k, I was on my way to the Han River but turned around after seeing the news. I would have been so disappointed if I had jumped!

- Brother JaiTiger, I'm so grateful. I'll live a good life from now on.

- Don't badmouth Brother JaiTiger anymore.

- From now on, I won't tolerate anyone badmouthing Brother JaiTiger, even if they badmouth my parents!

- Sure, sure. People can commit tax evasion or illegal succession in their lives.

- I'm the guy who secretly embezzled the down payment for a house and got caught, leading to a divorce. Just before submitting the divorce papers to the family court, I saw the news and decided to live a better life. To the wife who had a lousy husband... I love you!!!

- I'll throw away my Enphone today and switch to Yuseong Electronics' Cosmic Phone!

- I'm a newbie in stock investing. What does SMES mean?

- Oh! It means small and medium enterprises (SMEs) for small stocks and large and medium enterprises (LMEs) for large stocks.

- What the hell is that?

- Huh? So financial stocks are called financial SMEs?

- It's a term for materials, components, and equipment combined.

- The worst thing in the world is pretending to know something you don't. -_-;

While reading the news, I received a call from a friend at the company.

[Is this news real?]

"Of course it is."

With Yuseong Electronics stepping in, the acquisition of XRT Semicon is as good as dead. No matter how high the price, it won't get approval.

Seonwoo said in amazement,

[Wow! This is really happening.]

I smiled and said,

"I told you it would."

* * *

XRT Semicon continued to express its acquisition intentions, but the atmosphere suggested that Yuseong Electronics was the confirmed acquirer.

One might think that a higher offer would work, but in that case, the funding plan becomes a problem. They can't say they received support from a Chinese company either.

Moreover, a semiconductor company can't be acquired just because it has money. For example, CMIC tried to acquire the foundry division of U.S. semiconductor company Nanotron but failed due to lack of approval.

No matter how corrupt the government is, it wouldn't hand over a domestic major company to a foreign one.

Dongwoo Precision's stock remained suspended, making trading impossible. However, the company's bonds were still tradable.

Dongwoo Precision's credit rating was still rated as not suitable for investment.

No one knew when the factory would normalize or when it would start generating profits. But if Yuseong Electronics is acquiring it, who cares?

To put it in a metaphor, it's like a debt-ridden young man suddenly having rich parents. A loan is nothing; the rich parents can pay it off.

As soon as the news of Yuseong Electronics' acquisition broke, the company's bonds soared to their issue price.

I raised my arms in celebration.

"Great! This is why I invest in junk bonds!"

I can understand the feelings of fund managers who manage high-yield funds.

This event will change the history of the semiconductor industry. Depending on my actions, I can change the world.

Feeling excited, I received a call from an unknown number.

"Who is this?"

The caller revealed his name.

[It's Jaiho Yoo.]

After a moment of thinking, I realized he was the chairman of Yuseong Electronics.

"Ah! Hello, Chairman."

[What you said that day was right.]

"What do you mean?"

[Dongwoo Precision really does have that much value.]

"I'm glad to hear that."

I'm glad he found out; it means I can sell the bonds at a fair price.

[What do you plan to do with Dongwoo Precision's corporate bonds?]

I said matter-of-factly,

"I plan to sell them."

[I heard you bought the subordinated BW. Isn't it a bit too early to sell? You could receive new shares at maturity.]

A BW (Bond with Warrant) gives the right to buy new shares at a predetermined price if held until maturity. If the stock price is below the exercise price at maturity, it has no value, but if it's above, you can make a profit.

Although the trading suspension hasn't been lifted yet, the stock price will undoubtedly soar higher than the warrant price once trading resumes.

I said matter-of-factly,

"I plan to separate the warrant and sell only the bond. I'll keep the stock for later."

Chairman Yoo laughed.

[Ha ha ha! That's a clever approach.]

You can sell the bond for a profit and either keep the warrant for the stock or sell it for a profit later.

Dongwoo Precision's subordinated bond interest rate is 7.6% annually. Even without the warrant, it's quite attractive.

[I'm also considering what you mentioned before.]

"What do you mean?"

[The acquisition of fabless companies. I plan to acquire and grow promising companies.]

I was quite surprised by this.

Yuseong Electronics is not particularly active in mergers and acquisitions. Even when other IT companies were actively acquiring startups, Yuseong Electronics focused on in-house R&D and equipment investment.

They also invested in design capabilities rather than M&A. Unfortunately, they didn't achieve significant success.

Why the change of heart?

A change in Chairman Yoo's thinking could mean a complete shift in Yuseong Electronics' business strategy.

After some thought, I had an idea.

Is it because of Dongwoo Precision?

What seemed like a pebble turned out to be a diamond. This event might have shown him that selecting and acquiring good companies or investing in them could lead to greater success than developing technology in-house.

[Do you have any companies to recommend?]

"Hmm, it's not something I can easily say."

No one knows the future of companies better than I do.

It might sound a bit arrogant, but my words are more valuable than the hundreds of millions paid for consulting.

Perhaps Yuseong Electronics will take a completely different path from now on.

[I will remember this favor and repay it.]

A chairman of a group like Yuseong wouldn't make empty promises.

Well, Yuseong Electronics' growth wouldn't be bad for me. Thanks to this, I succeeded in my investment, so it's fine to owe them a favor.

I said to him,

"I recommend RDQnet."

[I've heard of it. Is it a company that designs automotive semiconductors?]

"Exactly."

I was a bit surprised inside.

I didn't expect him to know this company.

RDQnet was founded by four former Coolcom employees. The co-founder and CTO, Peter Sandford, is a well-known figure in the semiconductor industry.

Currently, it's just a well-known name with no significant performance, but it will grow rapidly in the automotive semiconductor market.

I remember it went public on NASDAQ around this time next year.

By then, it will be impossible to buy even with money due to merger approval issues.

"I also recommend NP Semicon."

This company was acquired by Enfl and later developed the NP1 chipset. What would happen if it were acquired by Yuseong Electronics?

"Additionally, increasing your stake in ADM would be a good idea."

ADM was a company that competed with Antel in the CPU market.

Well, "competed" is a bit of an exaggeration; its market share was less than 20%, merely challenging Antel's monopoly.

However, it went bankrupt after the failure of the Bulls architecture.

But after the CEO changed to Taiwanese-American Janet Su, it underwent strong restructuring. First, it sold its fab to transition from IDM to fabless, reducing its size, and then focused on design.

The result was the REN architecture.

The REN architecture washed away the nightmare of the Bulls architecture and announced ADM's revival in the market.

It barely survived, but it's not yet a match for the market leader Antel. Currently, ADM has a reputation for being "cheaper than Antel but with lower performance."

However, this is only true until this year.

The REN2 architecture, to be released early next year, will outperform the same-generation Antel in terms of performance.

Moreover, its GPU design has shown remarkable growth, comparable to Endobia, and ADM is soaring.

[Does ADM have that much value?]

"It has even more value."

ADM's current market cap is around 25 billion dollars.

At this level, Yuseong Electronics could acquire it outright. However, semiconductors are a national key industry, directly related to security and monopoly issues, so it would need approval from the relevant countries.

The U.S. government wouldn't approve it, making the acquisition impossible. However, increasing the stake is entirely possible.

"ADM has two advantages for investment."

[What are they?]

"First, you can collaborate in the design field. Yuseong Electronics is building its design capabilities, but there are still clear limits. On the other hand, ADM designs both CPUs and GPUs and is preparing to enter the mobile market, making it a good partner."

In fact, Yuseong Electronics later struggled with mobile GPU design and formed a partnership with ADM. This partnership, in reality, meant that ADM provided design assets and received license fees and royalties, effectively outsourcing the design.

[What's the second advantage?]

"ADM is fabless. If you acquire a stake, it would be easier to entrust future production volumes to them."

This is just my prediction.

Originally, ADM concentrated its production at CSMT.

[The relationship with Antel is a problem.]

Yuseong Electronics has a close partnership with Antel.

Typically, computers use Antel's CPU and Yuseong Electronics' DRAM. Increasing the stake in ADM could strain the relationship with Antel.

Well, the chairman will handle such issues.

That's what they're paid to do, right?

If he can't handle it after all this, there's nothing I can do.

"If you plan to invest, it's best to act quickly. The market is changing rapidly."

[I understand. I should treat you to a meal.]

"A meal won't be enough."

If he follows my advice, he'll be bowing to me in a year. If he doesn't, he'll be banging his head in regret.

Chairman Yoo laughed.

[Ha ha ha! Then I'll treat you to drinks as well.]

"I'll enjoy it."

[Oh, and I have one more thing to say.]

"What is it?"

[Are you interested in joining Yuseong Electronics?]

"......"

The chairman of Yuseong Group offering a job.

Is this a special recruitment?

In my previous life, I would have jumped at the chance, but in this life, I'm a bit busy.

"Thank you for the offer, but I have other commitments. I'm sorry."

[That's a shame. Here's my number; please save it. Contact me if you need any help.]

"Understood."

How many people can directly contact the chairman of a conglomerate like Yuseong?

I couldn't even imagine it in my first life.

I feel like I've grown a lot.