Chapter 532 Dominance is the Most Important Thing: The End of the 1990s

Wang Xiao went downstairs to the restaurant for dinner and reminded Jiang Shangzhou to eat something light tonight and to go for his medical check-up on an empty stomach first thing tomorrow morning.

Don't worry about the process; someone will guide you throughout.

Jiang Shangzhou was surprised: "So fast? I'll prepare tomorrow..."

"Go after the physical exam," Mr. Wang said seriously. "Everything else can be postponed, but health is the only thing that matters."

She then asked Zhang Rujing, "What kind of private doctor does Principal Tian hope to find?"

Zhang Rujing was in a good mood.

This afternoon, Mr. Tsuyoshi Kawanishi also came from Taiwan to discuss the future of the Microelectronics Center.

With so many people around, Vice Director Jiang didn't mention anything about building a factory in Shanghai, let alone a 12-inch chip factory.

So Dr. Zhang, with the mindset that as long as no one confronted him, he would pretend nothing had happened, simply played dumb.

Now he answered Mr. Wang's question with ease and joy: "Principal Tian is still more accustomed to Western medicine."

Actually, Principal Tian originally disagreed with hiring a private doctor for him, feeling it was too much of an exaggeration.

However, Zhang Rujing also believed that his health was very important, and considering the future of the Hong Kong Microelectronics Centre, he strongly persuaded Principal Tian to agree.

Wang Xiao nodded: "Do you have Principal Tian's medical examination report? Or what kind of expert does he need?"

The assistant didn't even need the boss to tell him to start writing down the answers.

After answering the question, Zhang Rujing remembered something else: "Has President Tang seen Mr. Masuoka?"

To be honest, he would like to visit Professor Fujio Masuoka in person, since the Hong Kong Microelectronics Centre is positioned for research and development.

Professor Masuoka, who is passionate about technological research and development and has many years of experience working in large semiconductor companies, is a perfect fit for the Microelectronics Center.

Firstly, he has many things to do, as he is now in charge of the construction of the microelectronics center. Secondly, it is clear that Boss Wang intends to train General Manager Tang, so he naturally cannot interfere anymore.

However, he still had to ask about the progress, because Masuoka was coming from abroad and he certainly couldn't be a lone commander; he had to be equipped with a team as soon as possible according to Masuoka's requirements.

Wang Xiao took a sip of the bamboo fungus and mushroom chicken soup, put down the spoon, and replied, "I saw him, but Professor Masuoka can't let go of his students. President Tang plans to continue talking to him tomorrow to see if he can come over part-time, hold regular meetings to assign tasks, and provide remote guidance to the team."

This situation is certainly not as good as they expected.

But Zhang Rujing could understand.

After all, Fujio Masuoka is already 56 years old this year, and will be 57 after the new year. If he can retire smoothly as a professor at the prestigious Tohoku University, it would be a very respectable choice for both him and his family.

Under these circumstances, it would be too risky to ask him to resign, leave his hometown, and come to Hong Kong, a place where no one knew him, to join the uncertain microelectronics center.

Zhang Rujing nodded and smiled in agreement: "Indeed, once you become a teacher, you have to be responsible for your students and can't easily let them go."

Of course, that's just a polite way of putting it.

He further suspected that Masuoka was traumatized by his experience at Toshiba, and therefore unwilling to leave the pure research environment.

However, to be fair, as a senior manager, regarding Masuoka's situation, aside from Toshiba's denial that he was the inventor of flash memory and even attributing the credit to Intel, which is excessive, Dr. Zhang does not think that Toshiba's failure to pay attention to flash memory technology in the first place and to cultivate it deeply is an unforgivable crime.

After all, one cannot be wise after the event. In the 1980s, who could have guaranteed that flash memory technology would shine brightly in the future?

Because there was Sichuan ham on the table, they chatted directly in English.

Kawanishi Tsuyoshi naturally understood, so he took the opportunity to ask Wang Xiao, "Has Professor Masuoka received my letter?"

Since arriving in Hong Kong today, he has been busy communicating with the founders of the Hong Kong Microelectronics Centre and has not had time to contact Ichiro Ishida.

Wang Xiao told the truth: "Professor Masuoka received the letter, but didn't throw it away, nor did he open it in front of them."

Kawanishi smiled wryly: "Toshiba did have its own difficulties at the time."

After Masuoka received the IEEE Special Contribution Award, public opinion ridiculed Toshiba's shortsightedness and disregard for technology.

But in fact, if Toshiba were truly such a company, how could it have pioneered the "under the desk" research system?

It was through this system—where Masuoka could apply for and dedicate 10% of his time and budget to use company equipment and conduct free research within a certain scope outside of the tasks assigned by the company—that he invented flash memory technology.

Moreover, Masuoka loves to drink. During normal working hours, he is either drinking or sleeping, and sometimes he falls asleep in the middle of swearing.

Aside from Toshiba, how many companies in the world are truly so tolerant of such eccentric individuals?

As for Toshiba's initial neglect of the importance of flash memory technology, Kawanishi really has to say a few words on behalf of his former employer.

This kind of thing is really hard to completely avoid.

Why? Because Toshiba has been developing so many new technologies.

As a company that highly values ​​technological research and development, Toshiba possesses a wealth of new technologies.

So, how do you choose the best and most suitable technology from among them? That's a complex subject.

Anyone who has been involved in business management understands that the best and most promising technology is often not the same as the most suitable technology at the time.

From an outsider's perspective, if that's the case, why don't you do both things well? One should focus on the long term, and the other on the short term.

The problem is that, in the long run, it's hard to figure out how it will develop in the future.

Moreover, the semiconductor industry is inherently one that requires large investments and has a long return cycle. Practitioners often cannot do two things at once and have to grit their teeth and invest all their resources in one direction in order to have any chance of success.

Who can guarantee that every choice they make will be the right one?

History has shown that when it comes to technological choices, the truth always lies in the hands of a minority.

Because technologies that most people can understand and agree with are not unusual and cannot be original.

Now everyone is praising Intel for its keen eye for talent, for finding a gem in its competitor Toshiba, and for its subsequent rise to prominence in the flash memory business.

But has Intel ever made a mistake?

In the early 1970s, Intel ventured into consumer electronics for the first time with its Microma smartwatch project, priced at $400. However, Japanese manufacturers such as Seiko and Casio drove the price down to $40, resulting in a $15 million loss for Intel.

This even scared Intel so much that it didn't dare to enter the consumer electronics market for many years afterward.

Even in recent years, just last February, when Intel launched the i740 graphics chip with great fanfare and it became an instant hit, Intel has completely shut down the i740 project by the end of this year.

Are you sure you didn't make a mistake?

Zhang Rujing listened to Chuanxi Gang's complaints while nodding in agreement.

The same applies to everything: the more you do, the more mistakes you make.

If it were another company with insufficient R&D capabilities, they probably wouldn't have a choice if they wanted to make the wrong decision.

Wang Xiao ate and listened quietly beside him.

She didn't think Kawanishi was making excuses for Toshiba, because every path a semiconductor company chooses is like a gamble.

This industry is a classic example of watching someone build a tall building, entertain guests, and then watch it collapse.

Since the 1960s, the global semiconductor landscape has undergone three major reshuffles.

Fairchild Semiconductor, once a giant, is now on the very edge, having changed hands several times, and its headquarters were moved out of Silicon Valley more than a decade ago.

From this perspective, Mr. Wang believes he has truly chosen a suitable industry.

After all, working in semiconductors is incredibly exciting, even more so than going to a casino, and it's the kind where you go all in every hand.

It can make her adrenaline surge in real time.

Live jazz piano music filled the restaurant, its melody gentle and melodious—the classic "Moonlight Sonata," albeit adapted into a softer, more improvisational version.

The notes struck on the piano keys, like the occasional light flashing by outside the window, rippled outwards in the air filled with the aroma of grilled steak, the unique scent of truffles, and the subtle sweetness of dessert.

Why did Wang Xiao feel it so vividly and delicately?

Because she was daydreaming, and when she's daydreaming, she always notices details that she wouldn't normally notice.

Now she stares out the window at the lights of Victoria Harbour, and in the distance, she can see the neon signs welcoming the new millennium flashing.

Her thoughts drifted outwards, following the flickering light signs.

No wonder semiconductor giants love to engage in technological monopolies.

She had always thought it was a kind of greed, similar to the greed of monopolizing land and ports.

But later, when she got into the semiconductor industry herself, the huge upfront investment, like a money-devouring beast, made her realize that this was a necessary means for semiconductor companies to recoup their costs.

But now, after hearing Zhang Rujing and Kawanishi Tsuyoshi's sighs, she feels that pursuing technological monopolies is an inevitable choice driven by the inherent and extremely cruel underlying logic of the semiconductor industry.

Because in this industry, it's a winner-takes-all market.

The rewards for being number one are vastly different from those for being number two or below.

You can make a lot of money if you're number one, but if you're number two, you're likely to lose money or even be eliminated.

Because this industry is high-risk, and the sunk costs are too high.

One wrong move and the whole game is lost.

What can practitioners do?

We have no choice but to establish a technological monopoly.

In this way, companies can not only maximize the return on their current investments, but more importantly, they can accumulate crucial capital, influence, and room for error for the next equally risky choice of technological path.

Or to put it another way, only when a company has enough resources can it still have the opportunity to leverage the huge profits and patent barriers accumulated in the previous generation of technology to continue betting in the next round of competition, even if it fails to take the lead in a certain technological iteration.

But how can a technological monopoly be achieved?

Are we desperately pursuing technological breakthroughs and building massive patent pools to directly block competitors' technological paths?

No, no, no, how can you be so sure that your patent pool is a moat?

During his time at Toshiba, Fujio Masuoka applied for more than 500 patents, while there are tens of millions of patents worldwide, of which less than 5% are actually utilized.

More than 95% of the patents were not put into practical use or licensed before they expired.

In other words, they are just patents, and affecting them will not have any impact.

So how do you turn your patent pool into a true moat?

The most effective way is to become someone who defines the technical standards.

How can you guarantee that your choice is correct?

If the technology path you choose becomes the de facto industry standard, it will force the entire industry chain to gravitate towards it.

So no matter what you choose, you are right.

For example, in the technological battle between plasma and LCD screens, did Japan lose in plasma technology? No, what it truly lost was the struggle for the right to set standards.

Because LCD technology has become the de facto industry standard, a closed loop of "hardware-software-supply chain-consumer habits" has been formed.

The upstream and downstream supply chains actively adapt to it, which in turn squeezes the living space of plasma.

However, having control over standards can amplify advantages and mask disadvantages.

Plasma displays offer superior dynamic response, while LCD screens boast high brightness; each has its own strengths. However, with LCD screens becoming the market's default choice, plasma displays lost their supply chain support and ultimately had to withdraw from the consumer market.

Is this merely a competition over semiconductor technology?

No, no, no, that's how it is all over the world.

The people at the next table were reminiscing about the devastation of the 1997 Asian financial crisis and talking about the importance of the US dollar.

So why is the US dollar important?

Because the US dollar is the de facto world's main reserve and settlement currency, it has created a powerful closed loop of "US financial system - global trade settlement - energy pricing - foreign exchange reserves of various countries".

Through this closed loop, the United States automatically acquires enormous long-arm jurisdiction and financial sanctions powers.

This is why it can withstand structural problems such as industrial hollowing out and high debt.

Because the status of the US dollar amplifies the economic advantages of the United States, it can withstand huge trade deficits and can levy invisible seigniorage on the world by issuing currency.

The people at the next table started talking about the euro again, expressing optimism about its future and saying they were planning to invest.

Wang Xiao's thoughts began to wander again, focusing on the Euro and the European Union. What impressed him most was the issue of green energy. Essentially, it was about what standards the green energy used in the production of goods must meet before they could be sold in the EU.

Before she traveled through time, the city's industrial park had a government-mandated green energy supply system in order to ensure that the factory's products met the standards for export to the European Union.

As a result, the stringent and rigid green policies drove up costs for EU businesses, triggered industrial relocation, and coupled with redundant regulations, forced the EU to deindustrialize, ultimately destroying itself.

Mr. Wang couldn't help but smile. The world is so mysterious; the spear and the shield are always one.

Tsk, she should give herself a round of applause.

Look at her train of thought; if you wrote it down, it would be a college entrance exam essay.

She became overconfident, thinking the teacher would definitely give her a high score.

When Zhang Rujing turned to the side, he saw her smiling and couldn't help but smile and sigh, "Young people these days are so romantic."

Wang Xiao then came to her senses and subconsciously wanted to ask what was so romantic.

When she looked up, she saw a young man in a dark suit kneeling on one knee next to the grand piano in the center of the restaurant, saying something to a young woman in a little dress in front of him.

Wang Xiao couldn't understand Cantonese, but she could tell that the man was taking out a ring and was putting it on the woman's finger.

A series of smooth notes glided across the piano keys, and the music quietly switched to "When I Fall in Love".

As the music played, a ring appeared on the young woman's ring finger.

Rhythmic clapping filled the restaurant, and Wang Xiao saw smiles on every face, each with gentle eyes.

Jiang Shangzhou asked Wang Xiao, half-jokingly, "What are your thoughts, Boss Wang?"

He was rather curious: given Mr. Ivanov's status and Mr. Wang's generosity, what kind of grand proposal ceremony would she have?

The others at the table were also staring at Wang Xiao; the ladies were all anticipating an unparalleled proposal and a wedding of the century.

Wang Xiao nodded seriously, expressing his affirmation with an air of importance: "I am optimistic about Hong Kong's future because Hong Kong is optimistic and full of hope for the future."

That's completely irrelevant. What does a marriage proposal have to do with whether Hong Kong is optimistic or not?

Wang Xiao said in a serious tone: "Humans only form families and reproduce when they feel safe and are full of hope for the future. They get married because they believe that life will get better and better, and they encourage and expect others to get married."

What she really meant was that marriage isn't a guaranteed path to wealth; who knows what the future holds? More than half of human unhappiness stems from marriage. Those who are applauding now are clearly very optimistic.

However, she decided not to say it, lest she upset the group of elderly people who were over fifty years old.

Zhang Rujing, unaware of the darkness in Boss Wang's heart, nodded earnestly in agreement: "Indeed, he is full of hope for the future, which is why he is willing to get married."

As the general manager, overseeing a group of engineers, he naturally knows about the many problems that come with marriage.

You need money to buy a house, support your family, raise your children—everything requires money.

A bachelor is always more carefree than someone with a family.

But the joy of having a family is enough to overcome these problems.

Zhang Rujing spoke sincerely, but Boss Wang smiled without saying a word.

Fortunately, the ring was put on, the applause was received, and the proposal ceremony at the restaurant came to an end.

No one at the table was interested in continuing to gossip about this topic.

Kawanishi then returned to the topic of management issues in semiconductor companies.

He and Zhang Rujing just mentioned that because Japan's semiconductor industry is not good at cost control, it has to focus its efforts on technology in the hope of reducing costs through technological advancements.

Taiwan's advantages in manpower and land give it a natural ability to control costs, so it doesn't need to be as anxious about technology.

Jiang Shangzhou suddenly blurted out, "So everyone should build factories on the mainland. Labor and land are cheaper there, making it easier to reduce costs."

Zhang Rujing's head was about to explode.

Lord, he was just getting carried away. How could he forget about building the factory?

Now that's a good starting point, isn't it? The next second they'll be talking about 12-inch chip factories.

Oh, perfect timing! He needs to quickly grab Kawanishi Tsuyoshi and ask him to help persuade Director Jiang and Boss Wang to understand that building a 12-inch factory in Shanghai now is simply wishful thinking.

As a result, while Dr. Zhang had already sounded the alarm, Jiang Shangzhou was now speaking to Wang Xiao.

He smiled and said, "Besides, with your management skills, Mr. Wang, you can definitely keep costs lower than anyone else."

Although Mr. Wang is carefree and seems a bit unreliable.

But she could make Dr. Zhang Rujing hold his nose and try every means to meet her demands, and make Dr. Lin Benjian frown and do as she said.

She could even get Principal Tian to stop arguing with her and follow her lead in thinking about the path.

Not to mention that with such a large operation under her management, no major problems have arisen.

She was even able to smoothly transform the Hong Kong chip factory project into a microelectronics center after it failed, and she even managed to attract so many people to support her.

That proves that she actually has strong management skills and knows how to achieve her goals.

Kawanishi Tsuyoshi nodded in agreement, noting that the semiconductor production costs in mainland China were so low that everyone envied them.

This alone is enough to deter people from setting up factories in mainland China, even with the restrictions of the Wassenaar Arrangement.

Focusing on management rather than competing on technology is indeed a good approach.

Zhang Rujing nodded repeatedly, hoping to take the opportunity to persuade them to abandon the idea of ​​a 12-inch chip factory.

There's no need for that. We can build an 8-inch factory and establish ourselves in the market by cutting costs.

Before Director Jiang could react, Boss Wang shook his head: "No, in mainland China, if I want to grow big, I have to compete on technology. I want to pursue the latest and most advanced technology."

Chuanxi was stunned. Pursuing technology? That's not where the mainland's advantage lies.

Wang Xiao laughed and said, "Because it isn't, that's why it is. The market competition is so fierce now, I can only survive by differentiating myself from others. There are ready-made examples right in front of me."

She smiled and said, "In the 1980s, when everyone was doing IDM (Integrated Device Manufacturer) model, Chairman Zhang founded TSMC to do pure contract manufacturing. So even though its technology was not good and its scale was small at the beginning, it was able to get orders and gain customers' trust because it took a different path, and gradually became the number one company today."

Just as Kawanishi was about to say that the battle for supremacy between TSMC and UMC was not yet over, he realized that his company, World Microelectronics, was about to be acquired by the former, so the former truly deserved the title of number one.

Wang Xiao continued with a smile, "To be frank, even without the acquisition of World Semiconductor, I am more optimistic about TSMC's development."

Everyone became interested, and Zhang Rujing even asked directly, "Why?"

Okay, actually he is quite optimistic about UMC's business model.

Chairman Cao Xingcheng has achieved a deep bond between Lianhua and its customers by turning customers into shareholders, resulting in a continuous stream of orders and a strong growth momentum.

He later built a chip factory, intending to adopt the same model.

TSMC's acquisition of Worldwide was also aimed at surpassing its competitor in terms of size, thereby leveraging its scale to reduce costs and expand its market share.

Without this acquisition, it would be hard to say who would have won.

Wang Xiao laughed and said, "Because TSMC has the courage to engage in technological research and development. Everyone is doing chip manufacturing in Taiwan, and the land costs and labor costs are actually quite similar. Under these circumstances, if you want to win, you can't just cut costs through administrative and personnel management."

"Otherwise, if you put too much pressure on them here, they will leave. Engineers will go to other factories, and the government will also tend to allocate land to other factories for development."

"In this way, if we want to stand out and take the lead among so many companies, we can only find another way and take the technology-first route."

“Other factories rely on technology licenses from the United States or Japan, so their technological level can never surpass that of the licensors.”

“TSMC’s ability to conduct its own technology research and development gives it the potential to develop technologies faster than the US and Japan, and eventually surpass them. Its technology is the most advanced, and its cost control capabilities are similar to others, so it naturally stands out from the crowd.”

Kawanishi nodded in agreement, but he didn't say anything about how Taiwan's technology couldn't possibly be stronger than that of the United States and Japan.

Many people initially said that Japanese semiconductors were cheap and technologically inferior, but in fact, the subsequent development of Japanese semiconductors proved that Japanese technology could surpass that of the United States.

If the United States had not used a combination of rules and policies to suppress and gradually undermine Japan's semiconductor industry advantage, Japanese semiconductor companies would not be in such dire straits now.

Jiang Shangzhou nodded in agreement: "Being involved in technology is indeed another path to success, and it's not easy for ordinary people to catch up."

Because the cost of technological research and development is too high and the risk factor is also too great, small and medium-sized enterprises simply cannot keep up, and large enterprises also have to consider the opinions of their shareholders.

The more shareholders there are, the more troublesome it becomes. Everyone has their own ideas, making it difficult to work together as a cohesive unit. If someone is only investing, they naturally want to make money faster, and long-term technological research and development doesn't meet everyone's technological needs.

From this perspective, TSMC's decision to focus on technological research and development is indeed a decisive move.

After dinner, everyone left the restaurant.

Mr. Wang was going out for a stroll and didn't plan to join their after-dinner chat.

Zhang Rujing didn't follow the two of them. Instead, he walked towards Wang Xiao and sighed softly, "If that's the case, my idea of ​​turning clients into shareholders is probably going to fall through."

If technological research and development is taken as the breakthrough path, then the leader must be strong enough, even to the point of having absolute power, in order to forcefully and continuously push forward.

Wang Xiao laughed: "Go ahead and do it, what's the big deal? As long as we have absolute control over the shares, that's fine. Besides, the chip manufacturers in mainland China, including Hua Hong NEC, can't even reach the cost control level of World Semiconductor and TSMC. To compete with them, we can defeat them through management first."

As for technology, as long as the major shareholder has the ability to continuously invest funds, then even if the minority shareholders object, they should keep quiet and shut their mouths.

When it comes to money, Mr. Wang's specialty is making money.

She looked up at the millennium countdown across Victoria Harbour and was momentarily lost in thought.

The 1990s are coming to an end so quickly; her 1990s are about to come to a close.

From 1990 to the present, her past ten years have probably been more colorful and eventful than many people's entire lives.

Wang Xiao nodded to Zhang Rujing with a broad smile: "Zhang Bo, I'm going to go for a walk."

She wanted to enjoy the last moments of her 1990s.

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[Starry-eyed] Good morning! The opinions expressed in the article regarding Fujio Masuoka and Tsuyoshi Kawanishi are referenced from the 2010 NHK documentary "Reclaiming the Summit: A 20-Year War for Technicians." When Masuoka received the grand prize in 2010, he was very excited, saying, "Long live Japanese-developed flash memory! We have developed a new type of semiconductor, and by 2010, we will rapidly advance its development and achieve practical application. Thank you everyone!" Moreover, when a wealthy Middle Eastern businessman offered him funding for research and development, his conditions were: first, he could not pursue short-term profits; second, he had to establish a research and development company in Japan.