Rebirth Tokyo 1986

Chapter 272 Exchange of Interests
After Lou Gerstner and Masato Takeshita reached an agreement, they immediately notified Toshiba and other shareholders.

Tadahiro Sekimoto, president of Japan's NEC, easily saw through the young people's tricks.

"Humph!" He snorted unhappily, then muttered to himself, "How cunning."

But soon, he thought about the pros and cons and made up his mind silently.

"Forget it, there's no need to keep nagging about it. They are the major shareholder, so they always have more options."

“Corporate debt-to-equity conversions can make it easier to move forward, so it’s a good option.”

Tadahiro Sekimoto originally wanted to participate in this wave of debt-equity restructuring because NEC had sufficient cash flow at that time.

But he soon realized that since the chairman of Xinghai Group wanted to increase his shareholding in Xinghai Semiconductor, this must not be the only method.

The simplest way is to increase your stake by investing a large amount of additional capital.

It will be difficult to follow or not to follow at that time, so it is better to just go with the flow.

If I interfere, Xinghai Group will choose the most cruel method.

All the profitable projects including Xinghai mobile phones, Xinghai hardware, Xinghai OEM, and disaster emergency radios will be split up and sold.

Only flash memory related projects that will still generate huge losses and various microprocessor chip projects remain.

By then, both sides will be in a desperate situation and NEC will only suffer greater losses.

No one is a fool.

The other four small shareholders of Xinghai Semiconductor also saw through everything.

Sony President Akio Morita flicked the notice of Xinghai Semiconductor's debt-to-equity conversion and looked at his own president with a slightly frown.

"Ohga-san, what kind of action do you think we should take?"

Ohga Norio said expressionlessly: "The best action is to do nothing."

"The company's cash flow is not sufficient, so it cannot compete with Xinghai Group."

In recent years, Sony has spent a lot of money on investments and mergers and acquisitions.

The most well-known case is the acquisition of Columbia Pictures for US$34 billion.

Now, this acquisition has become a financial black hole for Sony.

Coupled with the collapse of the stock market caused by the real estate crash, Sony did not have enough funds to fight against the Xinghai Group.

Of course, even if Sony had sufficient cash flow, Norio Ohga had never thought of fighting with Xinghai Group for a 5% stake.

Xinghai Investment, a subsidiary of Xinghai Group, has an incredibly abundant amount of funds.

Norio Ohga was worried that Xinghai Group would become angry and turn around to forcibly acquire Sony.

In the end, even if Sony can resolve the hostile takeover, it will be seriously damaged.

"Yes, the company does need to operate steadily for a period of time."

This happened to Sony, and eventually to Hitachi and other companies as well.

At this critical moment when the real estate market is collapsing and the stock market is plummeting, no one wants to waste money on this matter.

Even though some companies are backed by chaebols, they are unwilling to take risks easily.

Because they invited the chaebols behind them, several companies also had to pay a certain price. For a mere 5% of the shares, it is not worth it.

Of course, several companies also realized that they could not meet the requirements of Xinghai Group too easily.

Otherwise, Xinghai Semiconductor will come up with even more extreme policies in the future.

Therefore, the presidents of several companies simply made an appointment to meet and jointly deal with the debt-to-equity incident of Xinghai Group.

After politely greeting each other, Tadahiro Sekimoto looked at the most prestigious Sony president.

"Mr. Morita, you are the most experienced among us. What do you think of Xinghai Semiconductor's debt-equity conversion?"

"No, you're welcome, Mr. Guan."

Akio Morita enjoyed the compliments from leaders of the same level. After a simple polite remark, he confidently expressed his opinions.

"My idea is that we can agree to it, but we must give equal conditions."

"For example, we can increase the share of funds invested by several of our companies in Xinghai."

"Or provide us with more favorable conditions in wafer foundry."

Asking for shares of Xinghai Investment Fund is for the purpose of making money.

No one does not envy Xinghai Investment’s ability to make money, it is simply a financial money printing machine.

Even if Xinghai Investment increases its share to 70% now, there will still be countless people pouring money in with red eyes.

Because even if you can only get 30%, the funds can be multiplied several times after 3 years.

Asking for preferential policies for Xinghai's OEM business means paying more attention to the company's strategic development.

Several companies are major manufacturers in the memory chip field, and each company has a wafer fab dedicated to producing memory chips.

However, when it comes to producing logic chips, several companies now do not have the foundry expertise of Xinghai.

This is because logic chips have taken a completely different path from memory chips.

There is a big difference in the production methods of the two.

To give an example, memory chips are similar to the staple food we eat in our lives.

The quantity is indeed very large, but the production line is relatively simple.

Wafer foundry companies have no chance of winning over specialized semiconductor manufacturers in the short term.

Logic chips are completely different and come in a wide variety of types.

Except for the CPU which is monopolized by big companies like Intel, there is no professional competition among various chips such as sound cards, graphics cards, disk drives, scanners, etc.

Because these logic chips are too complicated to produce and there are not so many of them, they are very useless to large manufacturers.

Xinghai Foundry has targeted this point and directly focused on the field of logic chips.

After several years of hard work, it has become the leading manufacturer of various logic chips in Japan. The logic chips it produces are not only of good quality but also of low price.

Of course, the five semiconductor companies hope that Xinghai Foundry will sign more wafer order contracts, and there is also the factor of the explosive growth of the chip market.

Originally, the supply of chips in the market was very sufficient, but Microsoft's new operating system directly boosted computer sales.

As a result, the world has entered a chip shortage situation.

If Xinghai OEM can receive more orders from them, several companies will take advantage of this wave of popularity to seize more market share.

Increasing market share is often more important than making money.

"I think this is fine, worthy of Morita-san."

Toshiba President Fumio Sato's eyes lit up because his own company is currently experiencing a shortage of product supply due to a chip shortage.

If you can get enough logic chips, you can make more money.

NEC President Tadahiro Sekimoto had already had similar ideas and followed suit in praising the idea.

"Mr. Morita is indeed a treasure of our great Japan. His two suggestions are very insightful."

Even if Akio Morita had similar thoughts in his mind, he did not dare to admit it directly.

He waved his hands repeatedly and refused: "No, everyone is exaggerating, I just did what I should do."

In addition to these two most important points, several people discussed some alternative plans.

For example, the relevant technologies of the Xinghai second-generation mobile phone and patent authorization.

In short, Xinghai Semiconductor must be made aware.

We allow you to achieve the results you want, but you must give enough benefits.

……

"What do you think about the exchange of interests proposed by several companies?"

Masato Takeshita tapped the documents on the table and looked up at his president.

"I think you can selectively agree to each one, thus reducing your own losses."

"Hiss, that makes sense."

The young man nodded in approval and suddenly stood up.

"How about this, let's both sort out our thoughts first and discuss it tomorrow morning."

Things happen suddenly, and it is difficult to think clearly about Zi, Wu, Yin, and Mao in a short time. It is better to stop and think carefully for a while.

Anyway, it's not that urgent. "Yes, President."

After Lou Gerstner left, Masato Takeshita gave instructions to the person outside the door.

"Keiko, make me another pot of tea."

"Hi, please wait."

Keiko Sakai bowed respectfully, then quickly walked to the tea room.

Three minutes later, she returned to the president's office with a cup of hot tea.

"President, your tea."

"Well, good, you go to work."

"Hi!"

After the Secretary General left, Masato Takeshita drank tea while examining the exchange terms proposed by several companies.

Those that were too outrageous were simply ignored by the young people.

Those who ask for exorbitant prices are his focus.

"Well, fund shares, that's easy."

As early as last year, Masato Takeshita had the idea of establishing the seventh Zodiac Fund after the collapse of Japan's real estate.

Now that the five companies want to join, it is just a matter of course.

Of course, the specific figures will naturally have to be reduced.

$2 million per company is the upper limit he can tolerate.

“We need to think carefully about the wafer foundry share.”

"Well, let's call Xiaochi-san first."

Having made the decision, Masato Takeshita immediately called the mobile phone number of Atsuyoshi Koike, the president of Xinghai OEM.

Soon, the call was connected.

However, before Masato Takeshita could speak, the person on the other side took the initiative to speak respectfully.

"President, good afternoon, my name is Junyi Koike. I wonder if there is anything I can do for you that I can help you with."

"No big deal, I just want to ask about the wafer fab's production capacity."

"Hey, I see."

Atsushi Koike bowed slightly and began to introduce his company's four 4-inch wafer fabs.

The one acquired from Hitachi is relatively small and its manufacturing process is relatively backward.

Only 2.6 1.5-micron process wafers can be produced each month, but the yield rate is the highest, exceeding 99%.

The three wafer fabs that were put into production just last year use the most advanced 3-micron, or 0.6-nanometer, process technology.

As for output, the two wafer fabs put into production in the middle of last year have increased their monthly production capacity to 3.2 wafers, with a yield rate of over 90%.

It is expected that by the end of this year, the output can be increased to 5 pieces and the yield rate can be increased to more than 97%.

The fourth wafer factory, which was put into production at the end of last year, has a monthly production capacity of only 2.3 wafers, and the yield rate is close to 80%.

It is expected that by the end of this year, the output can be increased to about 4.3 pieces, and the yield rate can be increased to 95%.

"As expected of Xiaochi-san, you are really amazing."

Although he didn't understand these technical terms at all, it did not affect Masato Takeshita's tone of praise.

“No, we still need to work hard in many areas.”

Simply being number one in Japan's logic chip foundry industry is not enough to satisfy Atsushi Koike's ambition.

He wants to become the king of chip production in the world.

"Excessive modesty is actually pride. It looks like Xinghai OEM's bonus for July can be increased again."

"According to current market demand and the company's technological advancement, that's it."

When a wafer fab is first put into production, various adjustments are required, so the output will not be very high.

As proficiency increases, productivity will increase until it reaches the highest profit point like a parabola.

At that time, the wafer fab’s output was at its best.

Xinghai foundry, the wafer factory is approaching the optimal value. Coupled with the explosion of chip demand, employees can naturally share more bonuses.

"Good, good, keep it up."

Masato Takeshita's call today was not to praise Atsushi Koike's leadership, so after briefly understanding the current situation of the wafer factory, he went straight to the point.

"President, do you mean to trade with them based on the wafer fab capacity?"

"Yes."

Although he couldn't see it from the other side, Masato Takeshita nodded subconsciously.

"How do you think we can better achieve our goals without affecting the company's reputation?"

Koike Junyi did a simple calculation in his mind and then said simply.

"The company's newly added production capacity each month can be provided to five companies."

“In addition, the company will be able to allocate one-third of its existing production capacity next month.”

"Including the previous part, these five companies will be able to occupy about half of the company's production capacity next month."

In fact, to put it in an extreme case, Xinghai Foundry can even distribute more than 8% of the company's production capacity to five semiconductor companies.

But doing so would offend people and would not be conducive to the company's development.

Maybe it will help the enemy grow.

Because those lost American customers are likely to blame TSMC.

This is a hidden dragon that will take off with the wind if you're not careful.

"So many?"

Masato Takeshita was a little surprised. He didn't expect that his company could take out such a large share of the wafer market.

But he instinctively felt that this approach was wrong.

"We can't just serve Japanese customers, we need to keep enough market share in the U.S. The company will allocate at least one-third of its orders to the U.S. in the future."

"At the same time, the country will also allocate certain orders to giant companies such as Fujitsu and Kyocera, as well as game companies such as Nintendo and Sega."

The order source is single, and problems are likely to occur during the chip low period.

China has many experiences and lessons in this regard.

For example, the planned Huahong NEC had a dismal outcome because it was too closely tied to NEC Corporation.

Another example is Shougang NEC, which was forced to withdraw from the semiconductor industry due to NEC's failure in the semiconductor market.

"Understood. Please rest assured, President, our orders will continue to diversify."

Koike Junyi understood immediately and straightened his back to assure the young man.

After all, anyone who is not a fool knows the benefits of order diversification.

"Well, then write a proposal and send it to me before you get off work tonight."

"Hi!"

After hanging up the phone, Masato Takeshita thought about his own 8-inch wafer factory under construction and decided to continue to reduce the shares of the five companies in the future.

At most 40%, no more.

Apart from fund shares and wafer shares, everything else is just details.

For example, Xinghai Mobile’s mobile phone patent licensing, even if Xinghai Group doesn’t want to, it simply can’t do it.

Of course, it is totally undesirable for a few companies to tentatively grant free licenses.

At most, they can charge a little less in patent fees, or provide the patent for free for three years.

Anyway, before 1993, the world could not collect much patent fees. In exchange for several companies agreeing to debt-to-equity swaps, it is still very worthwhile.

As for the authorization of flash memory technology, the young man plans to ask Fujio Masuoka.

He also doesn't quite understand this aspect.

(End of this chapter)