The Millennium Semiconductor Survival Guide.

Chapter 350: Who will be put on the shelf next?

"Mr. Yano, I am very happy to be able to reach a deal with NEC this time. We will run ASPLA well."

After the interview that day, Yano Kaoru was responsible for receiving Hu Zhengming. The two were about the same age. Yano was the president of NEC and was also a technical engineer before becoming the president.

After Hu Zhengming finished speaking, Yano had the illusion that he was hosting U.S. troops stationed in Japan in Tokyo. How could he sell ASPLA so easily?

When ASPLA was established, he was still in charge of NEC's network communications business at Amerikan. At that time, he returned to Tokyo to attend the founding meeting of ASPLA. His colleagues at the time were full of confidence and believed that under the leadership of the Ministry of Industry and Economy, the 11 Neon companies could be integrated. With the power of semiconductor companies, ASPLA, which is specifically run by NEC, will be the future of neon chip foundry.

Yano Kaoru still vividly remembers the satisfied look of the president of NEC and the executives of other semiconductor companies over sake that night. It seemed that they were also in this store.

As a result, Xinxin wanted to acquire ASPLA this time, and the faces of these people made him feel sick.

Because there are 11 shareholders of ASPLA, coupled with the economic downturn, no one has confidence in running ASPLA well. The economic environment has further deteriorated. It is a waste of money to continue to maintain this stall. The longer it is delayed, the more losses it will have.

Those who are willing to pay for the acquisition will have no idea how long they will have to wait if they miss out on Xinxin.

Yano can understand everyone's desire to sell ASPLA, but he wants to retain some shares, such as 20% or even 49% of the shares. It is best to send managers to continue to stay in ASPLA. They do not expect to be senior executives, but to be middle-level managers. Managers can do it, and they can learn about Xinxin's business model and business philosophy.

As a result, other companies wanted to get the money quickly. At his insistence, they submitted this request to Xinxin. After being rejected, these guys didn't even want to struggle. They just wanted to get rid of this burden as soon as possible. .

Xinxin even made a humiliating offer of US$2 million, which was Neon Semiconductor's last hope.

As a result, these guys actually agreed, and NEC was unable to reverse the situation, and there were voices within NEC that wanted to sell a lot.

Kaoru Yano had a feeling that he wanted to fight to the death but was helpless. Then he thought back to the ambitions of everyone when ASPLA was established, and he felt even more uncomfortable.

Yano silently took a sip of the sake in front of him and said: "Professor Hu, I believe in Xinxin's business capabilities, and I also believe that you can bring new vitality to ASPLA.

Actually we shouldn't talk about work today, but I'm still curious about some questions and would like you to answer them for me. "

Hu Zhengming raised his glass: "Please tell me."

Yano Kaoru asked: "Xinxin's positioning for ASPLA is to package up all the technology and high-end talents. As for the original two wafer fabs, can it just continue to operate?"

They had indeed thought about it, taking away the technology and talents and leaving the rest to Neon, but when the other party said it directly, Hu Zhengming still felt embarrassed.

"ASPLA's good technology will of course be applied to Xinxin's wafer factories around the world. We will also let ASPLA's excellent talents get more training."

What Yano said was too straightforward, but Hu Zhengming covered it up and it sounded much better.

Yano's eyebrows suddenly drooped, and Hu Zhengming continued: "We will also consider expanding production capacity in Neon, just like we did with Xinxin Lion City Branch.

Expand advanced production capacity in Neon.

But this may require the neon government to be willing to cooperate.Our branch in Lion City has received strong support from the Lion City government, including land, water and electricity, capital, talent visas, etc. "

As a practitioner, Yano Kaoru understands the operation mode of Xinxin Lion City very well. If it can operate like that, it will be good for ASPLA.

The light reappeared in his eyes: "Professor Hu, NEC has a good relationship with the Neon government. We will help Xinxin obtain preferential policies."

He holds the idea that one day in the future, when NEC can catch its breath and Xinxin declines, he can buy ASPLA back from Xinxin.

This kind of thing is not uncommon in business history.

Yano continued to ask: "Professor Hu, what do you think is the problem with neon semiconductors? Please don't use the excuses to excuse the media.

I want to hear your honest opinion. "

Hu Zhengming said: "The overall cost is too high and there is no technical advantage. The consumer electronics industry that requires a large number of chips is also shrinking."

Hu Zhengming didn't finish speaking, but the meaning was already expressed. If you don't die, who will die?

Yano Kaoru sighed, "Yes, there is no essential difference between the way we fell and the way Amerikan fell.

If it is for such reasons, Amerikan will withdraw from the competition in the chip manufacturing industry sooner or later.

The unit cost is too high, resulting in the short-term advantages of government subsidies being unable to offset the disadvantages of long-term competition. "

After chatting for a while, Hu Zhengming asked: "Do Renesas and Elpida have any thoughts on selling?
If so, please ask President Yano to inform Xinxin as soon as possible, and we will definitely give the best price. "

Yano was speechless. What's the matter? You are addicted to picking up things, right? "Professor Hu, these are the core assets of Neon Semiconductor you are talking about. It is impossible for us to sell them."

If Zhou Xin knew about it, he would definitely want to pretend that Elpida would go bankrupt in less than two years, and the technology would be packaged and sold to Yangtze River Storage. It would be better to sell it to Xinxin without struggling.

Hu Zhengming didn't know, so he just smiled and raised his glass: "Drink, drink."

Elpida and Renesas are two companies established after the semiconductor businesses of NEC, Hitachi and Mitsubishi were spun off. Elpida inherited the DRAM business of these three companies, that is, memory chips, while Renesas inherited other sectors. The business focuses on automotive and consumer electronics chips.

Because of the strength of the Neon automotive industry, Renesas did not go bankrupt like Elpida, but has survived well until now.

Moreover, because Renesas is related to automobiles and consumer electronics, they received far more support than Elpida. After the financial crisis, Elpida received 300 billion yen from the Ministry of Industry and Economy, while Renesas received 1400 billion yen.

Of course, once Neon's automotive industry is defeated, Renesas will not escape the fate of bankruptcy.

I am not happy about the acquisition of ASPLA for a moment, the next target Elpida is on the way.With the help of the financial crisis, Xinxin is getting closer and closer to the day when Neon will purchase goods.

“TSMC’s competitors are accelerating their rise”

After the completion of Xinxin's acquisition of ASPLA, the most anxious people are the semiconductor practitioners and media in the Wanwan area.

“TSMC used to be the absolute king in the chip foundry field, but after facing the rapid development of China’s chip foundry industry recently, TSMC’s leading edge in the chip foundry field has been completely lost.

The chip technology is overtaken by its competitor Xinxin, chip customers are scattered with orders from SMIC, Xinxin, Huahong, etc., and the demand for chips is weakening. The combination of various factors makes TSMC face unprecedented challenges.

Recently, Xinxin Technology completed the wholly-owned acquisition of ASPLA, a neon chip manufacturing company, while TSMC passed the largest layoff plan since the 21st century. Xinxin's advantage in capital is further reflected, and the situation of one-off and one-off has become increasingly Severe hair loss.

For TSMC, they need to face the transformation from challenger to challenger. "

This is a cover article published in a business magazine. They believe that TSMC’s disadvantages are obvious and they need to be more vigilant.

The problem is, doesn’t TSMC itself know?The reversal of the offensive and defensive momentum between TSMC and New Core cannot be changed by subjective will.

If Neon Media views this matter from the perspective of Neon Semiconductor being acquired in its final glory, then Wanwan Media views this matter from the perspective of ending TSMC and facing an unprecedented crisis.

Of course, this is not 2018, but 2008. Wanwan’s advantageous industries other than semiconductors have not been swallowed up by the mainland one by one. Semiconductors are only one of Wanwan’s advantageous technology industries.

Therefore, their sense of crisis is not that strong yet.

If SMIC exceeds TSMC in terms of revenue and process technology in ten years, the whole island will not be able to sleep well.

Xinxin's acquisition of ASPLA was widely reported, and the emphasis was even more exaggerated than that of Neon Media.

Wanwan blogger’s attitude is even more pessimistic:

"TSMC's stock price had a relatively strong trend in January last year, but it has been falling since January 1. Compared with the high point at that time, it has been cut in half. Today, after the news of Xinxin Technology's acquisition of ASPLA came out, I It is believed that after the U.S. stock market opens tonight, TSMC’s stock price will open significantly lower and hit a historic low.

I am a business blogger and I often talk about stock market-related content. This leads to readers under my PO articles often asking me whether TSMC has reached a trading point where I can buy it after it has fallen so much.

Of course, as the recent financial crisis has become more and more exaggerated, even if the Federal Reserve cut interest rates by 1 bp in one go in January, the largest drop in the past 75 years, it did not improve the US stock market. Bales, whose assets are as high as US$25 billion, There were even rumors of bankruptcy and liquidation. These horror stories led to no one thinking about bargain hunting.

But I want to take advantage of the time when New Core Technology acquired ASPLA to have a good chat with you about when TSMC will be considered the bottom and when it will reach a point where it can be traded.

To be honest, Xinxin is very powerful. From the company's own operating strength to R&D strength and capital operation, it is very powerful. The difference between TSMC and Xinxin is in capital operation.

Everyone knows that Xinxin was established later than TSMC, but it achieved rapid expansion of production capacity by cooperating with wafer factories founded by Chinese state-owned capital. After the success of this model, Xinxin began to cooperate with Temasek and Sequoia , Goldman Sachs and other international capital cooperation to continue to expand production capacity.

The cost of building a wafer fab is US$10 billion. Xinxin itself only needs to provide US$1 million. In the past two years, it has been even less, only tens of millions of US dollars. And this is not leverage. These funds are zero cost. , this is an investment.

TSMC also relies on bank money to build wafer fabs, but bank money has costs. Even if our government gives TSMC preferential policies, the lowest cost is only 4 points. Xinxin takes the investment money, and the investment money is Zero cost.

Loan money has repayment pressure and interest pressure, and investment money also has disadvantages. The disadvantage is that you have to pay dividends to shareholders, and of course the risks are also shared.

With the help of this model, Xinxin achieved rapid expansion, and it took only three years to catch up with TSMC in terms of production capacity.

I have talked with many people in the chip industry, can they expand in a similar way?Why can only Xinxin play this mode?
It seemed that the risks were shared by everyone, and then I built a lot of wafer fabs. The production capacity formed a scale effect, which could reduce operating costs and process iterations faster.

Their answer is that only Xinxin can play this set of gameplay and is willing to play it.

Because Xinxin controls two giants in the field of consumer electronics: Matrix and Xiaomi, its three brands Mphone, Apple and Xiaomi cover a full range of high-end, high-end and low-end products in computers and mobile phones.

And they all sell very well. As many chips as Xinxin manufactures, they are sure to sell as many chips as they can.

Coupled with Xinxin's Yanque and Honghu series mobile phone chips and its technologically advanced Bluetooth chips, these advantages allow Xinxin to expand production aggressively without worrying about not being able to sell the chips due to increased production capacity.

TSMC also wants to expand production in this way. First, capital does not trust TSMC as much as it trusts Xinxin. Of course, Xinxin did not gain the trust of capital from the beginning. Xinxin initially cooperated with enterprises controlled by the Chinese state in this way. After the cooperation was very successful, we were able to cooperate with international capital in this way.

The second reason is that TSMC’s current problem is not insufficient production capacity, but insufficient high-end production capacity and no orders for low-end production capacity.The lack of high-end production capacity is because the lithography machines for the 40nm process are produced by Xinxin, and the orders allocated to TSMC are limited each year.

There are no orders for low-end production capacity because TSMC is not like Xinxin. Matrix and Xiaomi can help them digest production capacity, and Chinese mobile phone brands can help them digest production capacity.

Why has TSMC reduced domestic production in the past two years while expanding production in China? "

(Considering that this is a blog written by Wanwan, I use the words this way.)
"A very important reason is that China's mobile chip design industry is developing rapidly. At the same time, China's mobile phone brands are also developing rapidly. China has a large demand for chips. If TSMC continues to produce Wanwan, the cost will be higher than that of new chips. If there is a gap, the situation that is already difficult to compete will become even more difficult.

Therefore, Xinxin’s entire industry chain and aggressive expansion strategy make it difficult for TSMC to resist.

As for Xinxin's acquisition of ASPLA this time, I think it will be another landmark event, and TSMC's market share will be further eroded.

Because ASPLA owns the essence of Neon's technology over the past few decades, it has a large number of unique technologies in the production of mid- and low-end chips. These technologies can help Xinxin further improve the yield rate of mid- and low-end production capacity.

This will further worsen TSMC's problem of insufficient orders for mid- to low-end orders.Because of the emergence of new chips, the capital market has very pessimistic expectations for TSMC.

This is also the most important reason why TSMC’s stock price has been falling. Unfortunately, this pessimistic expectation will not end in the short term. "

　What a great weekend, spent the whole day in a daze.

　　
　
(End of this chapter)