Chapter 454: Shencheng’s speed shocked the opponent
As if he sensed that Jiang Hui and Zhang Shaohua were discussing him, Kim Tae, the marketing director of Samsung Electronics, happened to hear about Intel’s movements.

Although Samsung Electronics has not yet entered the chip foundry business, as one of the chip companies with the highest level of equipment in Asia, Samsung Electronics has never relaxed its attention on Lingnan Semiconductor.

“President, Intel arranged a team to visit Lingnan Semiconductor last week.”

“It is said that it has officially passed the certification and will introduce Lingnan Semiconductor into the list of chip foundry partners.”

“Including TSMC, which passed the certification some time ago, Intel now has two foundry companies.”

Jin Tai felt that this matter was of great reference value to Samsung Electronics, and it was necessary to let President Li Jianxi know it first.

“Is chip foundry really that promising?”

“It seems like Intel is going to promote it vigorously.”

Li Jianxi didn’t quite understand Intel’s approach.

In his opinion, as a semiconductor company, it must build its own factories to produce chips.

What would it mean to outsource the manufacturing to other factories?
By then, wouldn’t the specific chip design plans and the like be known to everyone?
And to a certain extent, we have also lost the initiative.

Historically, Samsung Electronics entered the foundry field relatively late.

In the early days, all related chips were produced for its own group.

This is also closely related to Li Jianxi’s ideas.

“President, chip manufacturing requires the purchase of a large number of advanced and expensive equipment such as lithography machines and etching machines. It also requires huge investments in infrastructure such as clean rooms and high operating costs.”

“If chip design companies build their own factories, they will have to bear huge financial pressure.”

“With the OEM model, the design company only needs to pay the OEM fee and pass the production cost to the OEM company, which can avoid huge fixed asset investment and operating expenses and improve the efficiency of capital utilization.”

“And chip design is a technology-intensive job that requires a lot of R&D investment and professional talent.”

“By outsourcing the manufacturing process to foundry companies, design companies can focus their main energy and resources on chip design and development, and focus on improving their core competitiveness.”

“Such as developing more advanced architectures, improving performance, reducing power consumption, and launching more innovative and competitive products.”

“This should be Intel’s main consideration.”

As the head of the marketing department, Jin Tai has obviously done special research on the chip foundry model developed by TSMC and Lingnan Semiconductor.

He is very clear about the advantages of this model and its appeal to chip companies.

Knowing these advantages, he is actually somewhat inclined to make Samsung Electronics the same as Lingnan Semiconductor.

While designing and producing chips on its own, it has also entered the foundry field, manufacturing chips for international chip giants.

However, this idea is very different from the development direction previously decided by Samsung Electronics, and he did not dare to express his opinion casually.

Especially after some investigation, he found that Li Jianxi did not seem to particularly approve of the chip foundry model.

In this situation, Jin Tai would be even less likely to express his true thoughts.

“You are right. The chip foundry model does have its own advantages.”

“But the shortcomings are also very obvious.”

“Under this model, chip manufacturers are overly dependent on foundry companies. If foundry companies encounter production accidents, tight production capacity, raw material supply problems or are affected by natural disasters and other factors.”

“It is likely to cause chip delivery delays, insufficient production or reduced quality, affecting the product supply and marketing plans of chip design companies.”

“And in the process of cooperating with foundry companies, chip design companies need to provide core confidential information such as detailed design drawings and technical data to the foundry.”

“If the confidentiality measures of the foundry company are not in place or internal personnel violate regulations, it may lead to technology leakage, infringing the intellectual property rights of the design company and damaging its market competitiveness.”

The reason why Lee Gun-hee was able to hold on to his position as the president of Samsung Electronics is not only because of his good rebirth, but also because of his good personal abilities.

The children raised in such large families often have higher personal abilities than many people think.

There are relatively few people who are truly the stupid sons of landlords.

“Intel may be more concerned about the flexibility of market response.”

“After all, the market demand for chips is uncertain and diverse.”

“Under the foundry model, Intel can flexibly adjust order quantities and product types according to changes in market demand, and foundry companies can respond quickly and make production arrangements,”

“There is no need to worry about the limitation or overcapacity of one’s own production capacity, which reduces market risks.”

“The competition in the American semiconductor market is very fierce now. Under such circumstances, it should be more suitable for the promotion of the foundry model.”

Jin Tai couldn’t help but explain the situation he had understood to Li Jianxi.

He still hopes that Samsung Electronics will consider joining the foundry industry as soon as possible.

Otherwise, by then, Lingnan Semiconductor and TSMC will have divided up the market, and it will be very difficult for Samsung Electronics to break in.

“Do you think we should also consider entering the OEM industry?”

Li Jianxi is not stupid either.

Through the conversation with Jin Tai, he keenly realized that the latter seemed to want the company to engage in OEM business.

Hearing what Li Jianxi said, Jin Tai hesitated for a moment.

Between following his own heart and expressing his opinions in accordance with the leadership’s ideas, he honestly chose the latter.

After all, the company belongs to someone else and I am just an employee.

There is no need to force your boss to do this unless he wants to do OEM.

Of course, if the attitude changes too quickly, it would obviously be inappropriate.

“President, I have indeed thought about this issue and was wondering whether I should conduct a thorough research and report to the company.”

“But just as you said, chip foundry has some advantages but also many disadvantages.”

“Different chip design companies have different product needs and technical requirements.”

“OEMs need to meet the diverse needs of many customers at the same time, which increases the difficulty of production management and quality control.”

‘”In order to cope with this situation, the company needs to invest more manpower and material resources in production scheduling and quality monitoring to ensure that every customer’s order can be completed on time, in quality and quantity.”

“Otherwise, it may lead to customer dissatisfaction and affect the company’s reputation and partnerships.”

“There are still dozens of OEM companies that mainly make profits through large-scale production, and the market competition is fierce.”

“Under this situation, the OEM price is relatively transparent and the profit margin is subject to certain restrictions.”

“At the same time, with the rise in labor costs, raw material prices and increased investment in technology research and development, the cost pressure on OEM companies continues to increase, further squeezing profit margins.”

“In order to maintain profitability, we need to continuously improve production efficiency and reduce costs, and we are facing great operating pressure.”

“So when the situation is not so clear, I think we need to wait and see for a few more years.”

After Jin Tai said this, he quickly confirmed Li Jianxi’s reaction.

Sure enough, the latter’s expression relaxed a lot.

I think I made the right bet this time.

The president has no intention of taking Samsung Electronics into the chip foundry industry.

At least not at this stage.

I served as a reminder, but in the end I also gave the opinion that it was not yet suitable to enter the chip foundry industry.

This should be in line with the president’s idea.

“You make sense. We need to continue to pay attention to the movements of TSMC and Lingnan Semiconductor in the chip foundry field.”

“But at this stage, the conditions are not yet ripe for entering the chip foundry industry.”

“We just need to get our own chip design and production done first.”

Li Jianxi took the opportunity to give his final opinion.

This exchange ended smoothly.

……

“Director, I heard that Lingnan Semiconductor has passed Intel’s certification and will officially help Intel manufacture chips in the next step.”

“By then, their export earnings will probably have a huge breakthrough.”

Zhao Dongfang came to Wang Honggui’s office with mixed feelings.

As a new company reorganized after the reform of China’s semiconductor industry in recent years, the superiors of Microelectronics United Corporation have relatively high expectations for them.

However, since the company was reorganized and established, it has not achieved any particularly outstanding results.

On the contrary, Lingnan Semiconductor, which was established around the same time period, has made quite a stir in the past year.

Now, the equipment installation work of the 4-inch wafer factory and 3-micron process chip factory introduced from abroad has been completed.

It also successfully passed Intel’s certification.

This is definitely a huge stimulus for Microelectronics Associates.

“Did they pass Intel certification so easily?”

“It stands to reason that a new semiconductor company has just been established and all conditions are not mature. It should be impossible for it to pass the certification, right?”

Wang Honggui was also very surprised by this result.

This speed was completely beyond his expectations.

“When I heard the news just now, I also felt it was very strange.”

“But yesterday I found a way to contact my classmates abroad and discussed this matter with them.”

“They offer some different perspectives.”

Zhao Dongfang knew that it was necessary to explain this matter clearly to Wang Honggui.

This is related to some future development strategies of the Microelectronics Corporation.

“What’s the different point of view?”

Wang Honggui looked at Zhao Dongfang curiously, “Could it be that Lingnan Semiconductor paid money to get Intel’s auditors?”

Although within state-owned enterprises, private transactions involving money rarely occur directly between state-owned enterprises.

But there are plenty of drinking parties.

Wang Honggui had also heard about the working styles of some private enterprises, and wondered if Lingnan Semiconductor had also relied on a more unconventional approach to deal with Intel.

However, Zhao Dongfang was a little amused and felt like explaining, “Director, it should have nothing to do with these things. Giants like Intel have very strict management in this regard.”

“Without sufficient trust among the parties, even if Lingnan Semiconductor is willing to pay a large sum of money, no one would dare to accept it.”

“Intel’s rapid success in passing Lingnan Semiconductor’s certification should be based on its own development.”

Zhao Dongfang quickly reviewed what he had discussed with his classmates yesterday, and then organized it into his own words to explain to Wang Honggui.

“As we all know, Japan’s semiconductor industry has developed very rapidly in the past decade.”

“It even has the momentum to surpass America.”

“Faced with this situation, the United States has also introduced various policies.”

“The hope is that the US semiconductor industry will regain its position as the world’s number one through a combination of hard and soft tactics.”

“So Intel is actually facing great competitive pressure and needs to reduce its burden and development pressure appropriately.”

“Chip foundry has its own unique advantages in reducing costs and improving efficiency.” “So Intel should outsource some low-end chips to TSMC and Lingnan Semiconductor for foundry.”

“This way, we can compete with AMD and other chip companies on price.”

“Intel’s own production plants focus on the most cutting-edge high-end chips to ensure its leading position in the computer chip market.”

Although the information Zhao Dongfang got back might not be 100% accurate, there was no doubt that it was part of Intel’s reasoning.

After listening to it, Wang Honggui basically understood it.

“That is to say, Lingnan Semiconductor made a good choice and hit the mark with Intel’s needs.”

“So you passed the certification so smoothly?”

Wang Honggui asked back somewhat unwillingly.

Why don’t I have such bad luck?
“That’s about it.”

“Not only Intel has this demand, but other chip companies such as IBM and Texas Instruments also have similar needs.”

“The scale of the subsequent chip foundry market should continue to grow and develop.”

“Director, can we consider freeing up some of our production capacity to provide OEM services to other factories?”

Zhao Dongfang couldn’t help but speak out his thoughts.

So far, the capacity utilization rate of Microelectronics Associates’ chip factories is less than 50%.

This is absolutely a huge waste.

It is very difficult to make money when the capacity utilization rate is so low.

That is, when the company was reorganized, some historical baggage was discarded.

Otherwise, United Microelectronics would definitely be having a hard time now.

“Some of our domestic chip companies have previously produced some chips for export.”

“To a certain extent, it is similar to OEM.”

“But our chip technology is not as advanced as TSMC and Lingnan Semiconductor. It will be difficult to compete with them.”

Wang Honggui is also very clear about the current situation in the factory.

So he didn’t reject it outright.

I just expressed my concerns.

“The high-end market has its own high-end demand, and the mid-end market has its own mid-end market. We make mid- and low-end products, so there should also be demand for them.”

After hearing what Zhao Dongfang said, Wang Honggui was a little moved.

If we can really export and earn foreign exchange, it would definitely be a good thing.

“Try to contact foreign chip companies and see if they have any ideas in this regard.”

“If we can find the right customers, I will definitely support the factory to develop chip foundry business.”

No matter which method is used, as long as it can improve the performance of Microelectronics United Company, Wang Honggui will support it.

As for what impact these choices will have on the company’s long-term development, he no longer cares.

Just live your present life first.

As for the future, we’ll take it one step at a time.

Invisibly, Wang Honggui made the right choice.

……

“President, from the latest information we have obtained, American semiconductor companies led by Intel will make a huge change in the chip foundry field in the future.”

“Now that Intel has passed the certification of TSMC and Lingnan Semiconductor, it will outsource the production of some of its mid- and low-end products to these two foundries.”

As the sales director of Hitachi Semiconductor, Sano Miki must be paying close attention to every move of the world’s chip giant.

Over the past decade, Japanese semiconductor companies have put tremendous pressure on American chip giants.

The rapid development of semiconductor giants such as Hitachi Semiconductor, NEC, Mitsubishi Semiconductor, Toshiba Semiconductor, and Fujitsu has made Japanese semiconductors almost the most powerful in the world.

But America will not allow itself to be surpassed by Japan in key areas.

Many normal business and administrative means were used to suppress Japanese companies.

These actions will certainly make Hitachi Semiconductor and other related manufacturers very unhappy.

But they are powerless and have no way to resist administrative measures.

But when it comes to business tactics, they won’t surrender easily.

“America is completely in disarray.”

“I think only by adhering to the IDM model that integrates multiple processes such as chip design, manufacturing, packaging and testing, and combining design and manufacturing, can the company maintain its overall advantage.”

Taro Koike’s attitude is obviously very clear.

He does not approve of the chip foundry model developed by TSMC and Lingnan Semiconductor.

In his opinion, this is entirely the behavior of TSMC and other later-entering companies to create topics and gain a certain living space for their own development.

In fact, most Japanese semiconductor companies will not choose the chip foundry model.

The reasons behind this are actually quite complicated.

As we all know, the financial groups in Japan are very powerful.

In fact, each semiconductor company is not an independent company, but a part of a consortium.

As a member of a consortium, it is natural to prioritize the needs of the group.

For example, Hitachi Semiconductor must first meet the needs of the Hitachi Group.

If you choose to join the chip foundry industry, the internal resistance will be huge.

It is precisely because of this awareness that Taro Koike’s attitude is so firm.

Don’t force yourself to do something that you can’t do.

If there can be fewer changes, there won’t be so many.

“I think so too, but as the world’s leading semiconductor company, Intel’s every move will still cause a big reaction.”

“It is estimated that more American companies will choose to follow Intel’s path in the next step.”

“Because the chip foundry model can reduce some of their burdens, there will be a better response in the capital market.”

“Wall Street should also support Intel’s approach.”

“You can see these things from the increase in Intel’s stock price during this period.”

Sano Miki has been following the developments of Intel, TSMC and Lingnan Semiconductor during this period, and has also made special analysis of the relevant situations.

When I gave the report today, I naturally spoke very clearly.

After all, Intel made such a choice, so he must give a reasonable explanation.

Otherwise Taro Koike would also have some questions.

“The business rules in America are somewhat different from ours.”

“We don’t have to follow their path completely.”

After Taro Koike said this, Sano Miki became more clear about his leader’s thoughts.

From now on, just do your work according to your leader’s instructions.

This workplace rule applies equally whether in Japan, Korea, or anywhere else.

……

“Mr. Jiang, I heard that your Lingnan Semiconductor has passed Intel’s certification and will produce chips for Intel in the future?”

Seeing that the first phase of Lingnan Semiconductor’s factory was about to enter formal production, Liu Tianwu went to the site for a special inspection.

As the first semiconductor company in Shenzhen, Liu Tianwu attaches great importance to the development of Lingnan Semiconductor.

This thing is definitely a high-tech industry and is very consistent with Shenzhen’s future development direction.

At present, the layout of the entire Lingnan Province in the semiconductor field is relatively backward. If Shenzhen can make a breakthrough in this regard, the significance will be absolutely extraordinary.

“It has indeed passed Intel’s certification. Next, we will continue to invite other companies such as Texas Instruments and AMD to do certification as well.”

“Once the certification is passed, the next step will be to start specific cooperation.”

“According to preliminary estimates, our OEM business will officially enter production next year.”

“If the OEM business develops well, the production capacity of the first phase factory will soon be saturated.”

Jiang Hui told Liu Tianwu the result with certainty.

This made the latter feel a little excited.

When Lingnan Semiconductor was first established, he was worried that the company would be doing a lot of noise but not much results.

Don’t let this semiconductor factory with huge investment become an unfinished project, which would be embarrassing.

Now it seems that my worries are completely unnecessary.

Lingnan Semiconductor has taken a different and unique path.

Designing and producing chips by ourselves and combining them with chip foundry is like walking on two legs.

This is obviously a more prudent approach.

“It seems that your previous plan to ask Lingnan Semiconductor to start the construction of the second factory as soon as possible was completely correct.”

“Some of the equipment has already started arriving, right?”

Liu Tianwu is quite familiar with many things about Lingnan Semiconductor.

After all, Yao Yiming would report to him every now and then, so it would be hard for him not to be clear.

At the beginning, Jiang Hui went against the opposition and started the equipment procurement business for the second factory even before the first production line was installed.

Many people are very worried.

Liu Tianwu is no exception.

This approach is not in line with common sense and the development rules of the industry.

Now it seems that Jiang Hui did the right thing again.

“Yes, except for important equipment such as lithography machines, which still need to wait a little longer, some other less complex equipment has already started to be delivered.”

“Our second factory will officially start production next year.”

“This way, there is no need to worry about insufficient production capacity.”

After Jiang Hui said this, Liu Tianwu was completely relieved.

I don’t need to feel any pressure about the Lingnan Semiconductor mass production ceremony that will be held next week.

(End of this chapter)