Chapter 281: Wailing Like A Banshee
Translator: Nyoi-Bo Studio Editor: Nyoi-Bo Studio
In Holland, at the ASML Headquarters, Gallaher Rodney, CEO of the company, was awakened by a phone call in the middle of the night. The caller told him several surprising bits of news in succession.
What shocked him the most was that Z country’s Zhongxin International broke through the ban on the sales of photolithography machines into their country. They manufactured their own EUV photolithography machines and used them to produce the 5-nanometer chips.
“How is this possible?” Gallaher Rodney was stunned still. It had only been a few months since the ban was implemented. This was impossible!
The company’s shareholders and upper management were reduced to a mess during the emergency meeting held on the very next day. The gentlemanly elegance, the certainty, and the calm composure that they had in the past were now lost.
“This is absolutely impossible! It must be fake news!”
“I don’t believe this either. They need at least three more years before they can create the EUV photolithography machine.”
Gallaher Rodney pounded his fist on the table and asked, “Everyone! The facts cannot be changed by our willpower alone. Let’s just a.s.sume that they have achieved what they did. Ladies and gentlemen, what should we do now?”
In an instant, an executive replied, “Sue them, we’ll immediately accuse them of copyright violation! There is no way for them to go around the patent barriers. They must have infringed on our patents, so we’ll file a lawsuit against them!”
Gallaher Rodney shook his head. “But it takes time to find a lawyer and to collect evidence. It takes even more time to file a lawsuit and continue the dispute. It’ll be at least a year or two before we can see the results… In addition, due to the special provisions of the Z country’s copyright law, we will not win the court case in Z country. This is because we implemented the sales ban first.” As a supporter of free trade, he opposed the sales ban from the very beginning. Despite the advanced technological nature of the photolithography machine, the market for the machines was not large. ASML sold merely a little more than 10 photolithography machines every year. The annual revenue was only about 3 billion euros. With the slowdown of the market’s growth, the revenue shrunk every year. Hence, every order was precious to him. Moreover, he was very optimistic about the market prospect of Z country. He believed that the market would be the driver of ASML’s growth for the next 20 years.
In the end, the audience fell silent. Everyone thought that the problem was very tricky but they could not resign themselves to the fact that there was such a problem. How could Z’s citizens ever manufacture the EUV photolithography machines?
“Ladies and gentlemen, as things stand today, we can only sue for peace. This is for own benefit.” Gallaher Rodney proposed his solution plan. “One, we’ll immediately announce the lifting of the ban and allow Z’s citizens to buy our photolithography machines. At the same time, we can get Zhongxin International to stop counterfeiting our photolithography machines by offering them ‘priority supply’. This will allow us to reach a preliminary settlement. Next, we’ll apply for technical collaboration with Shanghai Microelectronics to obtain their super-resolution photolithography technology. If necessary, we will offer our core technologies in exchange. The super-resolution photolithography machine has an excellent compet.i.tive advantage in the field of low-mid end chip manufacturing! We will lose all our share in the low-mid end market if we don’t master this technology. It’s akin to having one of our legs cut off if we lose this market. In short, we want to cooperate with Z’s people at all costs. Otherwise, our market share will shrink rapidly. We’ll be reduced to the verge of bankruptcy… Our good days are coming to an end. This is a fact that cannot be changed!”
A dejected executive raised his head and asked, “What will we do if Merica opposes to this unauthorized cancellation of the ban? We import many core components from Merica.”
“The Mericans?” Gallaher Rodney said with a condescending laugh, “We can’t destroy our income source for Merica! Yes, Merica can retaliate. But didn’t Z’s people create their own EUV photolithography machines? When that time arrives, we can simply buy our core components from Z country. Remember that we are Dutch; we are not obliged to uphold the interests of the Mericans.”
Everyone from the upper management nodded. Some of them were still paying the mortgage on their houses, some were saving up to buy a yacht, and some did not want to give up the two-month annual paid vacation. They were all adults and they must make choices based on their own interests.
…
In Gorea, at the Samsin Headquarters, in the President’s office, Li Jianrong was destroying everything in his sight. The table, the vases, and tea sets; he smashed everything into a mess. His eyes were bloodshot. From time to time, he would shout “Ah!”and “Ha!” like a wounded beast. There was a reason for his present anger.
The Z people deceived him. Their deceitful battle tactics caused his Samsin to suffer a net loss of more than $200 billion in less than a year.
When Samsin launched the great battle using the “Law of the Downswing,” he fully mobilized all the fields at his disposal including the memory, internal storage, panels, and semiconductor OEMs etc. A skirmish to bleed the enemy turned into a full-scale world war. Samsin had indeed been ruthless. Their ferocity and savagery this time around had far exceeded what they had done in previous price wars using the “Law of the Downswing.”
There were some ghastly facts using last year’s prices in the same period as a comparison:
The price of RAM chips plummeted by 91%.
NAND storage prices plummeted by 84%.
Panel prices plummeted by 52%.
The standard for the semiconductor OEM charges had been reduced by 45%.
These were originally industries with huge gross profits. All of them were bleeding money now. He expected to conduct the price war for 3 years or more using the huge cash reserves. However, two-thirds of the cash reserves had already been used in less than a year. And Z country was still holding on! They had not revealed the slightest sign of an imminent crash. On the contrary, Samsin was the first to show signs of buckling.
Li Jianrong never predicted this kind of situation! Until he got wind of the press conference by Zhongxin International. At that moment, his chest felt so tight that he thought blood might spurt out! The manufacturing cost of chips was reduced to one-third of its original price with the use of the super-resolution photolithography machine. Was there even any room for comparison? Would there be any point in comparing who would be the winner and who would be the loser when it was so obvious?
$200 billion… How nice would it have been if he kept it all to himself? Now he wasted all of that for nothing!
After he destroyed the room to his satisfaction, Li Jianrong picked up his mobile phone and made a call. “Hurry! Send someone to Z country. We request an immediate truce. We hope that the market will return to its normal and orderly state.” His Samsin company would go under if they did not stop the war now.
…
On Treasure Island, after news of Zhongxin International’s several major breakthroughs spread there, public opinion on the island exploded.
Their netizens commented in profusion.
“Fake news. This is impossible!”
“The mainland has manufactured a 5-nanometer chip? Is it April Fool’s Day today?”
“They’re probably using chips and pa.s.sing it off as theirs.”
“They only used 8 months to achieve the 5-nanometers? Again? Are they writing science fiction? It can’t get any faker than this!”
“If it is really 5-nanometers, it does have a certain threat to us.”
Someone ridiculed, “Do you have enough IQ? You should also believe in such obvious fake news. Remember this sentence: in the chip field, the mainland can never exceed us!”
…
At a particular villa, Liu De Ming trembled as he stood in front of an old man. Dazed, he asked in a faint voice, “Old man, did you hear about the news from the mainland?”
“Yes.” The old man closed his eyes slightly. “I’ve finished watching the press conference.”
“Then… do you believe it?”
The old man sank into silence and did not immediately answer him. After a long time, he said one thing. “I never thought that I would see the Chinese race rise to stand at the top of the world in my lifetime. What a happy event!”
At that moment, the old man let go of all interests’ disputes. Only a joyful smile remained on his face.