Global economic integration is gradually evolving into a monopoly at the top of the supply chain.
Editor’s note: This article is from WeChat public account “Ginkgo Finance” (ID: threemornings ), the author is aged, edited by Yang Yizhi.
On July 10th, South Korean President Wen’s business held a corporate symposium in Cheong Wa Dae. A total of 30 corporate presidents with total assets of more than 10 trillion won were present.
However, the symposium did not see a person alone. He is the vice president of Samsung Electronics, Li Zaiyu. Samsung is the first to bear the import restrictions in Japan. It is reasonable to say that he should not be absent.
After two days later, in a suit and a tired face, Li Zaiyu just got off the plane at Seoul Airport in South Korea and was surrounded by reporters waiting for a long time. In the face of the reporter’s “difficulties”, he became silent and the whole process looked very embarrassing.
The discerning person knows at a glance that Li’s six-day trip to Japan must have been closed, so he chose to take a sigh of relief.
In the context of the trade conflict between Japan and South Korea, Samsung wants to import the goal of “hydrogen fluoride” through normal channels. In the past few days, Li Zaiyu found a number of companies that had worked with Samsung before, and even sought help from some friends in the financial industry. He wanted to secretly retrieve some raw materials to save Samsung.
Hydrogen fluoride has always been a shackle on the neck of the Korean semiconductor industry. Not only does Samsung need this life-saving straw, but the entire industry is also in need of feeding.
The success of Li Zaiyu’s trip to Japan is not only related to Samsung’s fate, but also directly affects the Korean economy.
Because you know what you can’t do, you can’t call it brave or courageous, but you’re forced to do so.
01 Benefit is the driving force of human action——Holbach
In 2017, the semiconductor industry set a new record. Samsung ended Intel’s 25-year dominance, and Intel’s “the world’s largest factory” gave way.
In South Korea, there is such a paragraph: Koreans have three things that cannot be avoided in their lifetime, taxes, death and Samsung. However, in the semiconductor industry where Samsung “shoulders only cover the sky”, it is not only Korean talents who have such feelings.
As the largest company in Korea, Samsung Electronics ranks second in the world in terms of semiconductor production, and its memory production ranks first in the world. Its main business is DRAM, NAND flash memory, microcontrollers and image sensors. In recent years, in order to expand the market, it has also entered the microprocessor and foundry. Its production of flash memory, multilayer ceramic capacitors,Battery and flexible circuit boards, etc., the main customer is Apple.
Samsung’s monopoly in the semiconductor industry has made other semiconductor companies “hate”. Acer’s founder Shi Zhenrong and TSMC’s boss Zhang Zhongmou made a public statement that Samsung is the enemy of Taiwan’s IT industry in China; Hon Hai’s chairman, Guo Taiming, claimed that defeating Samsung was his life’s goal.
In addition to the boss Samsung, South Korea also owns a semiconductor revenue third in the world, SK hynix. According to statistics, South Korea’s economic growth rate was 2.7% in 2018. If the benefits of semiconductor growth are removed, South Korea’s economic growth is only 1.4%, showing that Korea’s dependence on the semiconductor industry is heavy.
In the semiconductor industry, South Korea has absolute confidence, not only catching up with Japan and Taiwan in a short period of time, but also hitting Japanese semiconductor companies in the north. However, South Korea did not expect that the semiconductor industry, which is most proud of itself, was “sucked” by Japan.
Korea is the world’s number one mobile device supplier with a near monopoly in the screen and memory markets. But in these areas, Japan has always held the right to speak on the basis of high-tech materials.
Before talking about the production of CMOS (Complementary Metal Oxide Semiconductor), Samsung in South Korea cannot leave Japanese companies at the material or machine level. Even Samsung’s proud OLED screens rely entirely on imports from Japan in the production of raw materials for vapor deposition machines and screens.
Japan has mastered the core technology of the upstream, while South Korea is doing business on the basis of Japanese technology. Therefore, Japan’s attack on South Korea is accurate enough to attract life.
For example, in the past, Japanese materials companies were able to obtain permits in about a week when they exported to South Korea, and they were exempted from individual review for three years with a full license.
In the semiconductor industry, hydrogen fluoride is an indispensable raw material for cutting semiconductor substrates. However, hydrogen fluoride is extremely corrosive and cannot be stored for a long time. Korean companies have been importing small quantities, and hydrogen fluoride must be imported from Japan every once in a while.
But after the new policy is introduced, each review will last for 90 days. The Japanese government will review the items on the list, including related contracts, usage channels, sales offices, etc. In the past, only 3 documents were required. Today, it takes more than 9 copies.
On July 1, the Ministry of Economy, Trade and Industry of Japan announced that it will impose strict semiconductor export restrictions on Korea, including for manufacturing.Three kinds of chemical raw materials such as mobile phone screen, fluoropolyimide for OLED panel, photo-developing agent for semiconductor manufacturing, and high-purity hydrogen fluoride. It has been officially implemented since the 4th.
According to “Money Today”, it was confirmed to the Ministry of Industry, Trade, and Resources of the Korea and relevant industry professionals that the number of Korean companies imported from Japan was zero after the new policy on the Japanese restricted list was promulgated.
This is also the fundamental reason why Li Zaiqi went to Japan.
02 Prosperity itself has buried the seeds of destruction——Stiglitz
Samsung and other large consortia, as the foundation of Korea’s economic prosperity, have repeatedly taken on the important task of national economic transformation, allowing South Korea to rank among the developed countries.
In the mid-seventh century, under the power of the United States, Japan was forced to open up the computer and semiconductor markets. As a result, Japan felt the gap with the United States and determined to invest heavily in and develop semiconductors.
The Japanese Ministry of International Trade and Industry, led by Hitachi, Mitsubishi, Fujitsu, Toshiba, and Nippon Electric Co., Ltd., combined with the Institute of Electronics Research and the Computer Research Institute of the Ministry of International Trade and Industry of Japan, invested a total of 72 billion yen. Used to make breakthroughs in the core common technology of the semiconductor industry.
A DRAM chip survey released by Hewlett-Packard Company in 1983 found that the Japanese chip yield rate was five times that of the US equivalent before 1980.
The success achieved in large DRAMs has caused Japan to ignore the changes in technology. The stubborn will be applied to the development of DRAM technology for mainframes, emphasizing the continuity and stability of the chip.
With the advent of personal computers and the Internet since 1980, the era of consumer electronics represented by PCs and mobile phones has come, and the chips at this time are more focused on flexibility and ability to process information than long-term stability. Japan did not seize the pace of personal PC production soaring to take the initiative to adjust the industry, coupled with the US pressure on it, the Japanese semiconductor industry began to decline.
South Korea at this time seized the opportunity to succeed.
In 1975, the South Korean government announced a six-year plan to support the semiconductor industry, emphasizing the localization of electronic components and semiconductor production. It also organized a joint DRAM development project of “People and People”, which is to develop the DRAM industry through government investment.
Lee Samsung Group CEO Li Bingzhe
Top threeLi Bingzhe, CEO of Star Group, decided in February 1983 to make a large-scale investment in memory chip production and made detailed plans for this. Its SST International, which was established in Silicon Valley, played a vital role in Samsung’s technology development.
Like Japan, the rapid development of Korean semiconductors cannot be separated from government support. In the “Semiconductor Industry Revitalization Plan” implemented between 1983 and 1987, the Korean government invested a total of 346 million US dollars in loans and stimulated a private investment of 2 billion US dollars.
In the financial crisis of 2008, the price of DRAM was avalanche, falling from 2.25 to 0.31 US dollars. Samsung used the “counter-cyclical law” to make the price of DRAM in the market continue to fall. Many manufacturers failed to survive this winter.
The first thing that fell was the German giant Qimonda, which went bankrupt in early 2009 due to a broken capital chain. Subsequently, he moved to Zhao Weiguo of China Ziguang Group; Japan’s Elpida worked hard for several years and was eventually acquired by Micron in 2012. On the night of the bankruptcy of Elpida, the Samsung headquarters in Gyeonggi-do, Seoul, was lit up all night.
The flash memory business of Toshiba, another giant in Japan, was also acquired by Bain Capital in the United States in 2017. At this point, the entire DRAM industry has only three players, Samsung, SK Hynix and Micron. Among them, Samsung and SK Hynix, two major Korean giants, have a 75% share and become a veritable industry leader.
After going through Japan, the United States became extremely sensitive. Therefore, when Samsung became the head of the memory chip with 64MDRAM chips, it also faced anti-dumping lawsuits in the United States. But Samsung has a simple head, Li Jianxi, who sent people to lobby the Clinton administration:
If Samsung can’t manufacture chips normally, the trend of Japanese companies occupying the market will be more obvious. The reduction of competitors will further increase the price of chips purchased by the United States, which is even more unfavorable for American companies.
This lobbying was very successful. The United States only charged 0.74% of anti-dumping duties to Samsung, and Japan had to pay 100% anti-dumping duties.
Now, South Korea has been in the global semiconductor industry for many years, but the Japanese semiconductor industry has to rely on “selling children to sell women to support their families.”
Despite the constant contradiction between the three countries of China, Japan and South Korea, it is really impossible to say who can do it.
There is a complete eco-industrial chain between China, Japan and Korea. Japan is responsible for supplying raw materials, South Korea is processing products, and China is processing finished products. Can be described as interlocking, which part of the problem, the entire industry chain will be affected.
Japan’s fluorinated polyimide production capacity accounts for 90% of global production capacity, and high-purity hydrogen fluoride gas production capacity also accounts for 70% of the world. Therefore, it can use the raw materials to suppress South Korea.
But Korea also has giant companies such as Samsung Electronics and SK Hynix, which are not negligible. In the DRAM field, two companiesThe global share has reached 70%, and the NAND flash memory field is also as high as 50%. In the field of ultra-high-definition organic EL panels, South Korea’s Samsung and LG monitors hold more than 90% of the total.
Sony, Panasonic and other large companies in Japan are also important customers. Conversely, this move in Japan will also have a series of impacts on their own companies.
In addition, Samsung has a number of mobile phone and home appliance factories in Vietnam, accounting for a quarter of Vietnam’s exports in 2018. According to statistics from Citigroup, in South Korea, Korean companies account for 64% of semiconductor memory imports. Similarly, 48% of China’s semiconductor memory imports are also from Korean companies.
In the opinion of Ding Yifan, a senior researcher at the National Strategy Institute of Tsinghua University, Japan and South Korea are the beneficiaries of global economics and closely related to the value chain throughout East Asia. Therefore, Japan’s economic and trade disputes will not only suffer from China’s The impact will affect the economic development of East Asia.
From the perspective of global value chains, countries should do more to maintain, not destroy.
In the downstream of the industrial chain, South Korea’s semiconductor and OLED products are mainly exported to China. According to data released by the Korea Ministry of Commerce, Trade and Industry, in 2018, the country’s semiconductor exports amounted to US$128.15 billion, of which exports to China reached US$85.78 billion.
In other words, there is a problem with the supply of parts and components of Korean companies, and the production of smart phone manufacturers such as Huawei in China will surely be affected.
In the context of Sino-US economic and trade frictions, South Korea’s irreplaceability is even more pronounced.
The trade friction between Japan and South Korea will make Chinese companies very passive. Although China has a huge volume, it can form a huge industrial cluster on the premise of vigorously developing industrialization. But the core technology field at the top of the industry chain is still stuck in the neck.
03 Everything has cracks, and that is where light comes in. ——Cohn
In the short term, the dispute between Japan and South Korea will indeed have some negative impact on Chinese companies, but in the long run, is this not a chance to overtake a corner?
Japan’s chemical raw materials market share is 90%, so it is unlikely to find new alternatives, but South Korea’s “DRAM” and NANDflsh are not without alternatives.
In the current memory market, South Korea is the leader, while the United States and Taiwan are in the top three.
“There is no eternal friend, only eternal interests.” Once the United States chooses to join forces with Taiwan, this first throne is afraid to change people to sit.
In China’s interior, although the technology and production of memory cannot keep up with the maturity of the United States and South Korea, China has been continuously increasing the research and development of memory.The country may be able to gain a competitive advantage through the trade friction between Japan and South Korea. The report quoted analysts as saying that in the past few decades, South Korea and Japan have monopolized the global semiconductor industry, and now there is a gap in the market, and Chinese emerging companies may become new choices.
04 Success belongs to people who have seized the opportunity that others see as obstacles——Tedero
Semiconductors were born in the United States in the 1950s, initially using the IDM model. Up to now, it has experienced two major migrations from the United States to Japan, the transfer of the US and Japan to Korea, Taiwan, and the storage industry and the foundry model.
In addition to political considerations, these two transfers are also affected by the development of labor costs and the electronic market.
The rise of the Japanese home appliance market has led to the development of semiconductors, and the popularity of PCs has put DRAM and foundry in Korea and Taiwan.
As mentioned above, China’s smartphones are developing well and occupy a very high share of the global mobile phone market.
The reason why the United States chose South Korea and Taiwan, the cost of labor in South Korea and Taiwan is much lower than that in Japan. But for now, China’s manpower market is definitely better than South Korea and Taiwan.
China has become the world’s largest semiconductor consumer market, and today it is in the golden stage of semiconductor transfer. According to SEMI’s forecast, 78 new wafer foundries will be put into operation worldwide from 2017 to 2020. Nearly 30 new fabs will be put into operation in mainland China, with an investment of US$62 billion, accounting for global fab investment. 28% of the amount.
Global economic integration is gradually evolving into a monopoly at the top of the supply chain.
This Japan-Korea dispute has also made South Korea realize that the only way to get rid of Japan’s constraints is to “self-sufficiency”. The South Korean government announced today that it will spend $6.5 billion to boost the development of domestic high-tech industries, and plans to invest about 7.8 trillion won in the development of the technology industry in the next seven years.
And in today’s South Korea, it’s not hard to foresee China’s tomorrow.
This spring thunderstorm reminds us that if you don’t want to be a fish, you have to be a thief.