Technology invades the modern world

Chapter 394 What is professionalism? This is professionalism!

You were in a power struggle, trying to achieve a balance, not wanting to be devoured by either side, one wanting your money and the other wanting you as a person.

The only good news is that the two sides have a long history of enmity and are unlikely to cooperate, thus achieving a delicate balance.

Now, this good news has been ruined.

How could China and America cooperate on such a sensitive issue?

After thinking it over carefully, Chen Xiaoxian and Wu Jianzhong felt a chill run down their spines.

“That’s right, it’s exactly what you’re worried about – whether it’s a robbery or a robbery that results in murder,” Wu Jianzhong added.

Chen Xiaoxian asked, "If it's murder for money, what would you do?"

Wu Jianzhong shook his head: "If it's murder for money, what can we do? Of course, we can only surrender, surrender with our hands and feet raised."

Without America's support, we have no chance of resistance, but thankfully that's unlikely.

At most, it's about making money.

The only good news.

Regardless, the middle-aged technocrat did not believe that America would abandon them, and felt that this was just another unusual act by this unconventional president during Big T's term.

As the other party said regarding global customs clearance, Big T only cares about money.

The good news is that the two sides have gone from being unable to cooperate to now both wanting to make money.

With profits exceeding $150 billion, Wu Jianzhong wondered how they would divide them.

Chen Xiaoxian then asked, "So our lives are completely in the hands of the American people?"

Wu Jianzhong nodded seriously: "That's right, our lives are in the hands of the American people. It's a tragedy, but it's also our inescapable fate."

Rationally speaking, Wu Jianzhong is right, and this is also the perception of 99% of the locals.

But emotionally, Chen Xiaoxian felt it was simply unacceptable.

“Alright, don’t worry. They’re probably just after money. Money is easy to deal with. If they want money, give them money. If they want to short the market, let them short it. The profits they can reap from the Taiwan stock market will only decrease. There’s a limit to the profits they can reap. Why not spend money to buy peace of mind?” Wu Jianzhong continued.

Chen Xiaoxian looked at his once spirited classmate, who now resembled a gambler praying to a god for mercy from his opponent.

He couldn't help but let out a cold laugh.

"Buying peace with money?" His voice was soft, trying to shatter the other person's illusion, the most delusional one, or more accurately, the fragile hope built up by the entire bureaucratic system.

“Jianzhong, you and I have both worked on Wall Street. You should know very well that jackals have no limit to their appetite. They won’t turn back into sheep just because they’ve had a full meal. Besides, the Morgan family isn’t a jackal; they are the top predators on this planet.”

After Chen Xiaoxian finished speaking, he looked at Wu Jianzhong, who remained silent for a long time before drinking the sake in his cup in one gulp.

After a while, he seemed to have gathered his thoughts and spoke slowly in the calm tone characteristic of a technocrat, trying to take everything into consideration.

"Xiaoxian, I know, I know everyone has been bleeding these past four months. You're on the front lines, so you feel it most directly, but..."

Wu Jianzhong deliberately slowed down his speech, as if he were trying to persuade the other party, or perhaps he was trying to persuade himself: "You have to look at it from a macro perspective. Every economy has its resilience, and we are especially so."

He stretched out his fingers and began to analyze point by point: "When TAIEX fell below 20,000 points and dropped to 18,000, the price-to-earnings ratios of many high-quality stocks returned to a very attractive range. Our internal funds, the market support orders from the eight major banks, and even some astute retail investors and value investors have all started to enter the market to take over, which will form a de facto valuation bottom."

“Every downward attack by the short sellers requires a greater cost, while the potential profit margin is shrinking.”

You know what I mean: when the expected return from shorting a stock is lower than the risk-free return of investing in other markets, capital will automatically flow out.

They're sharks, not philanthropists. If there's no profit to be made, they'll leave.

Wu Jianzhong looked at Chen Xiaoxian with a confidence that existed only in theory: "So, yes, perhaps we are spending money to buy peace. But we are not buying their mercy. We are using our substantial foreign exchange reserves and the ammunition from the National Security Fund to fill the gap where they can profit. Once the gap is filled, the cost of attacking will outweigh the benefits, and this financial war will naturally end. At most, it will be about making money, not about taking lives."

This was a textbook-perfect argument, Chen Xiaoxian thought. If this were a classroom at National Taiwan University, I would applaud the other person's clear logic and perfect argument. But now I am on the front line of trading, and I have fought my way out of the blood and flesh mill. This theory seems so pale in the cruel world of finance.

The real world may be even more brutal than the financial world.

“Jianzhong,” Chen Xiaoxian began, his voice unusually calm, “your model is perfect, but it is wrong on one of the most fundamental assumptions.”

"What assumption?" Wu Jianzhong asked.

“You’re assuming their motive is simply to make money.” Chen Xiaoxian stared intently into the other person’s eyes: “You’re right. If sharks only come for money, they’ll leave once they smell there’s no meat left.”

But what if it wasn't sharks that came, but a group of marine biologists with scalpels? And what if their goal wasn't to eat us, but to capture this whale alive, drag it back to their lab, dismantle it, and make it into a specimen?

Wu Jianzhong's brows furrowed instantly.

"They're not driving down the stock price for the 10% or 20% profit from short selling!" Chen Xiaoxian's voice rose involuntarily. "That's how retail investors play! They are the top predators on Wall Street! They're willing to go to great lengths to drive down the price of a trillion-dollar company like TSMC to 80% or 70% of its value in order to seize control of the company from within, through its shareholder structure, at a lower cost!"

Just then, Chen Xiaoxian's cell phone issued the highest level of risk alert.

He quickly clicked on it, and the familiar headline from the Bloomberg terminal read like a verdict.

Chen Xiaoxian turned his phone screen towards Wu Jianzhong.

"Activist Investor 'Aethelred Capital'"

Wu Jianzhong was unfamiliar with the name: "Ethelred Capital?"

“‘Radical investors’,” Chen Xiaoxian explained, feeling the weight of each word as he spoke. “Their strategy is the same in every market around the world: buy shares at low prices, become major shareholders, then force the board of directors to conduct a strategic review, accelerate the establishment of overseas factories, divest non-core businesses, and replace management, until they have squeezed the company’s value dry and made their profits and left.”

Chen Xiaoxian looked at Wu Jianzhong's face, which had turned deathly pale, and gave his final conclusion.

"Jianzhong, your valuation bottom theory exists."

But what you didn't expect was that for them, that bottom line wasn't a signal for them to back down and leave, but rather a clarion call for them to launch an acquisition.

The Trojan horse has entered the city.

Wu Jianzhong leaned back in his chair and closed his eyes.

His defensive logic, based on rational markets and limited returns, was utterly shattered in the face of the cruel reality of murder for profit.

The bald man's voice continued on the television, like a ghost creeping into their ears:
"Think about it, is there really such a coincidence in the world?"

As soon as the other side puts pressure on you, America will precisely hand you a knife, and every knife will cut TSMC!

What did this lead to? It led global capital to begin to doubt the future of TSMC.

This move pushed TAIEX from over 20,000 points to over 19,000 points!

Okay, then let me ask you, Financial Supervisory Commission, don't you find this situation strange? Shouldn't you do something about it? For example, restrict malicious short selling?
Well, here comes the best part! Just as we were internally discussing whether to take stabilization measures, America's Special Advisor for East Asian Affairs, John Adams Morgan, happened to visit us with personnel from the Treasury and Commerce Departments! And then he told us, "You guys are a model of the free market, you absolutely mustn't engage in non-market intervention, otherwise it will affect investor confidence!"

Isn't this timing too coincidental?

Who is John Adams Morgan? I don't need to introduce Morgan much; I believe our viewers are already familiar with him.

Let me introduce the Adams family to avoid confusion. This is the true core family of the American Empire. Their ancestor was a founding father of the American Empire, the second president, and his son became the sixth president. The Adams family are descendants of a marriage alliance with the Morgan family. They're practically begging us to give them some face. Would we dare refuse? With just a little "face," they siphoned off at least ten billion US dollars from the Taiwanese stock market. That's the power of their influence.

Meanwhile, I specifically asked my journalist friend in America about his son, John Adams Morgan's son is John Morgan Jr., the one who's been getting along famously with Professor Lin Ran from China lately and is being hailed as the next Elon Musk, the space enthusiast.

Why was he able to reach a satisfactory conclusion with China? Because his son already had close business ties and core interests with China.

I'm telling you, I don't know if they've discussed it privately or if there's a script.

But if you put these things together: the other side is responsible for creating the geopolitical wave; Wall Street is responsible for using this wave to launch financial attacks to make money; and then the White House steps in to tie your hands and feet, preventing you from saving your life!
These three characters work together flawlessly!

So do you understand now? What we are facing now is not simply an economic problem.

You are on the chessboard of great power rivalry, with Beijing and Washington on either side, and they are likely in competition with each other on many issues.

However, they seem to have found a common ground in how to handle our problem.

Washington wants TSMC's supply chain and wants to de-risk it; China wants to undermine our economic foundation.

Wait, these two goals are actually not in conflict at this point in time!
So to put it bluntly, they're treating you like prey and hunting you down!

One was responsible for driving them away, and the other was responsible for firing the gun.

We were just foolishly thinking that the hunter who fired the shot was your bodyguard!
If you still don't understand this reality and keep fantasizing, still think America will support you unconditionally, let me tell you, when your stock market is down to 10,000 points and TSMC's factories have all moved to Arizona, you'll be left with nothing but tears.

It's that simple.

Okay, now let's move on to the next topic. As mentioned earlier, Professor Lin Ran's Apollo Technology will be launching its first lunar electromagnetic orbiter in August, two months from now. Let's discuss the significance of this event.

“Morgan, I must say, your methods are indeed very efficient,” Lin Ran said. “Ethelred Capital is like a catfish, stirring up TSMC’s board of directors. Shouldn’t the next step be to discuss the specific timetable for the acquisition and transfer?”

As an observer, Lin Ran felt that the Americans' actions were like a master butcher carving up an ox, a true art form.

Every beat was perfectly timed.

From the beginning, through research reports and rating reports, to Morgan Stanley's personal visit to Taipei, it was a stroke of genius that gave Yanjing the perfect opportunity to criticize.

Old John Morgan smiled, not looking at Lin Ran, but at the night view outside the window.

“Professor, don’t rush.” He slowly turned around. “The most exciting part of the hunt isn’t the final shot, but enjoying the chase, isn’t it?”

"We focus more on the results," Lin Ran said.

He'd love to see TSMC go under right now.

In any case, TSMC will never fall into the hands of China.

“Of course, so are we.” John Morgan walked to the water dispenser, poured himself a glass of water, and became quite familiar with coming to Lin Ran’s office.

Perhaps because it was the 60s, Lin Ran was very tolerant of this old acquaintance.

"But a direct acquisition? Professor, you're oversimplifying things. Even with our 'help' in the first quarter causing TSMC's market value to evaporate by 20%, it's still a behemoth exceeding four hundred billion US dollars."

Swallow it in one gulp? You'll choke to death.

Moreover, the official funds of 4V collectively hold more than 10% of the shares. Any public takeover offer will be met with a fierce battle from them, using all available administrative power on the grounds of security threats.

"Then what do you mean?"

Morgan's eyes gleamed with an almost cruel excitement, a reaction born from the stress of finally finding something to do after being a spoiled brat for so long.

"So, for the next two years, our focus will not be on 'acquisition,' but on 'dismantling' and 'draining.' It's a much more delicate business."

He held out two fingers.

"The first problem is the drain on technology."

We now have a new tool: Essellsted Capital.

They are the disruptive force on the board of directors, and also the time bomb we've placed in the heart of TSMC.

Through them, in the name of maximizing shareholder value and ensuring global supply chain security, we will continuously propose at the board meeting that TSMC engage in deeper technological cooperation, capacity backup licensing, and engineer exchange programs with Samsung of South Korea and Rapidus of Japan.

"Every time news breaks that TSMC licenses some of its 2nm yield control technology to Rapidus, or that Samsung obtains a license for some of TSMC's advanced packaging technology, guess what will happen?" Morgan looked at Lin Ran.

“TSMC’s stock price will plummet due to its uniqueness and irreplaceability,” Lin Ran said.

“Absolutely right!” Morgan nodded. “Then, we shorted.”

What will their government-backed funds do when the stock price hits rock bottom? They'll rush into the market like heroes, desperately trying to prop up the price, even releasing positive news about the company's sound operations, causing the stock price to rebound. And then what?

“You’ll short it again from that rebound high.” Lin Ran didn’t answer, Morgan asked and answered himself.

Morgan laughed heartily: "It's like a patient, and we're drawing his blood while giving him a little glucose to make sure he doesn't die too quickly."

This is how we can repeatedly extract capital. Every piece of bad news about a technology shift presents an opportunity for us to short; every time the other side intervenes to rescue the market, it becomes an excellent entry point for our next shorting attempt.

We will come and go, reaping their wealth again and again.

"How long will this process take?" Lin Ran asked.

"The President's term will last until January 2029."

Professor, we have a full three years to execute this plan of technological hollowing out and wealth harvesting.

Why the rush? Their foreign exchange reserves are substantial, enough for us to play around with for a long time.

He put down the glass and gave his final summary.

"By 2027 or 2028, when we have already backed up and copied TSMC's most advanced technologies and talents, we will have achieved a high degree of technological sophistication and talent.

When Samsung and Rapidus's high-end production capacity is no different from itss, when its halo of prestige has been completely stripped away by repeated technological collaborations, and when its stock price has been repeatedly exploited by us, then it will be a piece of meat that we can easily devour.

We will join forces with top private equity firms like Blackstone and Carlyle, and may also include your fund, to form an acquisition consortium that it cannot refuse.

We will launch a public takeover offer with a 30% premium.

For the minority shareholders who have been tormented by us for three years, this is an irresistible solution.

Meanwhile, the opposing authorities, by then, will have already exhausted their foreign exchange reserves and government funds through repeated market interventions. What will they have left to resist?

He turned his head, his eyes bright and piercing, staring directly at Lin Ran, not at all like someone in their eighties.

"That was the final blow, Professor."

Clean, legal, and even considered by Wall Street to be a brilliant, textbook example of value investing.

(End of this chapter)