Technology invades the modern world

Chapter 396 Nobody Has a Choice

"If there is a 10% profit, capital will be used everywhere; with a 20% profit, capital will become active; with a 50% profit, capital will take risks; for a 100% profit, capital will dare to trample on all human laws; with a profit of more than 300%, capital will dare to commit any crime, even risking the gallows."

This quote is not from Marx, but rather from Thomas Joseph Downing's "Trade Unions and Strikes: Their Ideas and Intentions," which he quoted in "Capital."

Katsunobu Kato knew that this series of harvests would only have been so successful with the cooperation of China.

China's cooperation means increased costs, and it means that 4V is not an option.

Because both sides you can side with are holding sickles to you, you want to lean slightly towards Yanjing to take the opportunity to prove to Washington that you are valuable. You'd better be polite to me. If you are not polite to me, I will really go back to Yanjing. You want to take the opportunity to make Washington's harvest lighter.

The reality is that while Washington was reaping the benefits, Beijing was simultaneously using a powerful force to push Beijing towards Washington, as if afraid that Washington wasn't reaping enough benefits.

To get Beijing to make such a drastic turn and cooperate so readily, Katsunobu Kato finally understood: it turns out that the ones footing the bill are the Japanese.

Washington reaps the benefits, Tokyo pays the price.

But is it really worth paying such a high price?

Katsunobu Kato suspected that John Morgan Sr. was forging an imperial edict.

But he dared not refuse, and after thinking it over, he felt it was impossible. The core members of the Morgan family would not be so willing to represent Yanjing, even for 200% of the profits. But Thomas Joseph Downing's words echoed in his mind.

What if?
Katsunobu Kato felt deeply uneasy after John Morgan Sr. left.

Those seemingly useless technologies, such as mature process equipment, some advanced packaging, and non-core semiconductor materials, may not be worth mentioning when taken individually, but if an industrial Cthulhu like China can integrate them all, it will be a force to be reckoned with.

“Too much,” Kato said, his brow furrowed. “This is not in America’s long-term interest. Unless they have something deeper in mind.”

After returning home, he took out his iPhone and dialed the number of Akazawa Ryosuke, the negotiator who was in America.

“Ryosuke,” Katsunobu Kato said quietly, “I just met with Mr. Morgan, and he told me that Washington will allow us to export a wide range of semiconductor technologies to China, including some compound semiconductor materials.”

Akazawa Ryo sounded somewhat surprised on the other end of the phone: "Minister, this sounds incredibly generous. Would the Americans really do this?"

“I have the same question as you. I need you to confirm immediately whether this is truly the official position of the White House. Go see Bessant, or anyone else who can give you a definite answer. Be careful not to arouse their suspicion.”

Akazawa Ryoma immediately understood the seriousness of the situation: "Understood, Minister. I will make arrangements immediately."

After hanging up the phone, Akazawa Ryosuke immediately contacted his acquaintances in Washington and eventually arranged a private meeting with Bessenter.

The meeting was held in an inconspicuous conference room.

“Mr. Bessant, I’ve come to confirm a few things,” Akazawa said bluntly. “We’ve heard that the U.S. will ease restrictions on Japan’s export of semiconductor technology to China, including some key materials and equipment. Is that true?”

A fleeting hint of hesitation crossed Bessent's face, but he quickly regained his composure.

He was about to speak when the door was suddenly pushed open.

"Don't listen to him!" A familiar, loud voice broke the silence.

The person who walked in was Big T.

He walked to the conference table, wearing his signature dark blue suit and red tie.

Both Bessant and Akazawa Ryosuke stood up in shock.

"Mr. President?" Bessant asked in surprise.

“Liangzheng, I’m here to tell you myself.” Big T’s voice was full of power, as if the entire room was vibrating with him. “You’re right, we will indeed allow Japan to sell these technologies to China. All of them, everything I’m saying.”

Akazawa Ryo was feeling a wave of dizziness.

This was an experience he had never had before in his career.

President America personally attended an informal, secret meeting, solely to confirm a piece of intelligence.

Again? Huh, why did I say "again"?
"Why?" Akazawa Ryo blurted out, unable to contain his question.

He looked at Big T, the man sitting at the pinnacle of world power, who had so suddenly appeared in this unassuming room.

Bessant was pale and clearly knew nothing about it.

Ignoring Bessant's shock, Big T walked straight up to Akazawa with a familiar, smug smile on his face.

"I'll tell you the truth, and it'll come straight from my mouth. That's the best and most credible way!" Big T's voice was loud and clear, filled with unquestionable confidence, as if he were giving a speech at a grand gathering.

Big T laughed heartily, patted Akazawa on the shoulder with such force that Akazawa almost lost his balance: "Because this is a great deal, Liangzheng! We are making America great! This harvest of 4V, those smart people on Wall Street, especially old Morgan, they did a fantastic job."

I told him, 'John, take all their money!'

He did not disappoint me.

They're emptying out the stock and bond markets in 4V, what can we get? We can get TSMC! The world's best semiconductor company, and now they're moving their factories here, creating tens of thousands of jobs! That's the real victory!

Big T's eyes turned sly. He lowered his voice and leaned closer to Akazawa: "You know what? That old guy John, he knows I like to win, and he knows I like big deals. He made a killing this time, and you guys made a killing too. I like this kind of business. Everyone wins, especially America!"

Akazawa Ryosuke knew the other party's subtext: the other family must have made a fortune in this round of harvesting.

Big T bluntly defined America's actions as reaping, completely disregarding the impact such a description would have on his allies.

America can so easily plunder allies? From the economy to industry.

Big T didn't care at all what his allies would think. He knew very well that other countries were useless and wouldn't dare to resist even if America went further.

Because after the collapse of the Soviet Union, America became their only option, both in the past and present, and Big T believes it will continue to be so in the future.

Since it's the only option, then give everything you have for America's greatness!

"So, we have to give China a little something to keep them cooperating. They've always wanted the technology, right? Okay, we'll give it to them."

But not the best! We give them those old, unimportant, and useless technologies.

I told my team to give them things they considered important, but which actually posed no threat to us.

Big T paused, his tone becoming more serious. "We made them believe they got what they wanted, that they would spend a lot of money, and that they would happily take these technologies back, thinking they had won. But we know we gave them an illusion they could never catch up to."

He gestured with his hand to indicate a large circle: "We put them inside and let them play the game under our rules."

We treat 4V as a chess piece, pushing it out to draw all the firepower while we reap the benefits from behind.

This is a brilliant strategy; no one could have come up with it except me!

He patted Akazawa on the shoulder one last time, as if he had completed the most important deal.

“Tell Minister Kato not to doubt. We know what we are doing.”

This is a 100% perfect deal.

Neon Japan can be our partner and earn some commission, but we, we will always be number one!

After saying that, Big T left the room without looking back, leaving behind a shocked Akazawa Ryo and an expressionless Bessant.

Akazawa finally understood that this so-called technology transfer was neither a gesture of goodwill towards China, but rather another carefully planned transaction and game orchestrated by Big T for the dual interests of himself and the country.

“Mr. Bessant,” Akazawa Ryo said softly.

Bessant shook his head: "We have no way to refuse the President's orders, so we do as he says."

President T was the second most powerful president in American history after Franklin D. Roosevelt.

Bessant had no choice but to comply. After meeting with Big T, negotiator Akazawa Ryosuke's feelings were incredibly complex.

He relayed the news back to Tokyo, and the two sides subsequently signed a series of technology transfer agreements.

4V has a huge trade surplus with the mainland, the largest source of which is electronic products.

They export not just single electronic products, but complex supply chains dominated by electronic components.

This includes chips, PCBs, passive components, connectors, and various semiconductor materials.

These upstream and downstream products in the supply chain are like blood, flowing to the massive electronics industry in the inland areas, supporting a huge manufacturing system ranging from smartphones and computers to home appliances and automotive electronics.

This high degree of economic dependence makes its electronic component companies extremely sensitive to demand in the mainland market.

When orders increase for factories in mainland China, these electronic component companies can reap substantial profits; conversely, if there are any disturbances in the mainland market, these companies will be the first to be affected, facing the dilemma of reduced orders and inventory backlog.

John Morgan Sr. and his Wall Street elites were intimately familiar with this economic structure.

They know that directly attacking TSMC's stock price now is costly, and the market has become somewhat desensitized to repeated attacks.

However, attacking component manufacturers that are highly dependent on the mainland market is a strategy that is extremely low-cost and highly effective.

After the technology deal was finalized, Morgan's funds used media and social media platforms to publicize how Japan's technology exports to China would "enhance China's self-sufficiency in electronic components."

"Now that China can produce these things on its own, what advantages do we still have?"

"Chinese factories will prioritize using their own components. What will happen to our companies?"

These concerns spread like a plague among electronic component companies, primarily in the Hsinchu Science Park.

Those listed companies that rely on the mainland market, such as IC design companies, PCB manufacturers, and passive component giants, have become targets of Morgan's short selling.

Morgan's funds shorted these companies' stocks at extremely low costs, waiting for panic to build up.

Within just a few weeks, the stock prices of these companies plummeted. Some were even shorted to the brink of delisting, losing billions of dollars in market value.

This precise financial operation not only made Morgan a fortune, but also dealt a heavy blow to the real economy.

In the past, businesses in Hsinchu believed that no matter what, Yen Ching would at least give them a way to make a living and survive. Now, that confidence is gone.

Panic spread like wildfire, with investors selling off their assets in Taiwan, resulting in a massive capital outflow.

Faced with the dual pressures of plummeting stock prices and reduced orders, many component companies were forced to lay off employees, triggering social unrest.

After losing economic support, some promising small and medium-sized technology companies have fallen into difficulties, and top talents have begun to flow to more secure companies, with the mainland being the most frequent destination.

This second round of exploitation has dealt a more devastating blow to the 4V semiconductor industry chain than the first.

Because it shook the foundation of the entire industrial ecosystem, plunging previously healthy upstream and downstream enterprises into difficulties.

No matter how strong TSMC is, it still needs upstream and downstream capillary companies to maintain a healthy ecosystem.

Now, under Morgan's management, this healthy ecosystem is beginning to fall ill, and it's not a mild case that can be easily resolved.

John Morgan Sr., however, was a master of the art of harvesting.

However, the atmosphere inside the semiconductor industrial park in China was unusually calm, even somewhat deserted.

These devices, provided by Japanese companies, appear brand new on the surface, but to Chinese engineers who are well-informed, they are more like a testament to the glorious history of Japanese semiconductors.

Zhao Ming, a veteran engineer who has worked in the semiconductor industry for over 20 years, stands in front of an etching machine manufactured by a well-known Japanese company.

His sharp eyes saw through the true nature of the equipment at a glance.

“These devices are all models from more than ten years ago,” he said to Jia Zhen, a Chinese technical bureaucrat who came to investigate and summarize the situation, his voice carrying an indescribable complex emotion.

"The lithography machine is an old model, and so is the etching machine."

They are indeed more advanced than the domestically produced equipment we use now, but in the most cutting-edge fields, they are not even in the same league as TSMC's equipment.

Jia Zhen's face betrayed her disappointment.

He had high hopes, believing that this cooperation would be a technological leap for China, but reality turned out to be rather harsh.

Seeing Jia Zhen's expression, Zhao Ming quickly explained, "No, no, no, Section Chief Jia, I didn't mean these devices are worthless." To us, these technologies are far more complex than they appear on the surface.

Nikon mastered lithography technology below the 28nm node in 2008, which is 17 years ago. I just feel that we still have a long way to go in the semiconductor field compared to Nikon.

It can help us save so much time.

"Comrade Zhao Ming, do you mean that these neon devices from more than ten years ago are still treasures to us?" Jia Zhen asked.

Zhao Ming replied without hesitation: "Yes, Section Chief Jia."

Our domestically produced equipment has now caught up with their technology at that time in terms of specifications.

However, what we lack is stability and process technology.

He paused for a moment: "Most importantly, it helps us gain know-how."

“Know-how,” another technocrat repeated.

Zhao Ming continued to explain: "Yes, it's a technical trick."

Previously, although we were able to manufacture equipment for processes such as photolithography and etching, we often encountered problems such as low yield and unstable equipment.

Because we don't know why their equipment is so stable, or why their process can achieve a yield rate of over 90%.

These neon-lit devices, along with the technical data and even production materials they transferred in bulk, constitute a living textbook.

Japanese semiconductor companies were also starving. After Washington loosened restrictions, they were willing to sell anything and rushed to sell their technology to China.

Fearing that China would not want it, they even sold off production materials that had been stored on floppy disks and in paper form, including debugging details and production optimization data.

Lin Ran's tough stance and John Morgan's cooperation made it impossible for the Japanese to refuse.

John Morgan's cooperation only fueled Katsunobu Kato's suspicions: was he still working for Yenching? Otherwise, why would a White House official be working so hard?
"We can reverse engineer their equipment, disassemble it, and study every part and every design."

We can analyze their process flow to understand how they perfect each step.

This is not just technology, but also the philosophy of industry.

The experience they accumulated in the past is now before us.

Instead of groping in the dark, we can build upon their work and explore further.

America thought they were giving us useless scraps, unaware that these bones contained the very genes that could help us rebuild the semiconductor industry ecosystem.

Shen Hai and Lin Ran were also discussing this matter with Song Nanping:
"The most important thing is not technology, but time."

Everything we do is to save time.

Time is everything. I believe that Chinese technicians will be able to overcome this challenge sooner or later, but we have saved at least five years without firing a single shot.

That's the most important thing.

(End of this chapter)