Chapter 148 - Convince Me
It had been two and a half years since Su Yuanshan was reborn. It had also been two and a half years since he set the goal of building a wafer fab. Now it was August 1993. Even if history unfolded as it should, half a year later, a certain "Mahjong organization" would officially announce its dissolution.
With the collapse of the northern empire, the Eight-Nation Control mechanism had lost most of its purpose, becoming an empty shell. However, even if it existed only in name, its presence still had real-world effects.
(Here we won't elaborate too much. The abolition of the Eight-Nation Control was mainly due to four reasons: 1) the end of the Cold War, 2) China's proactive efforts to join the WTO, 3) misuse of the system by "insiders," and 4) the fact that a separate ban on arms sales to China had already overlapped with the Eight-Nation Control's restrictions. In truth, even Wassenaar mainly focused on military aspects. Only the Coordinating Committee's China branch specifically restricted advanced civilian products.)
At the beginning, Su Yuanshan's strategy had been to cooperate with Japan, particularly with NEC. NEC had partnered with Shougang and reaped huge benefits. Moreover, their relations with China had always been good. Su Yuanshan had every reason to believe that once the agreement restrictions were lifted, NEC would help him build a wafer fab — just like in the previous life's 909 Project, where Hua Hong NEC was created.
Unfortunately, the Japanese were notoriously slow-moving. By the time Hua Hong NEC's 0.5-micron process line was completed, it was already nearly three generations behind the global cutting edge.
Of course, if Su Yuanshan had cooperated with NEC, he wouldn't have allowed them to delay so much. As a private enterprise, Yuanchip wouldn't get bogged down in endless feasibility studies. If things went well, the delay could be limited to just one generation.
However, as Xinghai expanded in Silicon Valley and Su Yuanshan's relationship with Texas Instruments (TI) deepened, his priorities shifted.
Especially seeing how fast TI could build factories — thanks largely to Zhang Ruijin — Su Yuanshan realized there was another, better possibility. If construction could start in 1994, it would coincide perfectly with Zhang's return from Singapore. By the time the plant was complete, Zhang would also be ready to leave TI, just in time to be recruited.
With Zhang Ruijin on board, Su Yuanshan would have nothing more to worry about in wafer manufacturing.
Su Yuanshan gently sipped his coffee, quietly waiting for Vincenti's reply.
Vincenti cleared his throat and smiled. "Su, this won't be easy."
"Are you referring to the partnership itself? Or the equipment?" Su Yuanshan asked calmly.
"The partnership is fine... equipment is tricky. But the real problem is process technology," Vincenti said bluntly. "You know very well — this stuff still can't be freely exported."
Su Yuanshan smiled lightly, "What's the maximum you could provide?"
"Six-inch wafers, 0.8-micron process — that's the best we can do."
"And if exports become unrestricted?" Su Yuanshan looked out the window, then back at Vincenti. "You must know that the Eight-Nation Control mechanism is bound to disappear."
"If exports become unrestricted..." Vincenti frowned. "Then yes, we could meet your requirements. But... we currently have no plans to build new fabs, especially not chip fabs."
Su Yuanshan sighed softly.
He remembered clearly that TI hadn't built new fabs in China during the 1990s. After 1995, they even slowed down their global fab construction, and during the semiconductor winter a few years later, they sold off many plants at heavy losses.
"Actually, it makes sense to build now. Domestic chip demand is enormous. Build one fab and you'll make money immediately."
Vincenti chuckled, "We're already making money without building new fabs."
Su Yuanshan grimaced.
Right now, China's biggest issue was that chips were almost entirely imported. Domestic production lines were running full tilt just to churn out basic components like diodes and transistors. Asking them to produce CPUs? Forget it. They didn't have the technology, nor the capacity.
Even if a top-tier company like Yuanchip designed brilliant chips, there was no one in the country who could manufacture them. Everything had to be sent abroad for fabrication.
So, as Vincenti said, why would TI rush to build a fab? Better to just sit back and collect orders.
He wasn't here to do charity.
"This is boring," Su Yuanshan muttered. "I'll go talk to the Japanese instead."
Vincenti was startled. "You're not even going to try to convince me?"
Su Yuanshan blinked, puzzled. "Convince you of what?"
"Convince me why building a fab in China is advantageous," Vincenti said, exasperated. "Right now, we already have our global layout complete. We know the Chinese market mainly demands basic components. Without a compelling reason, why would we bother building a fab there?"
Su Yuanshan froze, then smacked himself on the forehead.
He had forgotten that not everyone could foresee how fast China's development would be — even Intel would eventually build fabs there.
Moreover, as a "big" customer for TI, if Yuanchip built its own fab, it would mean TI would have to share future orders with them.
Understanding this, Su Yuanshan smiled brightly, "Given the trajectory of chip design in China, within the next three to five years, a large number of outstanding IC design companies will emerge. Would you agree?"
Vincenti nodded slowly. "Reluctantly, yes."
"Currently, relations between China, Japan, and Taiwan are all trending upward. You agree?"
"Yes."
"Then even just following the principle of proximity, these companies' orders will inevitably flow to nearby fabs. But if we work together to build the most advanced fab in China, we'll have a lock on all those orders." Su Yuanshan paused. "At the same time, Yuanchip needs a cutting-edge wafer fab to support our designs and tape-outs."
The implication was obvious: Yuanchip would build a fab one way or another. If TI didn't cooperate, Su Yuanshan would find someone else.
And since Xinghai had agreements with TI, their orders were guaranteed. But Yuanchip didn't — and if Su Yuanshan took his business elsewhere, TI would lose out badly.
Vincenti pondered for a long moment before nodding slowly. "But the export restrictions are still there."
"Here's my proposal," Su Yuanshan said. "Let's not talk about shareholding yet. Yuanchip will invest first to handle the preliminary groundwork for the fab. If, within a year, restrictions are lifted, we'll proceed immediately. What do you think?"
Vincenti stared at him in surprise. "You're gambling again?"
By "gambling," he meant betting that the Eight-Nation Control would be dismantled within a year.
Su Yuanshan shook his head with a smile. "Not gambling. Just reading the situation."
"If you agree, we'll sign a memorandum of understanding. If you don't... then I really will have to go talk to the Japanese."
Vincenti hesitated. "One more thing: what if restrictions aren't lifted in a year?"
"Then we pivot," Su Yuanshan said lightly. "We could always build a thousand-acre R&D center instead."
Vincenti stared at him for a long moment before saying seriously, "I'll need to discuss this with the other executives."
Thank you for the support, friends. If you want to read more chapters in advance, go to my Patreon.
Read 20 Chapters In Advance: patreon.com/Albino1