I Am the Third-Generation Heir of a Conglomerate - Chapter 499



Only Noblemtl

499. The saboteur (4)

A week has passed since I returned to Korea.

During that short time, my grandfather perfectly solved the problem of Vietnam’s mining regulations.

A vice president was so surprised by the tremendous momentum that he came to see me.

“Not only the Dong Pao mine, but all seven rare earth mines under development in Vietnam have had their regulations relaxed. To be precise, they have announced relaxation measures.”

“The level of deregulation will vary depending on who wins this election.”

In fact, there were no variables in the election in Vietnam.

Because the Vietnamese Communist Party held 460 of the 480 seats in the National Assembly.

So, if only he had the achievements of political funding support and foreign currency attraction, Prime Minister Phuc could have risen to a higher position than he is now.

“Rare earth production will increase significantly.”

“We are currently producing only about 2,000 tons. This is about double the amount produced last year. However, thanks to deregulation, production is expected to increase by more than tenfold.”

“If we multiply by 10, we can produce 20,000 tons.”

“It is still difficult to compare the production volume alone, as China produces 120,000 tons annually, but even if an additional 20,000 tons of rare earths are produced, it will be enough to thwart China’s rare earth export ban.”

Annual production of rare earth elements was only about 170,000 tons.

And China was producing 120,000 tonnes, or 70 percent of total production.

But if an additional 20,000 tons are produced, China’s share of production will drop to 63 percent.

Of course, one could say that there isn’t much difference between 70% and 63%.

However, Taewoo Group is not only developing rare earth mines in Vietnam.

“What’s happening with rare earth mines in Brazil, India and Australia?”

“In the case of Brazil and India, large-scale mining is possible from the end of this year or the first half of next year at the latest. However, in the case of Australia, it is difficult to increase production due to environmental regulations.”

The world’s second largest producer of rare earth elements was Australia.

It was surprising that Australia, a country that cares about the environment, was the second largest producer of rare earth elements.

This also meant that rare earth mining was not being done properly in other countries.

In terms of reserves alone, Australia ranked only 6th, following China, Brazil, Vietnam, Russia, and India.

“Australia’s rare earth reserves are not that large, so we can gradually increase them.”

“If Taewoo Group can mine rare earths on a large scale in Vietnam and Brazil, which are tied for second place in rare earth reserves, it can capture 25% of rare earth production.”

“What’s more important is that it can reduce China’s rare earth production by 50%. Furthermore, if Taewoo Group monopolizes rare earths from Mongolia, it could deal an even bigger blow.”

Mongolia was the country with 16% of the world’s rare earth reserves.

However, since rare earth elements can only be exported through China, they can be seen as resources dependent on China.

We destroyed such an unreasonable structure in advance.

Through Mongolian resource export contracts with China and Russia, Taewoo Group was able to monopolize Mongolia’s rare earth minerals.

“The Mongolian rare earth mine is also expected to be completed soon. Mass production will be possible in earnest by the middle of next year.”

“If we start mining rare earth elements in Mongolia, Taewoo Group will produce more than 30% of rare earth elements.”

“The problem is price competitiveness. Compared to China, we are still behind in price competitiveness.”

“It doesn’t matter if we lose in terms of price competitiveness. The number of companies trying to break away from their dependence on Chinese rare earths will continue to increase. And labor costs will also solve the problem of price competitiveness.”

When running a business, many variables inevitably arise.

That is why there were cases where a stable supply was more important than cheap materials.

Currently, China is losing stability and trust due to the trade dispute with the United States.

Moreover, since China’s labor costs continue to rise, price competitiveness was not a major obstacle.

“It is true that labor costs in China are rising rapidly. In Vietnam, labor costs are less than half that in China.”

“So we need to move our production base in China little by little.”

“The problem is that the moment we move our factories to China, we may have to give up China’s 1.3 billion consumer market.”

“You can start by moving home appliances that don’t sell well in China one by one.”

China was a country with many true patriots.

The Chinese preferred Chinese products, from home appliances to cell phones.

Of course, this is partly because the prices are relatively cheap, but there is also a preference for Chinese products throughout China.

“Except for products that require high technology that Chinese home appliance companies cannot produce, sales are decreasing significantly every year. The decline is too steep to be attributed to the THAAD sanctions.”

“Since it is a country where patents do not apply, the technology gap can be narrowed quickly. Of course, this is only possible in the domestic market.”

China’s patent piracy was unstoppable.

So it was important to prevent Chinese products from being sold only in the Chinese domestic market.

We had to prepare in advance to prevent Chinese products that infringed our patents from entering the U.S. and European markets.

“We continue to register patents in the U.S. and European markets, and file hundreds of lawsuits against Chinese companies for patent infringement every year.”

“I can somewhat understand why the United States is using intellectual property rights as an excuse to start a trade dispute.”

“I’m a little jealous. It’s hard for Taewoo Group to respond as strongly as the United States.”

Taewoo Group was still exporting many of its products to China.

So, it was not possible to take strong measures like the United States, and not only Taewoo Group but also South Korea could not follow the United States’ actions.

“So, we have to keep building up our strength. This is an opportunity to get deep into the Chinese financial market, so let’s try to squeeze out even a little more money.”

“It has become possible to enter not only the financial market but also the real estate market.”

“Are you planning to attack China’s real estate bubble?”

“Didn’t you say before that there was a bubble in the Chinese real estate market? That’s why we are targeting the Chinese real estate market in a way similar to the Lehman Brothers crisis in the United States.”

China’s high economic growth was driven in part by the real estate market.

In every city in China you went, there was massive civil engineering work going on, evidence of a bubble phenomenon where supply exceeded demand.

“The Chinese real estate market is already a lit bomb. They will have a lot of fun.”

“The stock price of Hengdae Group, China’s largest construction company, fluctuates by more than 10% every month. If you repeat short selling and buying, you can achieve large returns every month.”

“Just throw it away in one go after having so much fun. The Chinese government will also sense the real estate bubble and come up with measures such as lending regulations.”

“The moment the lending regulations are announced, we will dump all our short positions.”

Finance and real estate.

It was the industry that could make the most money.

Financial Tower had more experience than anyone else in these two fields.

“Vice Chairman Han, take the lead and maximize your profits. I have to go now because I have a schedule to visit Taewoo Semiconductor.”

“Let’s achieve the highest return ever!”

I stood up from my seat, trusting Vice Chairman Han.

While one vice president took charge of finances, I had to take more care of other affiliates.

***

Arrived at Taewoo Semiconductor.

Today’s schedule was arranged at the request of President Lisa, and Center Director Cheon Min-jeong arrived and sat down.

“Is this serious enough to warrant calling the head of the AI ​​Center?”

“I have something to discuss with you regarding the development of next-generation memory semiconductors developed by Taewoo Semiconductor.”

It was President Lisa who had a more serious expression than usual.

I sat up straight because she always seemed so confident.

“Please explain in more detail.”

“We have succeeded in developing the next-generation semiconductor HBM through collaboration with GPU companies centered around Taewoo Semiconductor.”

Taewoo Semiconductor’s masterpiece was HBM.

It was a project that required a huge investment and was pushed forward by CEO Lisa.

HBM was a method that had performance that surpassed the GDDR method of the existing high-speed memory market.

I didn’t know any more than that.

I simply knew that it was a high-speed memory method with very good performance.

“Is there anything wrong with the HBM method?”

“In theory, it should outperform existing high-speed memory, but in actual application, there is no significant difference. And the yield is also much lower than the basic method.”

“So you’re saying that there is no performance or yield?”

“In addition, the price is more than three times more expensive than the existing method. That is why Samjin Electronics stopped developing the HBM method.”

Samjin Electronics, the biggest competitor in the semiconductor market.

But if even Samjin Electronics halted the project, it was clear that there was a major problem with the HBM method.

“If Samjin Electronics is reacting like this, there is definitely a problem.”

“In the case of the existing method, the production cost is low and mass production is possible. However, the HBM method is expensive and mass production is difficult. Of course, the performance is superior to the existing method, but it is not worth buying it for three times more money.”

Any product has value only if it sells.

No matter how excellent the performance is, if there is no place to apply it, it is nothing more than a shiny apricot.

“It is time for Taewoo Semiconductor to decide whether to stop or continue HBM development.”

“If we continue to develop, we can increase yield and production volume compared to now, and even improve performance. However, it is uncertain whether demand will be created even if we create a high-performance product.”

The GPU market was where high-performance memory semiconductors were used.

The performance of the graphics card tends to increase as higher performance memory semiconductors are used.

“What do Center Director Cheon Min-jeong think?”

“Can I tell you without considering economic feasibility at all? I don’t know much about that field.”

“Just give me your opinion as the head of the AI ​​Center.”

“The current memory semiconductors used in AI, autonomous driving, etc. clearly have limitations in their performance. Only with GPUs that use high-bandwidth memory semiconductors can we create better AI.”

It was Center Director Cheon Min-jeong who thought the same as me.

It didn’t matter if it didn’t make money right away, didn’t produce yields, and didn’t have any distinct strengths in terms of performance.

The current method has clear limitations.

It was clear that in the future, an era would come in which performance that surpassed the limitations of existing memory semiconductors would be required.

To be exact, Taewoo Group has already finished preparing to create such an era.

“The answer is out there. Don’t worry about the investment and just push ahead.”

“To develop it properly, a development cost of at least 3 trillion won is required.”

“That amount of money is enough. And HBM memory semiconductors will be used mainly in GPUs, right? Then, collaborate with Nvidia. You can divert some of the $40 billion investment to the development of HBM memory semiconductors.”

A $40 billion investment to acquire a stake in NVIDIA.

There would be no problem at all if $10 billion of that was spent on HBM development costs and the development of a dedicated HBM factory.

Anyway, HBM memory will be used by NVIDIA.

“If we collaborate with NVIDIA, we can produce high-performance HBM memory in a shorter period of time than we can now.”

“Don’t spend 3 trillion won on development costs, spend more than 10 trillion won. And build a dedicated factory quickly. The HBM memory market should be monopolized by Taewoo Semiconductor.”

At the moment, the market for HBM memory is non-existent.

But the moment the AI ​​boom took hold, it was clear that a huge market would form in an instant.

If it was a semiconductor-related business, Taewoo Group could expand its influence only by increasing its stake.