The Cycle of Boom and Bust
Yoo Jae-won stood under the bright spotlight after signing the joint investment agreement. "Mirae Electronics already possessed sufficient semiconductor development capabilities. The only reason it remained in its current position was a lack of investment to turn that technology into tangible results. With ID Investment's funding to supplement Mirae Electronics' insufficient facilities, the company's latent potential will explode, and I expect this will also maximize returns for investors like myself."
After completing the signing ceremony, Yoo Jae-won began explaining the background of the investment in Mirae Electronics to the assembled reporters. When planning the event schedule, Chairman Jeon Myeong-heon had grumbled about the unnecessary hassle. In his view, journalists fell squarely into the category of servants who would naturally write favorable articles without extra prompting.
"Those bastards spend hundreds of millions a month on drinks and bribes. And don't even get me started on the advertising pages. If they print anything I don't like, I just cut them off. They'll learn to behave." His firm philosophy on the press was clear. Even Yoo Jae-won, with his 21st-century sensibilities, could not refute the chairman's words. The standards of Korean journalism, barring a tiny handful of exceptions, had not changed much between now and the 21st century.
He had witnessed countless times how generous advertising and entertainment yielded positive coverage, while refusal brought articles that practically called for a company's ruin. The memory of the vicious smears he endured from reporters while being stripped of his AI algorithms still made his teeth grind. He had carved their names into his bones. If they showed the same behavior this time, he would bring down the hammer. Yet he had no desire to condemn the entire media industry because of a few so-called "giregi."
Above all, he did not fully agree with Chairman Jeon Myeong-heon's worldview on the press. The tone of newspapers and broadcasts was not shaped solely by the chaebols; the efforts of figures like Jeon Myeong-heon and Choi Hyun-hee to manage the media could not be ignored. Furthermore, many foreign correspondents were present at the event. Whether drawn by Yoo Jae-won's reputation or the sheer scale of the investment, reporters from prestigious American and European outlets had come. Painting them all with the same brush would be an insult to genuine journalists who upheld proper standards.
"The semiconductor market recorded negative 20 percent growth in 1990. Although only three months have passed in 1991, the economy does not look promising this year either. To most observers, large-scale capacity expansion under these conditions appears reckless. What is your response?"
The New York Times reporter posed a sharp question, a clear contrast to the domestic journalists who were merely scribbling notes. The reporter's words were grounded in precise data. The semiconductor market had indeed contracted by nearly 20 percent in 1990. The DRAM market, valued at $8.7 billion in 1989, had plummeted to $6.9 billion the following year. Although demand for high-performance PCs had risen and many machines now featured 4-megabyte memory, the numbers told a different story.
The reason was straightforward. Manufacturers such as Ilseong, Mirae, and Micron had continued mass production despite falling prices, absorbing losses. While output volume increased as chip prices dropped sharply, the overall market size shrank. It was a negative trend for the companies involved. On the other hand, the cost of assembling computers had fallen significantly due to price competition, and the number of high-capacity memory users had grown.
Yoo Jae-won glanced at Chairman Jeon Myeong-heon before reaching for the microphone. The chairman gestured for him to proceed. The Q&A session had never been something he wanted in the first place, so the gesture clearly meant Yoo Jae-won should handle it himself.
"The semiconductor market follows a repeating cycle of booms and busts. This cycle is tied to PC replacement patterns. 1990 marked the tail end of the period when users of MSX or XT-class computers upgraded to 386 machines. The same held true for mainframes and other large-scale systems. A new boom period will arrive soon. When applications become more sophisticated and 386 users feel the need to upgrade, or when existing mainframes can no longer meet customer demand, another major replacement cycle will begin. This mechanism repeats itself, producing alternating periods of prosperity and recession."
The foreign correspondents nodded as they took notes. Yoo Jae-won was the first to explicitly articulate the boom-and-bust cycle in the semiconductor market, and he had backed it with concrete, understandable evidence.
"When the boom arrives, production must increase to meet surging demand. However, semiconductors cannot be ramped up overnight. Factories must be built in advance. That is why I judged this moment to be the right time and proceeded with the investment."
Satisfied with the answer, the reporter passed the next question to a colleague.
"Have you decided where the second factory will be located?"
It was a simple question, yet also a sensitive one. A large corporation's manufacturing plant represented highly desirable jobs. Although Chairman Jeon Myeong-heon had led the charge in suppressing unions and was currently dismantling them through various means, large companies still paid significantly better wages than smaller firms. The gap currently stood at 10 to 20 percent, but by the 21st century it would widen dramatically. Even within the same factory and on the same production line, the wage difference between regular employees and dispatched contract workers could reach 50 percent.
"It will be in Daejeon."
Chairman Jeon Myeong-heon had originally favored Suwon. Ilseong already operated a semiconductor plant there, and he had wanted to build a facility three times larger right next door to rub Choi Hyun-hee's nose in it. Yoo Jae-won, however, had recommended Daejeon, and the chairman had been persuaded.
Daejeon was Korea's premier science and technology city. It was home to the Korea Advanced Institute of Science and Technology and the Daedeok Research Complex. In addition, numerous national research institutes, including the Electronics and Telecommunications Research Institute, were concentrated there. Collaboration with KAIST on memory semiconductor research would be possible, and joint development of convergence technologies with various institutes could be pursued. Most decisively, land prices were lower than in Suwon.
"The second semiconductor plant Mirae Electronics will build in Daejeon will be the world's largest facility equipped with cutting-edge equipment. It will also be constructed as an eco-friendly factory, ensuring that the health of the workers and the surrounding environment suffer no harm whatsoever."
The emphasis on environmental considerations had caused some friction with Chairman Jeon Myeong-heon. The man was a living embodiment of the development-first mindset of the 1970s and 1980s. He had built a massive conglomerate with his bare hands and swept aside anything that stood in his way. When Mirae Construction built the Soyang River Dam, concerns about environmental damage were completely ignored. When Mirae Heavy Industries constructed massive oil tankers, workers were driven relentlessly to meet tight deadlines, resulting in a steady stream of fatal accidents. Even recently, a death had occurred, sparking major unrest among Mirae Heavy Industries laborers that was only quelled by deploying police forces.
Such a man had not easily accepted Yoo Jae-won's insistence on spending money on eco-friendly measures for the second semiconductor plant. It was only natural, given that Chairman Jeon Myeong-heon judged people solely by whether they were "servants" or not. Yoo Jae-won had therefore approached the environmental issue through economic logic.
"Semiconductor manufacturing inevitably involves toxic chemicals. Workers inside the factory are exposed to them. Yet it struck me as strange that no one ever stated this fact directly. I was especially shocked to discover how many people believed the cleanroom suits worn when entering semiconductor plants were for the workers' protection."
The suits were designed to protect the semiconductors from dust and sweat, not the other way around. Intel had pioneered their use, an idea conceived by Andy Grove, the man who had sent Yoo Jae-won the 486 samples. What semiconductor factories cared about most was yield. Reducing the defect rate on wafers directly translated into profit. When Intel first entered the CPU manufacturing business, the yield on its initial 4004 8-bit CPU, a chip the size of a fingernail, had been only 10 percent. Struggling with yield issues, Andy Grove introduced full-body cleanroom suits and cleanrooms. Earlier semiconductor plants had minimal dust-control measures and little awareness of the need for them. Achieving even 10 percent yield in such dusty environments had been remarkable. Once cleanrooms and suits were introduced, yields soared to 80–90 percent, dramatically lowering CPU prices to the point where individuals could afford personal computers. Andy Grove's idea had been brilliant, but his consideration for workers had been zero.
While cleanroom suits and facilities might seem beneficial to people, their focus was entirely on the semiconductors and machinery. They offered no protection to laborers. Workers in semiconductor plants remained directly exposed to harsh chemicals, and their health deteriorated rapidly, making them prone to cancer. Yoo Jae-won wanted Mirae Group's semiconductor plant to be one that considered its people as well. Moreover, this was not a matter of lacking technology; it had simply been dismissed under capital's logic. Implementing it posed no technical problems even with current capabilities.
"Even if the factory operates twenty-four hours a day, the natural environment will not be destroyed. Workers will be able to work safely and receive proper compensation for their labor. In addition, a portion of Mirae Electronics' profits will be allocated to environmental protection. Consumers and partner companies of Mirae Electronics will be able to use our products without any pangs of conscience."
Environmental issues had already become serious social concerns in developed countries. When reports emerged that polycarbonate used in Egg PC cases was produced using phosgene, a toxic gas, and bisphenol A, a hazardous substance, sales had declined noticeably. Thanks to timely responses from Sambo Computer and Yoo Jae-won, previous sales levels had been recovered, but a failure to act would have been devastating. Korea was no exception. Environmental protection campaigns had been promoted at the national level since the 1980s.
Coincidentally, on the very day of the signing ceremony, a phenol contamination incident had broken out. From a national perspective, the accident was so minor that it passed without mention in the master plan. Chairman Jeon Myeong-heon had ultimately nodded in agreement after Yoo Jae-won presented data proving that consumers chose eco-friendly products when prices were equal. The sales drop data for Egg PCs caused by environmental concerns had been particularly decisive. Even the chairman understood that if sales of a semiconductor plant costing hundreds of billions of won declined due to environmental problems, the losses would be far greater.
After returning from the signing ceremony and checking the news, Chairman Jeon Myeong-heon could only shake his head. The Nakdong River phenol contamination incident. Yoo Jae-won had just finished emphasizing eco-friendliness for Mirae Electronics' second plant, and now the worst environmental disaster had erupted. The man truly had heaven's favor on his side. Chairman Jeon Myeong-heon's perception of Yoo Jae-won hardened further. If this environmental incident had occurred at Mirae Group instead of Busan Group, cold sweat would have run down his back.
Korea was a nation where citizens had risen up to win direct presidential elections. Although the president elected through direct voting was still from the military, the margin of victory had been razor-thin. In a rapidly changing world, had he been too shortsighted, focusing only on immediate gains? It was a moment of reflection.
"Hmm. What about other issues?"
Chairman Jeon Myeong-heon suddenly recalled a problem that had been troubling him for several years: militant labor unions. A decade ago, workers had acted as if they would do anything just to be hired. Now they rose up like a swarm of bees at the slightest provocation, threatening strikes. Although ID Group currently moved as one under the founder's shared vision, growth would inevitably bring problems. The chairman was genuinely curious how Yoo Jae-won would resolve such issues. He was not testing him. Yoo Jae-won's capabilities had already been proven by building ID Group. He was simply curious, as one executive to another, about how the younger man would approach it. If Yoo Jae-won's methods proved superior to his own, he was more than willing to adopt them.
"Chairman, it is time to move to your next schedule. You have a dinner meeting with Toshiba representative Hisashige Tanaka."
While Chairman Jeon Myeong-heon remained lost in thought, his secretary Oh Hyun-ji approached to inform him of the schedule. Checking his watch, he saw it was just past 6:30 p.m. They said people grew sentimental with age. He had been indulging in unnecessary sentimentality and had nearly forgotten the important dinner with Toshiba. At the same time, Yoo Jae-won's face came to mind. He had asked the younger man to lead the negotiations for transferring Toshiba's NAND flash technology to Mirae Electronics. Although Yoo Jae-won understood IT technology far better, it still puzzled the chairman why he was being put forward when he was little more than a novice in the field. He had boasted loudly that he would secure the best terms at the lowest price, yet now that the moment had arrived, his confidence wavered in the unfamiliar territory of IT.
When his thoughts reached this point, Chairman Jeon Myeong-heon shook his head. Technology, after all, was something people used. He could handle it the way he always had—by winning them over. With his resolve renewed, the chairman set off with a firm, determined expression.