The Cicada's Shell
The first-class cabin of United Airlines Flight 892, departing Gimpo International Airport for San Francisco, had been completely taken over by a single group. The group was ID Group. Thanks to Chairman Yoo Jae-won and his executives and bodyguards, every seat that normally sat empty had sold out. The flight attendants and purser, who already paid extra attention to first class, took special care this time. Yet Yoo Jae-won and his party required no special treatment and showed no rudeness. Once the plane settled into its cruising altitude, most of the executives fell asleep. They had spent the weekend after the Expo opening dealing with a flood of incidents and accidents, and the exhaustion had finally caught up with them. Their efforts had paid off: the Technopia pavilion ID Group prepared had become the most talked-about exhibit among dozens. The United Airlines crew had been busy only during takeoff; afterward, the flight was smooth. Not everyone slept, however. The bodyguards kept their eyes sharp, and Yoo Jae-won remained awake.
“What could he be thinking?”
Yoo Jae-won’s concern was that he still could not read Chairman Choi Hyun-hee’s intentions. He had suspected something when the chairman himself appeared, but the reality was even more surprising. In exchange for adopting the Coppermine process, Ilseong Electronics had offered five percent of its shares—roughly 641 million shares worth 96.2 billion won at current market value. The price was steep compared with other semiconductor firms, yet the royalty rate on wafers dropped to one-fifth the usual level. As a result, ID Investment’s stake in Ilseong Electronics rose from fifteen percent to twenty percent, making it the largest single shareholder and surpassing the Choi family. Even so, actual management control remained out of reach. Although the Choi family’s combined holdings were under ten percent, the stakes held by Ilseong affiliates and friendly companies exceeded fifty percent. The transfer of five percent of treasury stock to ID Investment had reduced the friendly bloc to the low sixties, making defense of control noticeably harder. If even one affiliate were acquired or a friendly bank collapsed, Choi Hyun-hee’s grip would become precarious. Yoo Jae-won had therefore assumed the chairman would never hand over shares so readily. He had expected Choi to issue new shares first to stabilize control before any deal. The move had caught him completely off guard.
“I don’t understand.”
No matter how hard he thought, Yoo Jae-won could not decipher the motive alone. He would have to hand the puzzle to ID Investment and think it through together. Still, the transaction had not harmed ID Group, so he soon allowed himself to drift into comfortable sleep.
A few days later, back to his usual routine, Yoo Jae-won finally understood why Chairman Choi Hyun-hee had been willing to surrender such a vital stake in Ilseong Electronics.
—It appears Ilseong Group is moving into the automobile sector. In fact, it is confirmed.
The combined analysis of the Korea-based intelligence team and ID Investment had revealed Ilseong Group’s automotive plans.
“Really?”
—Yes. Several Ilseong affiliates are injecting capital to establish Ilseong Motors and position it as the group’s new core.
One of the Thirty-Six Stratagems was the Golden Cicada Sheds Its Shell. When an enemy was overwhelmingly strong and resistance would only increase losses, a temporary withdrawal to regroup was necessary. A disorderly retreat invited pursuit and greater damage. The Golden Cicada method left the shell behind so the enemy believed the main force remained, while the true strength slipped away. Chairman Choi Hyun-hee had used Ilseong Electronics itself as the cicada’s discarded shell.
—Busan is being rushed forward as the site for the new Ilseong Motors plant, and the technology will come from Japan’s Nissan.
“Wow. I never saw that coming.”
Choi Hyun-hee was clearly no ordinary man. Yoo Jae-won had never imagined the legendary Ilseong Motors would appear in this fashion. At the same time, he considered whether ID Investment’s substantial holdings across the entire Ilseong Group could be used to block the move. The answer was negative.
“We can’t stop it, can we?”
—No. Unfortunately, we can only watch.
The reason was simple. ID Investment held enough shares to attend board meetings, but not enough to exercise actual control. The most it could do was conduct audits and file complaints or lawsuits if illegal acts surfaced. It could oppose capital investment in Ilseong Motors, yet that single vote would be outvoted by the rest of the board. In Ilseong Electronics, one additional director could be added, giving two votes, but even that would not halt the plan.
—Will ID Investment participate in the launch of Ilseong Motors?
Choi Kang-wook, reading Yoo Jae-won’s disappointment, asked the question with quiet gravity. Ilseong Group had already tasted the bitter consequences of ID Investment’s strict governance participation. Launching a new entity called Ilseong Motors was precisely the method Choi Hyun-hee had chosen to exclude ID Investment’s influence. Until a few years earlier, Ilseong Group had run like a perfectly meshed set of gears. It could not yet compare with global giants, but within Korea it had been strong enough to challenge for first place among conglomerates. After ID Investment injected two billion dollars, however, the smooth gears began to grind. Executives were questioned on the legality of their actions. Under the banner of shareholder value, management was placed under a microscope and constantly challenged. Established practices were ignored, loyal subordinates were removed, and even the third-generation succession plan began to falter. Choi Hyun-hee could no longer endure it. His solution was to launch Ilseong Motors and restructure the group around it. He would therefore reject any investment proposal from ID Investment with revulsion. Of course, Choi Kang-wook’s suggestion was not without merit. If a way existed, it could be found. Building a massive automobile company required tight capital raising; gaps could be exploited. Yoo Jae-won rejected the idea outright.
“No.”
There were investments whose victory was already assured—Pfizer, for example. The global pharmaceutical giant already held a solid position, yet the sudden emergence of a single groundbreaking drug would send its value soaring. Conversely, there were things one must never touch even if money were rotting in the vault. Ilseong Motors was one of them. Ilseong Group was a vast conglomerate of more than a hundred companies, including heavy industry and chemicals, but it had no automobile-related businesses. That was inevitable: Mirae Motors, founded in 1967 through a joint venture with Ford, had long dominated the Korean market with a rock-solid foundation and commanding market share. Daeho Motors ranked second, and there were also Asia Motors and the commercial-vehicle maker. Creating a new flagship affiliate to replace Ilseong Electronics had been a respectable decision. Choosing automobiles, however, was a catastrophic miscalculation. The sector was a brutal red ocean crowded with established giants. Had the target been batteries, chemicals, or biotechnology, Yoo Jae-won’s assessment would have been different. But automobiles? The driving force behind Ilseong Group’s automotive entry was undoubtedly Chairman Choi Hyun-hee himself. He was a well-known car enthusiast whose lifelong ambition had been to bring Ilseong into the automobile business. Although Yoo Jae-won had never seen it personally, the list of vehicles Choi Hyun-hee reportedly owned in his previous life was enough to draw an involuntary gasp—everything from classics to the latest sports cars, collected without regard to brand. He had not merely collected them; he had been photographed driving on circuits. The five-kilometer speedway built beside Yongin’s Nature Farm was widely known to exist solely for his hobby.
“I can guarantee that Ilseong’s automotive venture will produce enormous backlash. All of it negative.”
—Is that so?
Korea still had low market autonomy and high government involvement. Blocking Ilseong’s automotive entry, which would clearly carry negative repercussions, made sense. Yet the project was moving forward briskly, apparently with political backing. President Kim would naturally view a giant automobile plant in his hometown of Busan as a major political asset. He had no idea what a devastating boomerang it would later become.
“Our policy is absolute opposition to Ilseong Group’s entry into automobiles.”
—Understood.
After ending the call with Chief of Staff Choi Kang-wook, Yoo Jae-won let out a long sigh. The bold move Choi Hyun-hee had chosen was automobiles of all things. It confirmed once again that history did not change easily. Even in his previous life, Ilseong Motors, launched with the wrong first button, had remained a disaster to the very end. The damage had fallen squarely on the nation and its people; thousands of employees had been held hostage while public funds were poured in. “This time, however, the aftermath will be handled differently.” Yoo Jae-won intended to see the matter through to a different conclusion. To ensure he never forgot the feeling, he opened the diary file he updated daily and wrote the resolution in large, clear letters.
The Nextcom News page was filled with political headlines.
On August 14, the Financial Real-Name System that President Kim had enacted by emergency decree was formally passed into law. To placate the Tongil National Party, the Disaster Special Act championed by Jeon Myeong-heon had also passed. Concerns had been raised that freezing a chaebol’s assets and having the state pay compensation first might be unconstitutional, yet the bill cleared without major difficulty. The real explosion came over abolishing the double-compensation ban for police, firefighters, and soldiers. The issue reached back to the dark legacy of military dictatorship, and because many members of the ruling Minja Party had military backgrounds, the reaction was explosive. The media reported a widening fracture between the Minja Party and the Tongil National Party. Even the symbolic partnership between President Kim and Prime Minister Jeon Myeong-heon was said to be strained. In reality, the rift had not yet deepened that far. President Kim himself had sided with the Tongil National Party on the double-compensation issue; only the military-origin members of the Minja Party had objected. The president had actually felt guilty about sidelining Jeon Myeong-heon during the push for the Financial Real-Name System and was relieved that the passage of both bills had eased the prime minister’s resentment at relatively low cost. The conflict had been papered over publicly, though the media continued to amplify it. What no one had anticipated was that the double-compensation bait had planted the seeds of fracture deep inside the ruling party’s own ranks. President Kim, a born politician, had been forced into this serious misstep because every indicator was at record levels. Although the Expo had been planned by the previous administration, it was succeeding spectacularly and President Kim was reaping all the credit. Public support for the Financial Real-Name System was overwhelming. Jeon Myeong-heon’s special envoy mission to North Korea was proceeding smoothly. Vice President Al Gore had even visited the Blue House to deliver a personal letter from President Clinton congratulating Kim on becoming Korea’s first civilian president and formally inviting him to the United States—an unprecedented honor that generated massive positive coverage and record approval ratings for the civilian government. In the midst of all this, Ilseong Group announced its entry into the automobile industry and chose Busan, President Kim’s hometown, as the plant site. For Kim, it was the best moment of his entire political life.
“Enjoying the good times, I see.”
Yoo Jae-won hoped President Kim would keep his original principles to the end, but that outcome would not happen simply because he wished it.
“Well then, shall I get started on my own work?”
Closing the internet page, Yoo Jae-won turned to his real tasks. Although he had been back in the United States for some time, today marked his first official return to work. Until now he had been resting and spending time with Tiffany and old acquaintances. “Hmm? Not much work here.” After several days of complete rest, his inbox and ID Talk showed surprisingly few urgent matters. The highly paid executives who handled his responsibilities had done their jobs thoroughly; no backlog had accumulated. Yoo Jae-won had also monitored most business remotely while in Korea, so nothing had piled up. A few non-urgent items remained that only he could decide.
“Why are there so many interview requests?”
Magazines, newspapers, and television networks had sent numerous requests for appearances or interviews. The reason was obvious: curiosity about the items unveiled at the Daejeon Expo had exploded. Even drones alone had been shocking to the public; when combined with the digital cameras and video-analysis software mounted on them, the devices seemed to have come straight from the future. Computer magazines were equally eager to review the tablet PC—essentially a laptop with the monitor detached yet fully functional, complete with touch interface. Interest also extended to Infinity Display technology and various internet applications. Some outlets inquired about the ongoing second Security Challenge. The secretary’s office and public-relations department noted that requests from prestigious broadcast networks or major national dailies would generate positive impact if accepted. Yoo Jae-won agreed; an interview would be more effective than spending hundreds of millions of won on a single advertisement. Never shy, he immediately sent messages approving one television interview and an interview with Time magazine.
Next on his monitor was the progress report on the big-data search-engine installation at CIA headquarters in Langley, personally overseen by Remington. Yoo Jae-won had sent requests for quotations to multiple CPU manufacturers; Intel, AMD, and Cyrix had all responded promptly, each claiming it could produce any quantity and supplying its best samples. After performance and security testing by the CIA’s technical-support division, Intel had been selected. Its performance was the highest, and so was its price. Since the CIA had already fixed the system budget at twenty million dollars, choosing the top-performing Intel chips was the rational decision.
“I guess even the CIA didn’t catch Intel’s Meltdown bug.”
Yoo Jae-won had given the CIA the final choice precisely to test that possibility. As expected, the technical-support team had missed the flaw. Assembly was complete; the systems were now being installed at Langley. Installing a cloud system was never simple. Although the scale was only one-twelfth that of the Coyote City data center—only a thousand units—organizing cabling and network connections was still a major task, and a dedicated cooling system required modifications to the building’s HVAC infrastructure. Installation alone did not finish the job. Only Yoo Jae-won could install the big-data search engine that would run on the cloud platform; the software had no installer and had to be compiled directly from source code.
“So next week’s top priority is the Langley trip?”
The source code had not yet been sent to Langley for security reasons. Yoo Jae-won would travel there, write and compile the code on site—the safest method against leaks and the only method he could perform himself. After emailing Remington, he moved to the next item. It was both personal and public: tracking Red Hack, the hacker who had become the world’s most notorious figure several weeks earlier.