Chapter 192: Earth Semiconductor
Earth Resource
Earth Resource, established in 2020, was the fastest-growing company in the world.
Its businesses spanned cryptocurrency, content, cloud services, shopping, and an exchange.
“What if Earth Car succeeds?”
“It’ll become a truly formidable competitor to Tesla.”
“But starting from Mirae Motors’ technology, won’t there be a gap with Tesla?”
“Mirae Motors is a company that knows how to make cars people want to buy. They’ve focused on affordable vehicles, but their vehicle quality has been improving rapidly lately. They excel at incorporating what the public wants and have the advantage of being a global manufacturer producing 8 million cars annually. On top of that, there are rumors that Kim Shin is personally leading the Earth Car project.”
“Kim Shin pulls off incredible feats like it’s nothing.”
“Yeah, I think he’ll produce a car that’ll blow everyone away.”
This was the kind of talk coming from economic news on TV.
Honestly, I’d wanted to make electric cars, but hadn’t put much thought into it.
“Why did you join Earth Car?”
“I’m convinced we’ll shape the future of mobility.”
Earth Car’s division was aggressively recruiting employees.
Applicants came from Apple, Google, Tesla, and various startups.
There were plenty with 4-5 years of experience, and even those who’d worked over 10 years in electric motor divisions applied.
“Stanford University Automotive Engineering, researched self-driving at Google. Myeong-woo, you know this guy?”
“He’s got skills. His motivation says he wants fun company life, not higher pay.”
“Really? Then hire him.”
Since Earth Resource was in San Francisco and invested in Silicon Valley startups, we had plenty of info on talented folks.
We prioritized hiring those with various experiences alongside fresh Stanford grads.
* * *
Wall Street investment banks and private equity firms were hugely interested in Earth Resource.
“If we’d invested in Earth Resource stock last year, it would’ve gone up 1,000 times.”
“From early last year, it would’ve been insane returns.”
There are tons of companies worldwide, but none had grown like Earth Resource.
The downside? Earth Resource was a private company, hard to buy shares in.
“Kim Shin owns 100% of the shares himself.”
“Doesn’t he give stock options to employees?”
“There must’ve been a management decision, but since the company makes so much money, they handle incentives with cash.”
New startups usually hand out shares to retain talent, betting on future growth.
Earth Resource didn’t bother.
Raising salaries and bonuses easily boosted employee satisfaction.
Despite the heavy workloads and long hours, the company also offered generous allowances.
Hiring new staff regularly gave a sense of growth within the company.
“How much will Earth Resource be valued at if it goes public?”
“Depends on the market. But I doubt it will. Kim Shin isn’t hurting for cash.”
Only Saudi royals could joke about Kim Shin being poor.
Of course, it’d just be a half-hearted joke.
Then the Earth Car project kicked off.
Wall Street’s eyes lit up because Earth Car was an Earth Resource subsidiary—and structured as a stock company.
“Not 100% owned by Kim Shin?”
“It’s a joint venture with Korean companies, so shares are divided from the start.”
“Really?”
Wall Street drooled over Earth Car. Using their networks, they dug up details.
“Isung has 3%, LK and DK 2% each. They’re providing tech cooperation and some initial capital.”
“Mirae Motors must be key.”
“Mirae Motors holds 20% of Earth Car. In exchange, they invest capital, build factories with best efforts, and provide their tech for 10+10 years.”
Mirae Motors provided $500 million in initial capital to Earth Car.
Symbolic compared to Earth Car’s development and investment scale; factory construction was fully on Mirae Motors Group.
Earth Resource covered construction costs, but at cost—no profit.
The core was fully providing Mirae Motors’ vehicle design and production tech.
Max cooperation on Earth Car development for 10 years, then full tech and patent support for another 10.
For that, they get 20% stake.
“CEO Kim Shin made a smart deal. Earth Car was near zero, but he brought in Mirae Motors to speed development and boost success odds.”
“From my view, Mirae Motors benefits way more. Their tech was only useful to them before. Joining a massive project like Earth Car for shares? Huge payoff.”
“Mirae Motors can cut development costs via parts compatibility or boost brand image through Earth Car.”
“Anyway, Earth Car shares are available.”
Quick-footed Wall Street private equity moved, followed by big financial institutions.
They approached the Korean companies partnering with Earth Car.
“You want to buy Earth Car shares?”
“Yes.”
It was bewildering for Korea’s conglomerates.
They’d just set up the partnership and launched.
Its prospects were certainly strong, but the interested institutions included JP Morgan, Morgan Stanley, Bank of America, Goldman Sachs, and Wells Fargo.
World-class financial institutions were already trying to buy shares.
“We’ll give you $2 billion.”
“$2 billion?”
Those were the words of Todd Ryland, head of Goldman Sachs Asia-Pacific.
Two billion dollars was not an amount that could be dismissed lightly.
“We won’t sell.”
LK’s Chairman Gu Jin-mo refused.
He saw the 2% as symbolic for business ties, potentially huge profits later.
“LK Group won’t sell due to our partnership with Earth Resource.”
“Then let’s negotiate at $3 billion.”
“$3 billion?”
Earth Car’s equity was around $10 billion; factory funds from low-interest long-term loans from banks.
Purely future-value based.
“Spending $3 billion on 2% means you value Earth Car at $150 billion already?”
“Yes.”
LK’s Chairman Gu still refused.
Not like IMF days when they sold anything for cash; $3 billion wouldn’t hurt LK.
But it showed how crazy the EV market was.
Startups that had yet to produce a single car were being valued more highly than GM or Ford.
‘Should’ve pumped more initial investment for even 1% more shares.’
DK and Isung Group also rejected Goldman Sachs.
Then JP Morgan showed up.
“We’ll give $4 billion.”
“…….”
Wall Street banks and PE firms aggressively pursued shares per investor demands.
* * *
―Jin Yoo-kyung: This is insane.
―Jin Yoo-kyung: What is Mirae Motors? A company tied to Korea’s economic history……
―Jin Yoo-kyung: Earth Car surpassed Mirae Motors’ value right after founding.
―Jin Yoo-kyung: Wall Street keeps offering to buy shares; company’s in chaos. Some say our 20% Earth Car stake might exceed Mirae Motors’ market cap.
A message arrived from Jin Yoo-kyung.
Korean execs must’ve been shocked.
Even if somewhat expected, reality hits different.
‘This is the U.S. capital market.’
I had experienced it myself while investing in Nikola.
EV market was a speculative frenzy like crypto.
Investors flush with cash were piling into companies on the promise of future growth, inflating their share prices.
―Kim Shin: That’s reality.
―Kim Shin: Good life experience. No choice.
―Jin Yoo-kyung: Huh??????
Teasing Jin Yoo-kyung was fun, but with Earth Factory under construction, I had one more task to handle.
That task was Earth Semiconductor.
Vice Chairman Seon Jae-yong had proposed partnering with Isung Electronics to establish a semiconductor company.
Originally the main focus, but Earth Car shifted priorities a bit.
―Kim Shin: Vice Chairman, let’s start Earth Semiconductor.
―Vice Chairman Seon Jae-yong: Been waiting. Perfect timing.
―Kim Shin: Perfect timing?
―Vice Chairman Seon Jae-yong: Favorable public opinion, media attention, U.S. gov support—all lined up.
Earth Semiconductor was the exciting venture.
―Vice Chairman Seon Jae-yong: Lines 1,2,3 for 5nm fabs. 4,5,6 for 3nm.
Isung Electronics would transfer cutting-edge processes to Earth Semiconductor.
Investment would rise, but no stopping for lack of funds.
―Kim Shin: Yeah, let’s do it.
* * *
Days later, White House announced semiconductor support.
[Boosting U.S. Semiconductor Manufacturing Capacity Big Time]
[Biden Urges Congress for Swift Passage of $52B Chip Support Bill]
The U.S. government offered tax breaks in exchange for domestic production and jobs.
Nicknamed CHIPS Act.
Seen as check on Chinese firms……
[Earth Semiconductor Corp Established]
[Earth Resource Entering Semiconductors?]
Earth Resource’s bold semiconductor entry made headlines.
Kim Shin posted on SNS.
[Data centers need tons of semis. Cars will too, increasingly.
Earth Resource is entering the semiconductor market—the rice of industry.]
―Whoa, semis too ㄷㄷㄷ
―EVs and semis in 2 years—nothing left out
―Feels like octopus arms, but all succeeding?
―Dude’s world’s richest. Can do whatever.
Media and most saw Earth Semiconductor as just covering Earth Car’s chip needs.
[Earth Resource’s semiconductor push will be historic.
―President Joe Biden]
U.S. President’s congrats; Kim Shin posted again.
[Earth Semiconductor’s capital: $50 billion.]
Micron was building a $15 billion fabrication plant in Idaho.
Intel was reinvesting $20 billion in production.
More than both combined.
―Kim Shin bro level ㄷㄷㄷ
―Money fixes everything!
―EVs to semis. K-Chaebol power.
―But need such huge investment?
―How much auto chip production?
CNN, ABC ran specials on Earth Resource semis.
“Earth Resource declares semiconductor entry. No worries on funding from CEO Kim Shin, but do they have production tech?”
“13nm doable now. But sub-10nm cutting-edge? Skeptical.”
“Not all $50B at once. R&D first; real entry years away.”
“Auto chip market low-margin; no need for such investment.”
Earth Semiconductor a misstep, they thought. Then Isung Electronics announced officially.
[Isung Electronics Actively Joining Earth Semiconductor]