Escape (1)
While Continue Capital was attacking LD Studio, something rather entertaining was happening in Hollywood.
The most anticipated film of the first half of the year in the American movie industry was Perfectnado. Directed by Steven Taylor and starring Vincent Berry and Jessica Edward, it was a disaster film about a massive tornado tearing across California. With a production budget of a staggering 200 million dollars, everyone expected it to be the sort of giant Hollywood blockbuster that would sweep the summer box office.
Then the movie opened, and a portion of the audience erupted in outrage.
The full story was this. Prisoner’s release of Zombienado 2 had spread by word of mouth among zombie fans, and even the first film was getting reappraised. Calls for a theatrical release kept growing, so riding that momentum, the studio decided on a small-scale theatrical run. But because the subtitle Perfectnado was printed so boldly, the two Perfectnados ended up playing in theaters at the same time.
People who came to see Perfectnado mistook the one for the other and wound up watching Zombienado 2. They thought they were seeing a disaster blockbuster, only to have zombies pour out of a tornado, and the audience was thrown into shock and terror. The uproar was so bad it even made the news.
Universal Studios, the distributor, then threatened to sue Prisoner. Their claim was simple: “Prisoner’s Perfectnado is a mockbuster that copied the title of our blockbuster. If you don’t pull the film immediately, we’ll sue!”
Linus, Prisoner’s representative, laughed it off and shot back, “We used the title Perfectnado as a subtitle from the very first film. Universal Studios is the one who copied it. Still, Prisoner isn’t petty and sleazy like Universal Studios, so I won’t demand that you change your title. If you’re so confident, let’s settle it by skill and see whose Perfectnado is more entertaining.”
He made it sound magnanimous, as though he were generously yielding ground, but in truth Zombienado 2 was getting enormous mileage out of sharing a title with a blockbuster. If anything, it was better for them not to change the name at all.
In any case, it was true that Prisoner had used the title Perfectnado first. Legal action was impossible, and now that the film had already opened, there was no way to change the title. Universal Studios offered a $1 million settlement on the condition that the subtitle be removed, but Linus refused.
It might have caused a brief stir by lucky chance, but a B-movie could never truly stand against a mega-blockbuster.
And yet...
Separate from the title dispute, the criticism of Perfectnado kept pouring in, and an interview given by director Steven Taylor only fueled the controversy.
“Modern audiences don’t understand films. The moment a story gets even a little difficult, they whine like children and say it isn’t fun.”
His condescending, almost schoolmasterly tone only made people angrier. A famous YouTuber known as AngryRabbit compared Perfectnado and Zombienado 2, declaring, “If you’ve got time to watch Perfectnado, you’re better off watching Zombienado 2 twice. It has tornadoes, and it even has zombies.”
The comparison between the two films even spread into internet memes. While Perfectnado was being pulled amid the bad reviews, Zombienado 2 was actually expanding to more theaters. A B-movie made for 2 million dollars had pushed aside a Hollywood blockbuster that cost 200 million dollars to produce.
That was how the Perfectnado matchup ended in Zombienado 2's victory, and Zombienado laid the foundation for a long-running franchise.
A visitor had come to Continue Capital HQ.
“Long time no see.”
“It’s even better to see you here.”
Dongho and Kim Beom-seok both went wide-eyed in surprise.
“Oh! Jae-Tiger...”
“Whoa. It really is him.”
The person who had come was Yoo Jae-ho, chairman of Yuseong Group. He was, without exaggeration, the biggest chaebol in Korea—the chaebol among chaebols.
When I had first met him, it had felt as though a halo were shining behind him. This time, though, he didn’t quite give off that same feeling.
I introduced everyone.
“This is David Lockhart.”
“It’s a pleasure to meet you. I’ve heard quite a lot about you.”
David and Chairman Yoo Jae-ho shook hands. After that, I introduced Dongho and Kim Beom-seok as well.
Once the greetings and introductions were over, the two of us took a seat apart from the others.
“Have you eaten?”
“Not yet. I heard there’s a famous burger shop in New York. I believe Continue Capital invested in it.”
“Unfortunately, it’s closed right now.”
President O’Connor was helping from start to finish with the opening of the first franchise location.
“What a shame.”
“Do you like burgers too?”
Chairman Yoo gave a small smile. “Of course. I like burgers, and I like fried chicken too.”
Hearing him say that, it sounded like the rumor about him occasionally ordering limited-edition fried chicken delivery was probably true.
“I didn’t know you’d take LD Studio down that hard.”
“I didn’t do much.”
They did all the work themselves. I had only shown the world what they were doing.
After we talked through what had happened so far, I finally got to the point.
“So what brings you all the way to the United States?”
“I came to answer the proposal you made last time.”
“You mean the data center?”
Chairman Yoo nodded.
“I’ve decided to do it.”
I smiled. “Good decision.”
“But just because I’ve decided doesn’t mean we can simply barrel ahead. Even if I force it through the board, the shareholders will oppose it fiercely.”
If Yuseong Group entered the data center industry, the money that would need to be poured into acquisitions and investment over the next five years would come to at least 100 trillion won.
I knew exactly how much Snow Crash would grow in the years ahead, so I thought it was a smart decision. But from the perspective of someone who didn’t know that, how would it look?
They would naturally think Yuseong Electronics was taking on an enormous gamble. They might even think the chairman had lost his mind.
And if they made the announcement, wouldn’t the stock price collapse?
“What worries me most is the backlash from our client companies.”
Yuseong Electronics was a comprehensive electronics company that produced TVs, refrigerators, washing machines, smartphones, telecom equipment, semiconductors, and more.
The single most important source of its revenue and profit was semiconductors. They made up a large share of sales, and the operating margin was an astonishing 50 percent.
And the largest customers for those semiconductors were the big tech companies—AMZ, NS, and Guble. If Yuseong Electronics entered the data center industry, that meant it would be competing directly with them.
There was no way those companies would like that. Even if they didn’t react right away, they would eventually start reducing their business with Yuseong Electronics.
Even combined, the big tech firms were worth ten times more than Yuseong Electronics by market cap.
If those companies cut back on Yuseong semiconductors and started looking for other suppliers, the blow to sales and profits would be immediate.
From the shareholders’ perspective, it was only natural they’d get angry and say Yuseong should just keep investing in semiconductors like before instead of doing something so pointless.
“If the client companies change suppliers, which company would benefit the most?”
Chairman Yoo didn’t even need to think about it.
“Probably Kionos.”
It was a Japanese company, formally known as Kionos Works. It currently ranked second in the world in NAND flash and fourth in D-RAM, and it had recently announced plans to enter foundry production as well.
“Its corporate competitiveness is nothing to underestimate, and it also has the backing of the Japanese government.”
Every industry was going digital now.
And the foundation for all of it was semiconductors.
If oil had been the key resource of the twentieth century, semiconductors were the key resource of the twenty-first. Because they were tied directly to the economy as a whole and to national security, countries were engaged in fierce competition to secure them.
China wasn’t the only country talking about a semiconductor rise. Other countries were doing the same, and the one raising its voice most loudly after China was Japan.
Chairman Yoo shook his head.
“In some ways, Japan is a greater threat than China.”
From America’s perspective, China was a virtual enemy.
The United States was tightly containing China’s semiconductor growth, controlling everything from acquisitions to equipment exports. That left China with money but little room to invest.
Japan, however, was an important ally of the United States.
If Japan said it wanted to invest, there was no reason to stop it.
It might seem ridiculous now, but until the 1980s Japan had held the number one share of the global semiconductor market.
Its overall market share had exceeded 50 percent, and in memory semiconductors alone it had reached an astonishing 80 percent.
Even after its decline, it still boasted the world’s fifth-largest production volume.
The Japanese government had made the revival of its semiconductor industry a core national priority and publicly pledged to increase semiconductor sales fivefold within ten years.
And this wasn’t just empty talk. It had set aside 1 trillion yen in the national budget and begun supporting domestic semiconductor production. If a company built a plant inside Japan, the government would subsidize 50 percent of the cost over several years.
Even with such massive support, though, Kionos still couldn’t easily move to expand its factories.
The reason was Yuseong Electronics.
Memory semiconductor prices rise and fall sharply depending on the industry cycle.
In the early 2000s, oversupply had caused D-RAM prices to crash to less than a tenth of their previous level. Even then, semiconductor companies didn’t cut production. Instead, they waged a bloody price war, selling below cost.
That brutal game of chicken went on for years, and the German and Japanese semiconductor companies that couldn’t endure it went bankrupt one after another.
The winner who survived that carnage was Yuseong Electronics.
Yuseong Electronics never forgot that lesson. It built economies of scale alongside technological development, and thanks to that, it became the company that produced the largest volume of memory semiconductors at the lowest cost.
Kionos was behind Yuseong Electronics in both technology and price competitiveness, whether in NAND flash, D-RAM, or foundry work.
So even with the Japanese government practically shoving investment in its direction, it had no choice but to be cautious.
But if the big tech companies started looking for other supply chains?
Then the incentive to invest would appear. The shortfall in price competitiveness could simply be covered with government subsidies.
Of course, Yuseong Electronics entering the data center industry was something that had never happened in the first timeline. But this time, because of me, the situation had changed.
Maybe this would even give the Japanese semiconductor industry a chance to rise again.
And that would become a considerable burden for Yuseong Electronics.
“If Yuseong Electronics’ dominance in semiconductors weakens, it could disrupt the data center investment as well.”
“That’s right.”
I thought for a moment, then said, “If Kionos can’t expand its factories, the big tech companies won’t be able to switch suppliers so easily, will they?”
“Some would leave, but we’d be able to avoid major damage.”
“Then we’d need to stop Japanese government support.”
“Yes, but...”
Chairman Yoo, who had been answering, looked at me.
“Do you have a good way to do that?”