Yokohama Electron (10)
(Continued)
Thierry Samara was a hardened criminal who had already been arrested twice for embezzlement, breach of trust, and a string of personal scandals. At the time, he was out on bail after posting the enormous sum of 2 billion yen.
After quietly slipping out of Japan, he exposed a story full of lies and fabrication, dealing Kionos and Japan a severe blow.
It was a disgraceful act of ingratitude, a man repaying the kindness he had received from Kionos with treachery.
For some time, there had been repeated suspicions that someone was backing Samara’s escape. This paper had pursued the case for a long while, and recently succeeded in uncovering the full story.
According to a tip from a key source, that backer was, astonishingly, Continue Capital and Yuseong Electronics.
(Omitted)
Continue Capital was said to have made 14 billion dollars from short selling and options trading at the time, and another 12 billion dollars through Rush Fund.
That came to an astounding total of 3 trillion yen.
Given the timing of the investment, the astronomical profits earned from it, and the contact made with Samara right before his escape, it would be entirely reasonable to suspect that Continue Capital had been involved in helping him get out.
Yuseong Electronics had also gained enormously from Chairman Samara’s escape.
Unlike Continue Capital, it had not invested directly, but at the time Yuseong Electronics had been facing the risk of clients drifting away as it moved into the data center industry.
Then, when trouble struck Kionos, Yuseong Electronics reaped the spillover benefits.
Today, Yuseong Electronics is larger than the combined market value of Japan’s ten biggest electronics companies. Yet only thirty years ago, it was little more than a subcontractor to Japanese firms. It was a company that assembled televisions and refrigerators using key components shipped in from Japan.
In the process, they steadily stole and copied Japanese technology.
Once they had built up enough technical capability, they entered the semiconductor industry and, this time, made products by stealing and copying Kionos’s semiconductor technology.
The Japanese electronics companies whose technology had been taken away fell one by one, while Yuseong Electronics went from strength to strength.
According to our investigation, Continue Capital used the enormous profits it had made then to join forces with Yuseong Electronics and move toward acquiring Yokohama Electron, Japan’s largest semiconductor equipment manufacturer.
At present, the company’s largest shareholder is Softbox Group.
Softbox Group currently holds a 36 percent stake in Yokohama Electron through Insight Fund and is in the process of selling it.
So why is Softbox Group trying to sell Yokohama Electron?
On the surface, it speaks of financial strain, but there are suspicions that the real motives lie elsewhere. It is said that Chairman Song Gazuki’s wishes strongly influenced this sale.
Chairman Song is Japanese by nationality, but the fact that he was born in Korea and that his blood is entirely Korean cannot be denied.
His wife is also a Zainichi Korean.
Given that, it is entirely possible that he intends to grant favorable treatment to Korean companies.
What would happen if Yokohama Electron fell into the hands of the Continue Capital and Yuseong Electronics consortium?
As they always have, they would thoroughly analyze the company, tear it apart, and siphon off its technology. Yokohama Electron would then meet the same miserable end as so many other Japanese electronics firms.
For Softbox to hand Yokohama Electron over to the CYP consortium in this way is no different from selling out the nation.
Japan’s civil society, business groups, and political world must step forward and protect Yokohama Electron!
* * *
The Sankei Shimbun article drew an enormous number of views.
In truth, it was little more than a speculative, fabricated piece, with no real evidence behind it.
And yet its impact was massive.
What had first spread among internet nationalist circles quickly reached the general public, became a hot topic, and even started appearing on NHK and other terrestrial broadcasters.
Chairman Samara’s escape was global news.
But in Japan, where the incident had actually taken place, it was not widely known. Japanese media outlets had deliberately held back, wary of upsetting the political establishment.
Thanks to this article, however, it had become an issue all over again.
Samara’s escape, and the flood of accusations that followed it, were an international humiliation for Japan.
The damage was so great that some even said Japan had suffered more than 1 trillion yen in tangible and intangible losses.
Of course, strictly speaking, Chairman Samara had not invented anything out of thin air. He had not created falsehood where none existed.
If anyone wanted to condemn this, they should first criticize Japan’s backward corporate practices and judicial system, but that was not what mattered to Japanese readers.
Public sentiment was already sour at the mere possibility that Japan’s largest semiconductor equipment manufacturer might be sold off to a foreign buyer.
And if that buyer was a company believed to have masterminded Chairman Samara’s escape and profited massively from it?
That could never be tolerated.
- What the hell? Continue Capital was behind Chairman Samara’s escape?
- They illegally smuggled out a criminal, then had him expose falsehoods to humiliate Japan?
- Continue Capital made huge gains shorting Kionos at the time! The total came to 3 trillion yen!
- Yuseong Electronics is suspected too?
- When they can’t beat Japan with technology, they resort to dirty schemes like this!
- This is basically an attack on Japan!
- Does it make sense to hand a Japanese company over to such immoral firms?
- Absolutely not! We have to stop this!
- Let’s show the strength of the Japanese people!
Anti-Korean groups and internet nationalists staged fierce demonstrations in front of Softbox headquarters.
“Cancel the Yokohama Electron sale!”
“Chairman Song Gazuki, come out here and apologize!”
“Drive the Koreans out of Japan!”
“Protect Japanese companies from Korea!”
“Song Gazuki, go back to Korea!”
“Nippon banzai!”
* * *
As public opinion worsened, Japan’s political establishment moved into action.
The Ministry of Economy, Trade and Industry convened a meeting under Minister Nagamine.
Strongly worded statements poured out across the table.
“Advanced semiconductors are the core of robotics and artificial intelligence. And Yokohama Electron is a company that supplies a wide range of equipment for producing those advanced semiconductors.”
“Can we allow a company that has harmed Japanese industry to acquire a Japanese company?”
“We must not permit bidding by any company that could pose a threat to Japan’s national security.”
“It’s clear that the Enple, PSMC, and Kionos alliance is the more suitable bidder!”
For support, they invoked Japan’s Foreign Exchange and Foreign Trade Act.
The law required any foreign company seeking to acquire a firm holding technology tied to national security to obtain prior approval from the Japanese government.
Internally, the Japanese government had already decided to move toward restricting the bidding qualifications of the CMIC and CYP consortiums.
If CYP Consortium had been the only prospective buyer, even the Japanese government would have found it difficult to block the acquisition outright.
But CYP Consortium was not the only serious candidate.
There was also the alliance of Enple, PSMC, and Kionos.
Unlike Yuseong Electronics, a formidable rival in its own right, Kionos was a Japanese semiconductor company, and both Enple and PSMC were friendly toward Japan as well.
PSMC announced that it would break ground early on a semiconductor plant in Japan. The investment size was a staggering 1 trillion yen.
The equipment for the plant would be ordered from Yokohama Electron.
Until then, the Japanese government had been working to attract semiconductor plants in order to rebuild the industry and secure stable domestic supply chains.
PSMC responded enthusiastically to that effort.
Although the plant would not produce cutting-edge chips on a 10-nanometer or smaller process, it would manufacture semiconductors on a 22-to-28-nanometer process, and those chips would be supplied to Japanese firms in automobiles, industrial machinery, home appliances, and more.
It was practically a gift to help secure the acquisition, and Japanese politicians were ecstatic.
“We sincerely thank PSMC for its investment!”
“Unlike Yuseong Electronics, PSMC is investing for the sake of Japan’s semiconductor industry.”
“Now is the time to strengthen semiconductor cooperation with Taiwan even further.”
The Japanese government immediately announced that it would amend the relevant laws and provide subsidies.
* * *
Shocked, Chairman Yoo Jae-ho flew directly to Japan and began meeting government officials to persuade them.
While he was in Japan, I received a call from him.
[I’m afraid this looks difficult. Even LDP lawmakers known for being pro-Korea are avoiding meetings, and the Ministry of Economy, Trade and Industry side won’t even see us at all.]
I was dumbfounded.
“They’re blocking us like this?”
The terms CYP Consortium had offered were nothing short of extraordinary.
The acquisition price was 7.2 trillion yen.
On top of that, taking Softbox Group’s urgent need for cash into account, they had proposed paying half the purchase price immediately.
For Softbox Group, it was an offer beyond ideal, and negotiations had been proceeding smoothly.
[They keep citing Chairman Samara’s escape, but deep down they don’t want the company to fall into the hands of Continue Capital and Yuseong Electronics. Japan’s relationship with Korea isn’t great right now, so from the political side this is probably a burden.]
Still, I never would have expected the media, the public, and the politicians to all line up against it.
“What does Chairman Song say?”
[He seems just as frustrated. If multiple bidders were forced to compete, the price could have been pushed up further. But if they knock us and CMIC out, that leaves practically only the Enple, PSMC, and Kionos alliance.]
Chairman Yoo Jae-ho asked me carefully.
[Is there any good way to handle this?]
From the way he said it, he seemed to think I might have some solution.
“No. If the Japanese government won’t let them buy it, what exactly can I do?”
[...I see.]
No matter how much money you offered, if the other side refused to sell, it was meaningless.
They had certainly played this one well.
They had effectively failed to secure a majority stake. Once an investment has failed, what matters is how quickly and how orderly you can pull out.
I told Chairman Yoo Jae-ho, “Then let’s start by unloading the shares we’ve already bought.”
* * *
Enple, PSMC, and Kionos immediately entered acquisition talks with Softbox Group.
Several procedures still remained, but they had already agreed to pay half the purchase price in dollars up front.
At 6.5 trillion yen, the price was above fair value.
But if you considered Yokohama Electron’s future value and the synergy from the acquisition, it was not a price they could not afford.
Tim Keaton spoke on the phone with Chairman Chen of PSMC.
“You’ve done excellent work.”
[Haha! What exactly did I do? This was all thanks to Chairman Keaton.]
“Not at all. You tipped off the Sankei Shimbun and stirred up negative sentiment within Japan, didn’t you? I knew Japan-Korea relations were bad, but I never expected that method to work so well.”
Blocking the CYP consortium’s eligibility had been a masterstroke. Otherwise, they would have had to compete over every condition.
But Chairman Chen looked confused.
[What are you talking about?]
“Pardon? Weren’t you the one who tipped off the Sankei Shimbun?”
[Me? No, not at all. As I told you then, I only proposed PSMC’s semiconductor plant to the Japanese government side. In fact, I thought someone from Enple or Kionos had been behind it.]
“...”
For a moment, Tim Keaton froze.
Then who on earth was it...?