What Zhang Rujing and Liang Mengsong feared most was that Chen Pingjiang, being too young, would give up at the first sign of a setback.
Or perhaps he didn't fully understand the difficulties of wafer fab construction, thinking too optimistically.
Currently, in 2011, the world's most advanced process was only 22 nanometers, including TSMC, GlobalFoundries, and Samsung Electronics, which recently announced an alliance with IBM.
Others, such as UMC and SMIC, had fallen behind, capable of manufacturing only 28-32 nanometer node products.
The enormous cost investment in advanced semiconductor process technology led to seismic changes in the semiconductor market this year.
Japanese companies were the most severely affected, and it was estimated that all chip companies producing 32-nanometer specifications and below would be wiped out by the end of this year.
SMIC took so many years to only reach 28 nanometers, while TSMC and Samsung have been around for twenty or thirty years.
If they only focused on mature processes, they would face price wars and compete with SMIC and other rivals, but advanced processes were too difficult.
This market is just that brutal.
"It seems you, Mr. Chen, have considered it very thoroughly, so we are relieved. Let Old Zhang and I, these two old bones, continue to shine in our new roles and contribute to the nation's semiconductor industry,"
Liang Mengsong said.
At this moment, Old Zhang hesitated:
"Mr. Chen, there's one more thing I'd like to discuss."
Chen Pingjiang quickly waved his hand:
"Please don't be so polite, both of you. Just call me Little Chen; it sounds more familiar. Mr. Chen is too formal. Also, feel free to mention any conditions you have."
"Then I'll speak plainly,"
Old Zhang nodded and said,
"Old Liang and I are already quite old; we don't have many demands regarding compensation, just the normal standard is fine. But some of the classmates, friends, and former colleagues that Old Liang and I called over, they left their homes to come here just to earn money. I hope we can provide them with a good working environment and salary."
"Oh, I thought you were going to say something else! Isn't that how it should be? I know nothing about semiconductors and will rely on all of you in the future. Not only will the compensation satisfy everyone, but I will also provide accommodation, solve the schooling issues for your children, and offer stock option bonuses to key talents or those who make outstanding contributions. All of these can be written into the contract."
Old Zhang and Old Liang exchanged glances and nodded in satisfaction.
With these terms, they would have no worries.
"Although your presence is largely for China's semiconductor industry and the hope of someday defeating TSMC, I cannot lower your compensation standards for these reasons, we are tentatively setting your annual salaries at 2 million US dollars each, which will be considered normal work even during the factory's preparation phase. Additionally, all allowances will be complete, and year-end profit sharing and stock option incentives will not be lacking."
Chen Pingjiang had researched this compensation package externally; it naturally couldn't compare to companies in the US, but it was much higher than what other professional managers in China received.
With the annual salary, allowances, and bonuses, it was estimated to be over 3 million US dollars annually.
The main chunk of the compensation was still in stock options.
As for shares, it wasn't that Chen Pingjiang was stingy; he couldn't offer them yet.
Unless one day Huaxin truly reached the scale of TSMC, then giving shares wouldn't be too late.
After all, all the money currently invested in Huaxin came from his own pocket; he wasn't generous enough to just hand out shares directly.
Evidently, Old Zhang and Old Liang were not only satisfied but even shocked by the salary:
"Isn't it too much?"
"Not at all; in my eyes, both of you deserve this compensation."
As the saying goes, "buying a horse with a thousand gold pieces to attract other horses," with the addition of Zhang Rujing and Liang Mengsong, Huaxin's preparation and production would be extremely rapid.
Moreover, these two would bring along their disciples, colleagues, classmates, and friends; there was no better deal in the world.
Without these two, Huaxin's preparation and production would be more than ten times harder.
Talent is the most valuable asset.
Since Chen Pingjiang was so polite, the two elders no longer declined, but secretly felt that they must strive to make Huaxin a success.
Even if not to defeat TSMC, they had to repay Chen Pingjiang.
They were not those big swindlers out there, but genuinely wanted to do semiconductors well, operating it as their own enterprise.
Especially Chen Pingjiang, who had spent so much money.
If they couldn't do this well, it would not only disappoint Chen Pingjiang's expectations but also jeopardize their own reputations in their later years.
"During this period, I will accelerate the process of registering the Huaxin International trademark and company. For other colleagues, I will have to trouble you two elders; you might need to quickly get in touch."
"Later, we'll also need to take time to finalize the site, build the factory, and purchase equipment."
After the three had divided their tasks, Chen Pingjiang smiled and saw the two elders off to their car.
After Huaxin International was built, Zhang Rujing and Liang Mengsong would become co-CEOs, with Zhang Rujing responsible for daily company management and Liang Mengsong for technology research and development.
In the car.
Zhang Rujing asked Liang Mengsong with emotion,
"Old Liang, do you think we can succeed this time?"
Liang Mengsong shook his head:
"It's hard to say, but reaching SMIC's current level in the shortest possible time is no problem. Catching up further to TSMC will be difficult. It requires not only talent and capital but also equipment and R&D, and most importantly, a solid foundation."
Zhang Rujing nodded:
"I feel the same way, but I'm still not reconciled. No matter what, I want to bring Huaxin to fruition, show Zhang Zhongmou, and truly slap him in the face."
The two elders had common enemies, but there were also differences.
For example, Zhang Rujing's greater disdain was for Zhang Zhongmou, because Zhang Zhongmou first acquired World Elite Semiconductor, which he founded, then repeatedly caused him trouble, and even drove Old Zhang out of SMIC, which he had personally nurtured.
A decade of broken dreams!
As for Liang Mengsong, while he didn't like Zhang Zhongmou, it wasn't outright hatred.
The only person he truly detested in his heart was his "mentor" Jiang Shangyi.
He was willing to go to Samsung, throwing in with the Koreans, just to defeat TSMC; that tells you how much hatred was involved.
What's more, when Jiang Shangyi later intended to join SMIC, he immediately threatened to resign, feeling betrayed.
Liang Mengsong's tone shifted:
"However, this is indeed the best opportunity. Little Mr. Chen trusts us, is willing to delegate authority, has given us excellent compensation, and there are no other internal forces to hinder us. If we can't make this work, then we'd truly lose face."
...
After seeing off Zhang Rujing and Liang Mengsong, Chen Pingjiang breathed a sigh of relief.
He had finally secured these two, which meant the core talent issue was resolved.
All that remained was to recruit some graduates from relevant fields to serve as a reserve force, and then hire some frontline operators.
This meeting also meant that the Huaxin project was officially launched.
Once the bow is drawn, there's no turning back.
Only after this point did Chen Pingjiang truly feel the heavy pressure on his shoulders.
The upcoming expenses would be massive, and besides funding, Chen Pingjiang had to personally participate in every other aspect.
The total cost of a single 12-inch wafer fab alone would not be less than 2.5 billion US dollars, and including subsequent raw material purchases, it would be at least 3 billion US dollars.
This wasn't Chen Pingjiang's wild guess; TSMC's wholly-owned subsidiary established in Nanjing in 2016 invested 3 billion US dollars.
Of course, TSMC's equipment included the most advanced EUV, whereas at this point, only DUV was available worldwide.
But TSMC was an old hand, while Huaxin was just a new apprentice that had to learn everything, incurring costs.
They might even get ripped off when buying equipment.
Construction costs constituted the largest part, including equipment procurement, factory building, personnel training, and technology research and development.
The costs of different stages varied due to factors such as technical difficulty, market demand, and regional differences, in addition to product yield issues.
Overall, wafer fab construction costs are high, but with technological advancements and market expansion, costs will gradually decrease.
Among these, factory building required considering factors such as geographical location, environmental requirements, and safety standards.
Manufacturing equipment specifically included oxidation furnaces, CVD equipment, PVD equipment, vacuum evaporation equipment, MBE equipment, liquid phase epitaxy equipment, ALD equipment, electrochemical coating equipment, coating equipment, exposure machines, developing equipment, lithography machines, dry etching equipment, wet etching equipment, CMP equipment, ion implanters, cleaning equipment, and so on.
These pieces of equipment were responsible for steps such as wafer oxidation, deposition, photolithography, etching, and ion implantation/diffusion, respectively.
It was only 2011, and a series of domestic equipment manufacturers like Beifang Huachuang, Zhongwei Semiconductor, CETC No. 48 Institute, and CETC No. 45 Institute were just starting.
To buy, they could only look abroad.
In the manufacturing process, the three most important and most expensive categories were deposition equipment, including PECVD, LPCVD, etc., etching equipment, and lithography machines, accounting for 15%, 15%, and 20-25% of the total investment in semiconductor wafer fab equipment, respectively.
ASML, which almost monopolized up to 80% of the high-end lithography market share, along with US-based Applied Materials (AMAT), a leader in CVD and PVD equipment, and Lam Research, the leader in etching equipment, firmly held the top three spots.
To buy, and to buy good equipment, there was no way around them.
Of course, some equipment could also be purchased from Little Japan's Nikon, DNS, and Hitachi High-Tech.
Among them, what Chinese people were most familiar with were lithography machines and their main manufacturer, ASML.
Simply put, the function of a lithography machine is to use a series of methods to proportionally reduce a circuit diagram and project it onto a silicon wafer, then develop it to finally obtain the circuit diagram on the silicon wafer.
A chip that has undergone one lithography process can continue with coating and exposure.
The more complex the chip, the more layers the circuit diagram has, and the more precise the exposure control process required.
Later, Huawei's Kirin 9000S used multi-patterning technology.
Multi-patterning technology had existed for a long time, but it was considered to have little value because more precise chips could be made through other methods.
Only Huawei, when pushed to the limit, used this technology and achieved a significant breakthrough.
After all, the yield of multi-patterning is hard to guarantee, and if the yield isn't guaranteed, costs go up.
Lithography machines cannot bypass ASML, which holds an 80% market share for similar products worldwide.
Crucially, ASML had a very peculiar rule: only by investing in ASML could one obtain priority supply rights.
This unusual cooperation model allowed ASML to acquire vast amounts of capital, with Intel, Samsung, TSMC, and Hynix all holding substantial shares in ASML.
One could say that more than half of the semiconductor industry was a partner of ASML alone, forming a huge community of interests.
Unfortunately, no Chinese companies were involved.
So now you know, this itself was a competition between China and global enterprises.
An EUV lithography machine contains 100,000 parts, known as the jewel in the crown of industry, completed by over 5,000 top manufacturers from more than 30 countries.
The technical requirements are extremely high, and only ASML can build it.
It's not hard to understand why we can build atomic bombs but have been slow to produce EUV lithography machines; with no technology and no parts, everything has to be researched independently.
An advanced EUV lithography machine costs an average of 150 million US dollars per unit, with shipping alone costing 1 billion, weighing 180 tons, and requiring 40 containers to transport all its various components.
Assembly and debugging alone would take a year, and once assembled, it would be as long as two buses.
Even so, installation and debugging costs would still be hundreds of millions, and the key was that you couldn't even buy the goods...
You want to buy it, but they won't sell it!!!
The most disgusting part was...
Although Chen Pingjiang knew history, the first generation of commercial EUV wouldn't be available until 2016; before that, he could only use DUV.
DUV lithography machines could generally only achieve 25-nanometer processes, and even with some advanced technical methods, such as Intel's dual workstation mode, they could only reach 10-nanometer processes, but it was difficult to break through this limit.
EUV lithography machines could support more advanced process technologies, such as 7-nanometer, 5-nanometer, or even 3-nanometer.
DUV lithography machines primarily utilized the principle of light refraction, focusing and positioning ultraviolet light through lenses and optical components.
EUV lithography machines, on the other hand, utilized the principle of light reflection, using mirrors instead of refractive lenses to transmit the light beam.
In contrast, DUV lithography machines were relatively mature and stable in terms of technology and cost, capable of meeting the demands of most chip manufacturing.
This was especially true in application areas with less stringent process requirements, such as memory and analog chips.
However, Chen Pingjiang still held a trump card.
All he needed to do was give Liang Mengsong a hint and let him lead the development of quadruple patterning technology.
Then, DUV could also be used to manufacture 14-nanometer or even 7-nanometer chips.
This card was Chen Pingjiang's ace, and it was his confidence to venture into chip manufacturing.
At the 2011 time point, the most advanced process was only 22 nanometers.
Considering the time it would take for Huaxin's wafer fab to go into production, if they fully committed to developing 14-nanometer technology, the day that development succeeded would also be the day Huaxin joined the ranks of world-class wafer fabs.
...
Just as Chen Pingjiang was busy preparing for the wafer fab.
The Dongjiang government became a bit restless.
The circle was only so big; news, from who knew where, spread that Chen Pingjiang had ultimately decided to build the wafer fab in Shanghai.
This instantly drove Dongjiang frantic.
Shanghai, how dare you!?
How dare you snatch the duck right out of our mouths!
Good heavens, Dongjiang was thrown into chaos from top to bottom.
It was said that dozens of meetings, big and small, were held, including the city's standing committee meeting.
There was only one purpose for the meetings.
To retain Huaxin's wafer fab at all costs!
Given the special nature of the chip industry and the large investment required, there would be a tax exemption for the next ten years!
If necessary, local banks such as Dongjiang Commercial Bank and Dongjiang Bank could provide interest-free loans.
While Chen Pingjiang was still in Shanghai, an investment promotion team led by a deputy mayor from Dongjiang directly cornered Chen Pingjiang at his hotel.
At the same time, another deputy mayor directly went to Tongnan to lobby Chen Pingjiang's future father-in-law, Yan Liming.
Even more exaggerated, Li Yuhua was forced to take leave by her newspaper.
The demand was simple: persuade Chen Pingjiang.
Some key figures in the city would frequently visit Juzi Technology to do some lobbying.
It didn't matter if they couldn't find Chen Pingjiang; it was still good to do some ideological work with other executives!
When Chen Pingjiang first saw the people from Dongjiang arrive, he received them politely.
Faced with their continuous lobbying, he firmly insisted he would "think about it more."
He had already promised Shanghai; after all, they had done a lot of work, and crucially, they had brought in Zhang Rujing and Liang Mengsong.
Chen Pingjiang couldn't go back on his word.
Moreover, Shanghai's geographical location was better, and its industrial support facilities were superior.
By the third day, the deputy mayor leading the Dongjiang delegation, seeing that they couldn't get it done, became anxious and refused to leave.
Wherever Chen Pingjiang went, they followed.
It gave Chen Pingjiang a headache, but he couldn't get angry; after all, they were local officials.
The news quickly reached the ears of relevant leaders in Shanghai's Economic and Trade Commission and Investment Promotion Bureau.
After being reported through the hierarchy.
The two sides immediately began a battle to win over people.
"You in Shanghai are very unethical. Mr. Chen's other industries are all in Dongjiang, and he initially considered setting up the factory in Dongjiang. How dare you hijack it halfway?"
"You in Dongjiang are the unethical ones! Entrepreneurs aren't your personal pets, to be tied to your belt, are they? They invest wherever they want; can you control that?"
"How dare you say that? If you hadn't used petty tricks to poach people, why would Mr. Chen consider Shanghai?"
"Haha, then I'd like to ask you what you've done for Huaxin's preparations? Nothing, absolutely nothing! It was us in Shanghai who ran from start to finish. Oh, now you're coming to pick the peaches?"
"I... I can't reason with you. I will report this to my superiors."
"Then please hurry up!"
Chen Pingjiang watched a group of men in their forties and fifties arguing.
Initially, he wanted to reason with them, but then realized it was futile, and they were immediately red-faced from arguing.
Finally, Chen Pingjiang simply hid alone in the small conference room next door, letting them argue it out.
Anyway, he didn't need to be the bad guy.
Since Dongjiang didn't dare to vent their anger on him, they had to trouble Shanghai.
And so, people from both sides argued for two full days, and in the end, neither could convince the other, so they each went home to call for reinforcements.
Why were both sides fighting so fiercely?
It was just one company, after all!
One just needs to look at how popular Tesla's later entry into China was.
At that time, rumors circulated that multiple cities were vying for Tesla to establish operations, with Shanghai and Guangzhou having the best chances.
The most incredible thing was that at the time, there were also certain policy restrictions on introducing wholly foreign-owned electric vehicle manufacturing plants.
Yet, after approval from higher-level departments, Tesla completed its registration procedures in just one day, becoming the first wholly foreign-owned car manufacturer in China.
One can only imagine how hard Shanghai fought for Tesla.
Even a car manufacturer like Tesla received such treatment, let alone the chip industry, which is both high-tech and a domestic weakness.
Behind this were not just minor issues like post-tax revenue and employment.
It was a major undertaking to promote industrial chain clustering, drive regional economy, and build the city's brand.
To give another example, in 2016, TSMC entered mainland China.
The leadership of this dominant enterprise accelerated the clustering of integrated circuit companies in Nanjing's Jiangbei New Area.
Half of China's top ten chip design companies, including Huada Semiconductor, Spreadtrum Communications, and Vimicro, had already settled in the Jiangbei New Area.
Later, the Jiangbei New Area gathered over 400 integrated circuit-related enterprises, including top domestic and international integrated circuit design companies like TSMC, ARM, Synopsys, Cadence, Solomon Systech, and Huada Empyrean, as well as IP and EDA tool suppliers.
It covered all upstream and downstream links of the industrial chain, including chip design, wafer manufacturing, chip packaging and final testing, specialized materials and equipment, and terminal manufacturing, forming a mature integrated circuit industry service system.
In just about three years, the new area attracted over 360 upstream and downstream enterprises.
A single industry is too important for a city.
(End of Chapter)