Tech Giants: Starting from Bankrupt Companies

112: Chapter 112 The Technological Shock of Global MediaOn the evening of November 6th, the editorial office of the London-based Nature magazine was brightly lit.

Editor-in-Chief James Watson stared at the final draft on his computer screen, his finger hovering over the publish button, unable to bring himself to press it.

Once published, this special feature, titled ”Feasibility Verification of Non-American Technological Paths: A Case Study from Xinghuo,” would trigger a tsunami across the global academic and industrial communities.

”James, are you still hesitating?” Deputy Editor-in-Chief Catherine walked in carrying a coffee. ”All five reviewers have approved it, including two Nobel laureates. Both the data and the arguments are solid.”

”I know,” James rubbed his temples. ”But this is a highly political technical paper. It’s not just discussing chip manufacturing processes; it’s also implying that the existing global semiconductor system, led by America, is not the only choice.”

Catherine sat down in front of him. ”Isn’t that the very meaning of science? Questioning existing paradigms and exploring new possibilities. Xinghuo has used concrete data to prove that the FD-SOI route can achieve commercialization at the 16nm node. That is a fact.”

”But this fact will keep many people awake at night,” James smiled bitterly. ”Intel, TSMC, Samsung... their stocks might fall tonight.”

”Then let them fall,” Catherine shrugged. ”Scientific progress is always accompanied by the overturning of the old order. Remember when transistors replaced vacuum tubes? Those vacuum tube giants couldn’t sleep either.”

James fell silent. Outside the window, the night in London was deep. Pleasure boats slowly passed along the River Thames, their lights reflecting on the black water like a shattered galaxy.

He finally pressed the publish button.

The article immediately appeared on the online section of the Nature website. There was no announcement, no teaser; it was like a pebble thrown into a calm lake.

But the ripples spread rapidly.

In the first hour, the view count exceeded one hundred thousand.

By the third hour, major global technology media outlets began to repost it.

By the sixth hour, links to this article appeared in the internal email lists of almost every tech company in Silicon Valley.

The article’s core arguments were as precise as a scalpel:

1. Choice of Technological Path: Xinghuo abandoned the current mainstream FinFET structure and adopted FD-SOI (Fully Depleted Silicon-on-Insulator). The performance of FD-SOI at nodes below 22nm had previously been questioned, but through material innovation and process optimization, Xinghuo proved this path was viable. More importantly, most FD-SOI patents are held by Europe and Japan, successfully bypassing the patent wall America has built around FinFET.

2. Restructuring of the Equipment Supply Chain: Xinghuo’s production line features core lithography machines from Shanghai Micro Electronics Equipment, auxiliary equipment from Germany, Japan, and South Korea, and chemical materials from domestic Chinese enterprises. The proportion of American technology in the entire production line is less than 5%, forming a substantive ”de-Americanized supply chain.”

3. The Criticality of Material Breakthroughs: The article particularly emphasized the role of Spark Materials—autonomous photoresists, high-purity silicon wafers, and new polishing fluids. These key materials, once monopolized by Japan and America, now have substitutes in China.

In the conclusion, the author wrote:

”Xinghuo’s case proves that outside the existing international technology system, there exists another viable path for semiconductor development. This path may be harder and more expensive, but it is also safer—because it does not rely on the technology supply of a single country or region.”

The final sentence was like a bomb:

”If Xinghuo can achieve mass production of the 14nm process within three years, the global semiconductor landscape will undergo a fundamental restructuring. By then, the choice of technological path will no longer be just a competition of performance, but a game of geopolitics.”

Two hours after the article was published, in Seoul, South Korea, at the headquarters of Samsung Electronics.

Vice Chairman Lee Jae-yong’s office was located on the top floor of the building, offering a view of the night scenery of the Han River through floor-to-ceiling windows. But at this moment, no one in the conference room was looking at the scenery.

Twelve top executives from Samsung Electronics sat around a long table, with printed copies of the Nature article in front of each of them. The atmosphere was as somber as a funeral.

”Results of the technical analysis?” Lee Jae-yong’s voice was very calm, but those who knew him understood that beneath this calmness was suppressed rage.

Technical Director Jin Chengjun stood up and pulled up a PPT: ”We have analyzed the parameters released by Xinghuo. Their 16nm FD-SOI is at 85% of our FinFET in terms of transistor density, but it is 15-20% lower than us in power consumption. This means that in fields sensitive to power consumption, such as mobile devices, the Internet of Things, and automotive electronics, their chip has an advantage.”

He switched to the next page: ”More importantly, there is the cost. The wafer cost of FD-SOI is 30% higher than bulk silicon, but Xinghuo has invested in Shanghai Silicon Industry, which specializes in producing FD-SOI-specific wafers, so the cost can be controlled. Meanwhile, our FinFET requires EUV lithography machines, with each piece of equipment costing $150 million, and America restricts their export to China.”

”So?” Lee Jae-yong asked.

”So, in the mid-to-low-end chip market, Xinghuo may pose price competition to us,” Jin Chengjun said cautiously. ”Especially in the Chinese market—60% of our revenue comes from China. If the Chinese government pushes for domestic substitution...”

He didn’t finish his sentence, but everyone understood.

Strategy Department Head Park Ji-hoon added: ”There is also a more long-term impact. The Nature article mentioned that ’the choice of technological path will become a geopolitical game.’ If China successfully establishes an autonomous semiconductor system, other countries—such as Russia, Iran, and even some countries in Europe—might choose to join China’s system instead of America’s. This means that the global semiconductor market could split into two camps.”

The conference room was deathly silent.

On the Han River outside the window, cruise ships slowly passed by, with faint music drifting from the boats. That was another world, a world that was still operating normally. But in this conference room, a group of people were contemplating a threat that could overturn the foundations of their kingdom.

Lee Jae-yong was silent for a full three minutes before speaking:

”Launch the ’Dual-Track Plan’.”

”The first track: continue to focus on 3nm FinFET to maintain our lead in high-performance computing.”

”The second track: establish an FD-SOI research group and invest resources into studying this technological path. Samsung cannot put all its eggs in one basket.”

He paused and looked at the Senior Vice President in charge of external cooperation: ”Contact Xinghuo and explore the possibility of cross-licensing technology. They need our memory technology, and we need their FD-SOI experience. Perhaps... we can cooperate.”

”Vice Chairman, what about the American government...” someone reminded him in a low voice.

”The American government cares about the interests of American companies,” Lee Jae-yong said expressionlessly. ”Samsung is a Korean company. Our top priority is the survival and development of Samsung.”

At the same time, in Tokyo, Japan, in the conference room of the Ministry of Economy, Trade and Industry.

The meeting had been going on for four hours, and the room was filled with smoke—although smoking is strictly prohibited in public places in Japan, in meetings at this level, the heavy smokers still couldn’t help themselves.

”What exactly is the proportion of American technology in Tokyo Electron’s equipment?” asked Hiroshi Nakamura, the Minister of Economy, Trade and Industry.

The representative for Tokyo Electron, a man in his fifties with meticulously combed hair, stood up: ”In our etching equipment, the proportion of American technology is 7.8%; for deposition equipment, it’s 6.2%; for cleaning equipment, it’s 4.5%. According to the current American export control regulations, these pieces of equipment can be legally exported to Xinghuo.”

”But the American Department of Commerce sent an informal notice last month, asking us to ’carefully evaluate’ equipment exports to China,” another official said. ”They threatened that if we continue to supply Xinghuo, they might add Tokyo Electron to the entity list.”

”It’s just a threat,” the representative from Shin-Etsu Chemical interjected. ”We have already received an intent for an order from Xinghuo—purchasing $3 billion worth of 300mm silicon wafers over the next three years. This is a real, tangible order, not a threat.”

A buzz of discussion arose in the conference room.

Shin-Etsu Chemical is the world’s largest supplier of semiconductor silicon wafers, but it has faced competition from South Korea’s Samsung and China’s Shanghai Silicon Industry in recent years. This order from Xinghuo is crucial for Shin-Etsu.

”What about the technical level?” Nakamura asked the technical reviewer.

The technical reviewer pulled up a report: ”We have analyzed Xinghuo’s technological path. FD-SOI does indeed bypass American patents, but many foundational patents are held by Japanese companies—such as Sony, Toshiba, and Renesas. If Xinghuo wants to achieve mass production, they will still need our authorization.”

He paused: ”Therefore, cooperation is a win-win. We authorize the patents and gain revenue; Xinghuo gains technical legitimacy and accelerates mass production.”

Nakamura thought for a long time before finally saying: ”First, conduct a detailed technical assessment. If Xinghuo’s path can really work... Japan cannot miss this train. As for the pressure from America—”

He looked out the window, where the Tokyo Tower was glowing red in the night: ”Tell them that Japan is a sovereign nation and has its own judgment.”

The reaction in Berlin, Germany, was more direct.

On the afternoon of November 7th, a closed-door meeting was underway in the conference room of the Federal Ministry for Economic Affairs. Attendees included not only government officials but also representatives from German industrial giants like Infineon, Siemens, and Zeiss.

The meeting minutes were later anonymously leaked online, and the most striking passage was:

”China is building a ’de-Americanized’ semiconductor ecosystem. This is not a supplement to the existing system, but a parallel system that may eventually operate independently. German companies face a choice: continue to rely on the American-led system and be subject to American geopolitical decisions; or actively participate in building the Chinese system and become rule-makers rather than passive recipients?”

”The joint venture between Xinghuo and Infineon provides an excellent opportunity to enter. Through this company, German technology can enter the core layer of the Chinese semiconductor ecosystem while accessing China’s innovations in materials and processes.”

The meeting’s conclusion: ”Accelerate the approval process for cooperation with Xinghuo. Chancellor Merkel has instructed that German-Chinese scientific and technological cooperation be elevated to a strategic level.”

Meanwhile, in Silicon Valley, anxiety was spreading like a virus.

On the morning of November 8th, an internal email sent by Intel CEO Brian Krzanich to his executive team was anonymously leaked to Bloomberg News. A passage from the email was widely cited:

”Over the past decade, we have been too focused on competing with TSMC and Samsung on process nodes—7nm, 5nm, 3nm. We thought that as long as we maintained technological leadership, we could hold onto the market.”

”But Xinghuo has reminded us of a cruel fact: competition may not be on the same dimension. They are not surpassing us at a certain node; they are building another playing field. In that playing field, our FinFET, our EUV, our EDA tools might not be necessary at all.”

”This is like Nokia in the smartphone era—we are still comparing whose buttons are more durable, while others have already redefined what a phone is.”

This email caused an uproar in Silicon Valley. That day, Intel’s stock price fell by 7%, TSMC’s American Depositary Receipts fell by 5%, and Nvidia fell by 4%.

A senior tech reporter for The Wall Street Journal, John Harris, wrote a column with a title so blunt it was almost rude: ”When Dependency is Cut: China Chooses to Build Its Own Path.”

The article wrote:

”For the past thirty years, American technology policy toward China has been based on an assumption: globalization would make China deeply dependent on American technology, thereby forcing concessions on key issues. We used intellectual property, patents, and standards to weave a dense web, believing China could not break free.”

”Xinghuo has proven the fatal flaw in this assumption: when dependency is cut, China will not yield, but will instead build its own path. This path may be bumpier and more expensive, but having a path is better than having no way forward.”

”What’s even more terrifying is that after this path is built, they might no longer need our technology. At that point, what we lose will not just be a market, but the ability to set the rules.”

The article concluded by asking: ”When China has its own chips, its own operating systems, and its own technical standards, will they still need us? If they don’t need us, what do we have left?”

This question haunted Silicon Valley like a ghost.

On the evening of November 8th, in a bar near Stanford University, a group of venture capitalists gathered together. They were the rainmakers of Silicon Valley, having invested in Google, Facebook, and Tesla, but now, they had only one topic of conversation: Xinghuo.

”I met a Chinese engineer who just returned from Xinghuo last week,” said Mark Stevens, a partner at Sequoia Capital. ”He told me that Xinghuo’s R&D intensity is three times that of Silicon Valley, their salaries are 1.3 times that of Silicon Valley, and their equity incentives are five times that of Silicon Valley. More importantly, they believe they are doing something that will change the fate of their country. Silicon Valley hasn’t had this kind of sense of mission for a long time.”

”So you’re considering investing in Chinese semiconductors?” someone asked.

”We already are,” Mark admitted. ”We just invested in a Chinese company working on the RISC-V architecture. We used to think of it as just a spare tire, but now it looks like the future.”

”But the restrictions from the American government...”

”That’s why we have to be fast,” Mark lowered his voice. ”Before policies tighten, we need to invest in what we need to invest in. I have a feeling that over the next decade, the center of gravity for global tech investment will shift to Asia. This isn’t because China is more innovative, but because—they are hungrier.”

Outside the bar, the night in Silicon Valley was still brightly lit. But in the eyes of some, those lights now looked like the afterglow of a setting sun.

One era was ending, and another was beginning.

And the turning point was a Chinese company called Xinghuo.