TSMC of GaAs: How does Win Semiconductors stay in the driver’s seat?

Source: This article is reproduced from Mirror Weekly.

The continued threat of the new coronavirus variant has deepened global economic concerns. Taiwan has made great contributions with its chip industry, burning up its export engine, and the Taiwan stock market has hit the most eye-catching 18,000-yuan market in history. According to our survey, the market value of the top 100 companies made a great leap forward last year, with semiconductors supporting half of the market. The third type of semiconductors are expected to become the next island-protecting mountain. Among them, Win Semiconductors, which has been low-key for many years and ranks 69th in market value, has invested 85 billion yuan in Kaohsiung to start the largest-scale expansion of the gallium arsenide industry. Chairman Chen Jincai said bluntly: "Win Semiconductors has mastered two key technologies in communication technology."

"I dare to make large investments because I am optimistic about the market." At the beginning of the new year, Chen Jincai, the 76-year-old chairman of Win Semiconductors, laughed loudly during an interview and said, "In the era of 5G and AIoT (intelligent Internet of Things), we definitely have a role to play. Wherever there is a demand for high-speed transmission, there is Win Semiconductors."

Chen Jincai's eyes sparkled as he continued to talk about his company's advantages. "5G has a larger and faster transmission capacity. To make AIoT truly effective, we must use high-performance computing and transmission chips, as well as optical applications required for AR (augmented reality), VR (virtual reality), MR (mixed reality), and the metaverse. The two major technologies of radio frequency chips (RF) and optical applications put Win Semiconductors in the most advantageous position. "

In recent years, Chen Jincai has led Win Semiconductors to a complete transformation. Relying on the power amplifier (PA) of radio frequency chip components, it has taken over the mobile phone giant iPhone on the left and the low-orbit satellite leader SpaceX on the right. It has won orders from two major technology giants, Cook and Musk, and grabbed nearly 80% of the global market share, firmly establishing its leading position in gallium arsenide wafer foundry.

Chen Jincai brought out the aerospace certifications he was proud of, "One is from the Chinese Academy of Sciences, and the other is in our hands. Both were obtained on the same day in 2018." "WIN Semiconductors is the only one that has the ability to fly into space. The first Skylink satellite used the chips we manufactured. All low-orbit satellite operators are related to WIN Semiconductors' business."

In addition, Win Semiconductors has spent ten years honing its skills and developed optical application technology with high-frequency chips, which is recognized by the industry as a key technology for 6G. At the end of last year, the world-renowned analyst Ming-Chi Kuo boldly predicted that "Win Semiconductors is the key winner of Apple's Metaverse." Chen Jincai couldn't help laughing when he heard this and said, "Because we have optical application technology."

Chen Jincai speaks loudly because of Win Semiconductors' outstanding operating performance. Its revenue has set new highs for seven consecutive years since 2015, approaching NT$26 billion in 2021, and its performance has surpassed its peers by more than four times. Investors are optimistic that it will make a profit of one share for three consecutive years. Win Semiconductors' average compound growth rate in the past seven years has exceeded 14%, attracting the attention of investors. Last year, its market value reached NT$158.8 billion, an increase of nearly 9% over the previous year.

Chen Jincai predicted that Win Semiconductors will continue to seize high-value markets with its advantages in gallium arsenide high-frequency chips, and will next target the Internet of Things applications brought about by 5G. It is also optimistic that low-orbit satellites and self-driving cars will enter a period of explosive growth in five years.

"These new applications must rely on compound semiconductors, otherwise they will not work. " Many years ago, in addition to mastering the key technology of gallium arsenide, Chen Jincai personally supervised the development of a new technology with higher frequency - the third type of compound semiconductor gallium nitride. Three years ago, small-scale shipments began and the industry named it a "key manufacturer". Chen Jincai proudly said: "We are the only company in the industry with stable shipments of third-type semiconductors. "

Category III semiconductors have a wide range of applications and are regarded as national strategic technologies by local governments. Taiwan has also decided to make the South Science Park S Corridor a key development base. In fact, Chen Jincai had already made advance arrangements. In 2020, he prepared 85 billion yuan in cash to go south to grab land, and construction began in the second half of last year. His actions were more active than TSMC, and it also alarmed Kaohsiung Mayor Chen Chi-mai to visit him in the north.

The global epidemic has sounded the alarm, but Win Semiconductors has gone against the trend to acquire land and expand factories. What is Chen Jincai's plan? Industry insiders said that Chen Jincai has a keen eye. When the financial tsunami broke out in 2007, many technology giants withdrew their investments. Chen Jincai boldly invested US$200 million to expand the factory, aiming at production capacity, and established his position as the leader in the gallium arsenide industry today.

"We will expand in the north this year, and the future will depend on the south. Kaohsiung's production capacity will be twice that of the north." Chen Jincai rushed to start the north-south expansion. "From factory construction to certification and mass production, it will take at least four years. We can't just start construction when we see demand."

Regarding American customers' demands to set up factories overseas under the banner of "geopolitics", Chen Jincai took a sip of water and shook his head, saying: "It's a big headache. Win Semiconductors must continue to strengthen its technology so that customers can only rely on us. "

Chen Jincai then listed the advantages of staying in Taiwan. "The supply chain here is complete, the engineering talent is excellent, and the Taiwanese are serious about their work and have a craftsman spirit, which is suitable for precision manufacturing that requires carefulness and patience." He laughed and said that the wafer foundry is like the Taiwanese spirit of the 1980s, who traveled the world with a suitcase and met the needs of customers. They would meet customers during the day, have meals with them at night, and deliver samples to customers early the next morning.

Chen Jincai changed the subject and put away his smile. He said that Taiwan has problems with water and electricity shortages, and the greater concern is the serious shortage of manpower. "Taiwan's population will have negative growth in 2020. We should try to open up white-collar labor and let Taiwanese and foreign white-collar workers work together to expand the pie." He, who is also the executive supervisor of the Federation of Trade Unions, shouted to the government: "Labor is a long-term plan for cultivating people. It is too late to start strengthening it when we see the employment gap widening."

Along the way, Chen Jincai did not deny that Win Semiconductors copied TSMC's wafer foundry model and established the world's first 6-inch GaAs wafer foundry. It took 11 years to become the leader. In 2010, it successfully entered Apple's supply chain and became a benchmark manufacturer that affects the global high-frequency chip supply. It was even hailed by the market as "TSMC in the GaAs industry."

Chen Jincai was originally a layman in the technology industry. He started out as an accountant and auditor, and has been working in the traditional industry for more than 40 years. In 2003, he was appointed as the chairman of Win Semiconductors. Chen Jincai was quick-witted and asked a senior American semiconductor expert to come to Taiwan to diagnose Win Semiconductors. "I can't say which international manufacturer it was because the other party sacrificed his annual leave and stayed for a week without pay." This time, the expert diagnosed the market trend in the next 10 years, and then Win Semiconductors' R&D team took over to formulate the new 10-year direction.

This 10-year winning blueprint is constantly revised in the management committee every year. Chen Jincai revealed that the industry-leading 6G optical technology was actually decided at a meeting 10 years ago. "At that time, I was optimistic about the game industry and thought why not take advantage of the opportunity to develop optical technology with higher transmission capacity."

In addition, in order to win the target customers, Chen Jincai tightly grasped the OEM orders from the first-tier suppliers, "following the teacher's training. " He recalled that Win Semiconductors started supplying iPhone 4 and kept grabbing two major orders for power amplifiers and 3D sensing (VCSEL) from Avago and Lumentum, which attracted Apple to send people to Win Semiconductors to inspect the factory, and in one fell swoop won Apple's exclusive LiDAR order. "Win Semiconductors' position in the industry is different after winning the target customers. "

Sure enough, Chen Jincai's strategy worked. Chen Shunping, general manager of Win Semiconductors' General Management Services Department, said: "Since the launch of LiDAR technology, many customers have come to us to inquire about it. This also means that Win Semiconductors' insistence on driving market demand with technological leadership is correct. This is the main reason why we are actively expanding our factory."

Chen Jincai admitted that he is very optimistic about LiDAR, saying that it is an extremely important application of stereoscopic imaging. When installed on the outside of a self-driving car, the detection range can reach 200 meters. Combined with AI (artificial intelligence) inside the car, it can judge the driver's fatigue and detect whether there is someone in the car after getting out of the car. As for which customers he has? He smiled and said, "Only Tesla doesn't like it, but many customers place orders here."

Chen Jincai, who is always calm and composed, had long noticed that the competition in the gallium arsenide market was becoming increasingly fierce. Before the second-largest semiconductor company, Macronix, joined forces with Sino-American Semiconductor in an attempt to seize the third-type semiconductor with silicon and gallium arsenide, Chen Jincai began to build a closer alliance with Win Semiconductors. He first allowed Apple supplier Avago to acquire a stake in Win Semiconductors, and then expanded investment in CCL (copper foil substrate) manufacturer Lianmao. The two powerful companies joined forces to attack the 5G infrastructure, network communication, and automotive markets. At the same time, through the allocation of production capacity, a new cooperative understanding was established with upstream epitaxial wafer manufacturers.

Changing the subject, Chen Jincai bluntly said that the outside world overhyped the third type of semiconductors. "I agree with Liu Deyin (TSMC Chairman) that the third type of semiconductors will not replace silicon and gallium arsenide. They are born for special applications in power or communications, so we focus on applications such as 5G base stations and satellite communications."

More than 20 years ago, Taiwan also experienced a wave of investment in gallium arsenide. At that time, the island was flooded with funds. Seeing that Broadcom and Hsinchu were making their mark in gallium arsenide, many big bosses rushed to get in. At its peak, there were nearly 10 companies involved. However, the Internet bubble burst, and the sensational Broadcom hollowing case broke out in 2004, which led to a major depression in the island's gallium arsenide industry. Today, there are only two wafer foundries left, namely Win Semiconductors and Macronix, and Hsinchu is the only upstream manufacturer.

Chen Jincai still remembers this incident vividly. It is not only related to Win Semiconductors' operational revitalization, but the more critical reason is that the former CEO of Analog Devices (ADI) once ridiculed Taiwan, saying: "Compound wafer foundry will never succeed. Even if it succeeds, it will definitely not be Taiwan. "

In 1999, Win Semiconductors was founded with the banner of professionalism and recruited elites from TRW and Bell Labs in the United States. However, due to the immature market, it struggled for 4 years with annual losses of NT$1 billion and fell into bankruptcy crisis. The founder, Xie Shichuan, lost weight rapidly and repeatedly sought help from the founding shareholder and old friend Chen Jincai from the Rotary Club.

"Many times in life, you don't get the path you originally wanted to take. Just accept it when it happens." Chen Jincai, then president of Nan Chiau, took the lead and decided to copy Nan Chiau's operating philosophy, emphasizing that R&D funding must not be cut, and that gallium arsenide-related application technologies must be fully developed without relying on technology transfer. On the other hand, he ordered professional managers to perform their duties, "This is a company, not a laboratory. All those who are suitable for academic studies should return to the United States."

In 2007, under the rectification of Chen Jincai, Win Semis turned losses into profits. He admitted: "I invested in gallium arsenide, which I didn't understand, because of personal relationships. I didn't expect that my relative would become the victim in the end." He laughed and said that at that time, his special assistant sorted out a thick stack of negative reviews of Win Semis and advised him not to get involved in muddy water. "Xie Shichuan lost weight for Win Semis, and I went there to save talents." Chen Jincai shook his head and said.

From accounting and traditional industries to the technology industry, Chen Jincai said that he had two great benefactors in his career. "The person I am most grateful to in my life is Chen Feilong, the chairman of the Nanqiao Association. " Looking back at the 19 years he has been at the helm of Win Semiconductors, Chen Jincai did not deny that he made a bold decision when he entered the society. "After retiring from the army, I first worked as an accounting assistant at Tamkang University for one year. After completing the exam, I passed the civil service exam for Hua Nan Bank, which was obviously a golden rice bowl. I went to work as an auditor at Anhou (accounting firm) despite my family's opposition. "

Chen Jincai said frankly that Chen Feilong was his career mentor. "After two years of auditing accounts at Nan Chiau, the president saw my professionalism and promoted me to the accounting department of Nan Chiau, which gave me the opportunity to gain cross-departmental experience. He also found three retired global senior management professionals from the International Executive Organization (IESC) to coach me in production, manufacturing, management, marketing, and finance, and systematically trained me."

Later, Chen Jincai decided to rescue Win Semiconductors, but Chen Feilong still let him serve as the president of Nanqiao. He said frankly: "Win Semiconductors was in a very bad situation at the time. In order to save money, I served as the chairman, general manager, and chief financial officer. I didn't dare to take Win Semiconductors' salary, and I lived on the salary of the president of Nanqiao." To this day, Chen Jincai still regards Nanqiao as his second home, and Chen Feilong still gives him the job of "top consultant". He goes to Nanqiao for a meeting at 8 o'clock every morning, and then drives to Win Semiconductors in Guishan, Taoyuan at 10 o'clock.

Talking about the key to Win Semiconductors' turnaround, Chen Jincai laughed, "This company has a good technical foundation, but the problem is that wafer foundry requires huge funds. How can you ask technology people to find money? My job is to find money. Because of the trust of Inventec Chairman Ye Guoyi, I have no worries and can make Win Semiconductors the leader. "

In order to improve Win Semiconductors' operating conditions, Chen Jincai tried to reduce capital and then increase it. The first capital increase was as high as NT$700 million. He approached Ye Guoyi and it only took him a cup of coffee to convince him. With Ye Guoyi's funds and Chen Jincai's management, Win Semiconductors laid the most solid foundation.

Chen Jincai recalled that when he first took over Win Semiconductors, 3G was taking off and the company was actively investing in technology development. However, Ye Guoyi found that Global Communications, a competitor in the industry, was planning to reduce capital and then increase capital, so he immediately contacted him to initiate a merger. This merger took only three days, successfully helping Win Semiconductors eliminate market competitors and seize the 3G application boom period.

Chen Jincai has endless thanks to Ye Guoyi, but he emphasized that the foundation of Win Semiconductors' success is technology. "Many customers use Win Semiconductors as their only source of technology, or rely on Win Semiconductors' new technology for R&D. We must ensure that our technology is at the forefront. Basically, it is the most efficient and cost-saving approach for IDMs (integrated device manufacturers) to come to us. If you want to know the prospects of Win Semiconductors, just look at the total market. Our growth rate will definitely exceed the total market." Looking forward to 2022, Chen Jincai's eyes showed confidence and he once again laughed his signature loud laugh.