Don't let them buy Toshiba storage? Chinese companies poach their people

Source: Content from Nikkei Chinese website, thank you.

Toshiba's semiconductor memory business still has no confirmed buyer. On September 13, Toshiba once again announced that it would "accelerate negotiations" with the Japan-US-ROK alliance, which was selected as the preferred negotiation partner more than two months ago. Behind the much-watched sales negotiations, the crisis is quietly approaching. Other competing companies have added production equipment, and Toshiba's technical personnel are also constantly leaving. Not only South Korea and the United States, but also China, which is cultivating the semiconductor industry, is taking action.

In July, the sales manager of a semiconductor manufacturing equipment company asked the technicians at Toshiba's Yokkaichi plant, "It will be difficult to deliver the products this year if things continue like this. Please make a decision as soon as possible." In the past, Toshiba, as a customer, would have taken a tough stance in the negotiations. But things are different now.

Samsung Electronics and SK Hynix of South Korea, which are optimistic about the prospects of the memory business, have begun to increase their production capacity. In addition, with the advancement of autonomous driving technology, Taiwan Semiconductor Manufacturing Company (TSMC), which is engaged in outsourcing processing, has also built new factories, resulting in a global shortage of manufacturing equipment. Since it is a seller's market, equipment companies will not wait patiently for Toshiba, which has been slow to make investment decisions.

Toshiba was unable to make a decision because of the deterioration of its relationship with its co-investor Western Digital (WD). The two companies went to court over the sale of their memory business. The person in charge of production technology at the manufacturing front line expressed dissatisfaction: "If we delay the purchase of equipment, our competitiveness will definitely lag behind other companies in two years."

Abnormal situations also occurred in the design and development department.

"Do you have Western Digital people there?" "No, only SanDisk people." This is the first conversation Toshiba has with SanDisk, a subsidiary of Western Digital, during a conference call.

In the cooperation between Toshiba and Western Digital, production has always been the focus, but it is precisely because the two sides have established a solid cooperative relationship in design and development that they have maintained product strength that can compete with Samsung. However, in June, Toshiba blocked Western Digital employees' access to information and banned them from attending meetings on the grounds that "(Western Digital) illegally obtained confidential information."

It has become a routine to make such confirmation before the conference call, but in fact Western Digital employees were also attending the meeting. Attending the meeting in the name of SanDisk employees was tacitly approved by Toshiba. A Toshiba employee said self-deprecatingly: "More than 1,000 adults pretended not to see (Western Digital employees). Although it is to maintain the R&D system, I still hope to change this abnormal situation as soon as possible."

Apparently seeing through the decline in the cohesion of the on-site technicians, other competing companies came to Toshiba to poach people. In the early spring when the sale negotiations officially began, suspicious figures would appear at the south gate of the Yokkaichi factory in the evening. They were employees of a headhunting company. The south gate was closest to the development facilities. The headhunting company came here to poach technicians called "process engineers" who could improve the yield of semiconductor production.

In the semiconductor field, sometimes a single idea can significantly improve the yield and product performance, so the competition for outstanding technical personnel is very fierce. Poaching is also commonplace, and headhunting companies admit that "it is a common practice to identify targets through recommendations from former colleagues and lists of published paper authors, find opportunities to meet, and then lobby."

The head of a foreign headhunting company revealed: "The reward for successfully recruiting an excellent technician for a company is 40% of the job-hopper's annual income." In the semiconductor field, the introduction fee for a technician can sometimes be as high as 10 million yen per person.

If a confidentiality agreement is not signed, the headhunter will not tell the client who is the client. However, at Toshiba, it is well known that China's Tsinghua Unigroup is poaching people behind the scenes. The main "buyers" of technical personnel used to be South Korea, and now they are China.

Yangtze Memory Technologies Co., Ltd., a subsidiary of Tsinghua Unigroup, is using government funds to build a large memory factory in Wuhan, Hubei Province, with an investment of more than 2 trillion yen. A Tsinghua Unigroup official said that in order for the factory to start smoothly, "at least several thousand technicians need to be secured before 2018."

Tsinghua Unigroup has established a research and development base in Silicon Valley, USA, and is poaching technical talents from semiconductor manufacturers. It is also discussing the establishment of a design and development base in Japan and actively seeking Japanese technical talents. Toshiba technicians, who are bound by the "seniority-based" income system of Japanese companies, are considered by Tsinghua Unigroup to be "cheap and excellent talents."

Large Japanese electrical companies have successively abandoned their semiconductor businesses, Elpida Memory has gone bankrupt, and Renesas Electronics has laid off a large number of employees... If we only look at Japan, the semiconductor industry is like a sunset. But looking around the world, semiconductors, which support the development of an information society from the foundation, are a potential industry with a high growth rate.

Therefore, there are many semiconductor technical talents who have switched to large overseas companies with abundant R&D funds. A former NEC technician who has worked at a Chinese semiconductor manufacturer for more than five years said, "I can continue my previous research here. Even if my former colleagues think I am a traitor, I don't regret it."

Although it is difficult to see government statistics, the technology outflow that the Ministry of Economy, Trade and Industry is worried about is happening all the time. In the process of selling Toshiba's memory business, the "prevention of technology outflow" that the Ministry of Economy, Trade and Industry regards as a golden rule is just empty talk. If you listen to the front line of Toshiba's Yokkaichi factory, you can hear the voice of "Hamamatsu-cho (Toshiba headquarters) knows nothing."

If we continue to look down on the frontier, our competitors who offer generous treatment will snatch away excellent technical talents. The effective recruitment ratio of the semiconductor industry has increased from 0.5 times to 1.5 times in three years. "As layoffs in Japanese companies come to an end, recruitment will become increasingly difficult in the future," said Recruit Career, a Japanese talent agency.

Toshiba's Yokkaichi plant's sixth manufacturing plant is scheduled to start production in 2018, and there are plans for further expansion. However, if the investment decision is slow, the competitiveness of the factory will decline, and the morale of the front-line staff will continue to decline. In the long run, the competitiveness of the world's second largest memory card manufacturer may inevitably decline.

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