In the movie the Graduate staring Dustin Hoffman, Mr. Robinson tells the Dustin Hoffman character the future is plastics. It could be, but the real future was the transistor or what we call computer chips.

Recently read an excellent book on the subject called Chip War by Chris Miller published by Scribner, NY, 2022. The book highlights the history of the computer chip as well as adds geopolitical themes which the State Department worries about.

Similar to Japan, Korea was important to the US that it develop into a market economy. Lee Byung-Chul founded Samsung. Lee was a natural businessman navigating South Korea’s complicated politics with finesse. The motto of the company is Serving the nation through business and Samsung was soon a conglomerate. Lee had a notion to break into the semiconductor field but it was not easy to jump from basic assembly to cutting-edge chipmaking.

Lee thought the environment was changing as the US government had helped fund the creation of the Korea Institute of Science and Technology and a growing number of Koreans were graduating from top US universities and being taught by US educated professors in Korea.

The South Korean government had identified semiconductors as a priority. Lee went to the US and toured plants, he wondered about secrets, but was told mere observation cannot be replicated. South Korean government promised $400 million for financial support. The banks would lend millions more. Samsung made the decision to enter the industry with a $100 investment.

Intel was worried about the Japanese influence and offered Samsung a joint venture selling chips manufactured by Samsung with Intel’s brand. The added advantage for Intel, Korea’s cost was substantially lower than Japan’s costs and wages.

Micron, which was cash strapped at the time, did a deal with Samsung to license a design for a 64K DRAM. What MICRON did, Samsung learned.

By 1998, South Korean firms had overtaken Japan as the world’s largest producers of DRAM, while Japan’s share fell from 90% to in the late 1980’s to 20% by 1998.

Linking to dividend paying stocks, all profitable companies need the help of the government. Sometimes it is directly, sometimes it is indirectly but good relations with the government is important.

There are more questions than answers, till the next time – to raising questions.