- Title
- Morning Letter 22nd
- Date
- 2008/09/04
- Contents
Hello!
It has been a while. The long hot summer is coming to an end, as we welcome the fall with clear blue sky.
Today, I would like to share my thoughts on the survival strategy in the downturn market, which has been the talk of the town lately.
First, let's take a look at our current economic situation and market trends.
The bottom line is that many experts predicted that we had to go through this long-term deep recession, and we are already experiencing such situation.
If you look at the semiconductor industry economic cycle, the longest down turn this industry has experienced began in the beginning of 2002 for a year and a half. However, this recession seems like it will last for more than 2 years, so everyone is becoming nervous.
Semiconductor and PCB industry can both be classified as product manufacturers, equipment manufacturers and raw material manufacturers. However, a continuous decrease in ASP (Average Selling Price), which leads to reducing and freezing of CAPEX (Capital Equipment Investment Expenditures), and a continuous decrease in purchase price of raw and subsidiary materials are causing both industries suffer.
When I met with a foreign customer recently, he was pretty concerned and said, "until now, we could still sell semiconductor products when we priced them under the unit cost in the down turn market. But, this time it's very strange that there is no demand even when the products are priced below the unit cost."
What should we do to survive in this long-term and unusual recession? I am sure that all companies have their own risk management strategies.
Are you familiar with the parable about blind people touching an elephant?
Several blind people gathered together, and described specific parts of an elephant that each person touched. However, they could not agree on the complete image of the elephant with different ideas. Likewise, it won't be easy to find a clear solution or a right direction in a situation that we are in.
I would like to suggest one direction that fits our situation.
That is "Strength" and "Patience".
Strength can be divided into three categories; manufacturing competitiveness, financial strength and the power of unity.
Manufacturing competitiveness, as we all know, is the 'ability to make what our customers want at a reasonable/low cost.' For a long time, we have been reinforcing this skill through our TMT meetings.
Financial strength, also called 'deep pocket', is how full the financial pocket is to go through recession. Through our transparent management based on our core value of 'integrity', we have enough strength compared to our competitors.
The power of unity means 'integration.' One leader and his followers are enough to manage a company with $100 million revenue, but 2~3 leaders and many more followers are needed to manage the company when the revenue increases to $300 million~$400 million.
The power of unity, in other words the integration of team leaders and followers, has never been more important as we go through a long tunnel to reach $1 billion revenue.
I ask all of you to unite like mud. This is not a matter of choice, but rather something that has to be done.
Also, I ask for your patience.
This is different from an optimist who is indefinitely waiting for an upturn market. Like the lesson from 'Stockdale Paradox,' we need to believe that the market will be upturn again, but be prepared for the possibility that the market stays the same for this year.
Water's boiling point is 100°C. Water has no reaction until 99°C, but the water will start boiling when the temperature is increased by just 1°C.
Furthermore, after we wisely overcome this down turn market, we will gain valuable benefits.
First of all, we will remove all the company-wide excess bubbles that existed in SIMMTECH, just like smelting gold from gold ore.
I would like to introduce a biblical verse that goes so well with what I just said.
"But He knows the way that I take; when he has tested me, I will come forth as gold." -Job 23:10
By passing through this process all the bubbles that prevented us from gaining manufacturing competitiveness, financial strength and the power of unity will disappear.
Another benefit will be the self-confidence we will gain from the fact that we did it on our own. We will gain a very precious lesson and know-how from being able to make a profit in this difficult situation. Our deep trust for one another and self-confidence will make SIMMTECH so much stronger that we will be surprised to our sustained growth regardless of the circumstances.
Recently I saw a flying eagle on TV. Unlike other birds, such as crows, eagles can soar very high. An eagle does not flap its wings as much as other birds do. And when other birds annoy an eagle, it can fly up very high with just a single flap. And that altitude is so high that other birds can't even survive.
Won't we be like an eagle when we overcome this down turn market?
Let's overcome this difficult time and soar high!
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