Chapter 4Launch of MegaChips

8.Unflagging determinationDirection of semiconductor industry in doubts

While Ricoh was achieving great success, Shindo was feeling concerns about the direction of the Japanese semiconductor industry. In the late 1980s, Japan dominated the worldwide semiconductor industry, this brought trade friction between Japan and the U.S. There were concerns that the semiconductor industry in the U.S would decline and degrade. Shindo believed the U.S. industry could actually be revived since its competitive power relied on creative technologies such as application and algorithm development and these would be the key drivers of the industry recovery.
Japanese semiconductor companies on the other hand, placed great emphasis on productivity. Shindo was certain that a fabless business model which he saw in Silicon Valley would be the crucial key factor to be successful for a start-up company attempting to enter this industry. His idea at that time was completely different than most other major companies who had their own factories, and focused on the traditional business model aimed at enhancing production capabilities. Shindo’s proposal to shift to a fabless style was not accepted by Ricoh. Furthermore, many people around Shindo chastised him saying that “he had lost his mind”. Once again this kindled his bulldog spirit, and Shindo became determined to launch his own company and dedicated himself to proving that his idea was right.

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9 .Launch of MegaChipsPerseverance in the face of many obstacles

Shingo resigned from Ricoh 1990 after the New Year’s holiday. He gave up his safe career and to follow his dream to build a fabless company dedicated to developing advanced system LSI’s.
Six other people followed Shindo’s dream and the Seven Samurai were ready to build a new kind of company. This company was going to be different than the majority of semiconductor companies at the time who were focused on standard commodity products like DRAM (Dynamic Random Access Memory) chips. System chips presented great challenges but the Seven Samurai were up for the challenge to develop a new generation of System IC’s.

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The first obstacle came quickly, with limited financial resources they could not rent even rent office space for lack of the funds needed for the security deposit, and even had problems trying to open a bank account. For the first three months; while they were preparing to start the company, they were nomadic. They had no office they wandered from place to place mostly the local community centers.
After being office-less for many months and meeting with countless building owners and bank branch managers they got their first break and were able to open a bank account and rent some small office space for their business. In the early days getting business was the first priority so each of the founding members started prospecting for business with own professional network.

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