Oral-History:Hong Eu
About Hong Eu
Hong Eu graduated from Seoul National University in 1966. After serving in the Navy from 1966 through 1969, he studied eletronics at Yale University, graduating in 1971.
This interview provides a sketch of Eu's employment career. Eu's employment at Signetics began in process engineering. Eu describes the Signetics company's production model, with wafers produced in the U.S. and assembled in Korea. When Signetics eliminated Korea's role in this process, Eu moved to Oltron Corporation, manufacturer of digital wristwatches, LCD watches, CB radios, and video games. Eu describes the challenges of maintaining quality and low production costs on these consumer products. He describes the technology and marketing of Oltron's video game products, detailing corporate competition and Oltron's efforts to obtain manufacturing contracts. Marginalized in the video game market, Oltron next focused on telecommunications, producing a system for automatic telephone dialing and marketing it in the U.S. and Europe. Eu describes his transition from this work to cellular phone design. In 1995 Eu became president of a leather tanning and garments company that was venturing into construction, department stores, and telecommunications. There he worked on cordless phones, PBX, and digital phones.
This interview considers the history of Korean industry and of Oltron, including its acquisition by OPC. Eu ends the interview by providing further details on previously addressed topics, including the process and influence of video game design.
About the Interview
HONG EU: An Interview Conducted by Andrew Goldstein, Center for the History of Electrical Engineering, 26 August 1996
Interview #314 for the Center for the History of Electrical Engineering, The Institute of Electrical and Electronics Engineering, Inc.
Copyright Statement
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Request for permission to quote for publication should be addressed to the IEEE History Center Oral History Program, IEEE History Center, 445 Hoes Lane, Piscataway, NJ 08854 USA or ieee-history@ieee.org. It should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user.
It is recommended that this oral history be cited as follows:
Hong Eu, an oral history conducted in 1996 by Andrew Goldstein, IEEE History Center, Piscataway, NJ, USA.
Interview
INTERVIEW: Mr. Hong Eu
INTERVIEWER: Andrew Goldstein
DATE: 26 August 1996
PLACE: An Yong
Education
Goldstein:
Could we begin with your education?
Eu:
In 1963 I got into the Seoul National University and then from 1966 through 1969 I was in the Navy. After that, I returned to college and graduated in February 1971.
Goldstein:
So you entered Seoul National University in 1963?
Eu:
Yes. I graduated in 1971.
Goldstein:
Right, but you graduated from Seoul National University in 1966, and joined the Navy?
Eu:
Right.
Goldstein:
Then you were in the Navy until 1969 and thereafter you went to Yale. Can you tell me about the classes you took, and what the education was like?
Eu:
Electronics was my major. In college, what they expected was just general things and knowledge of transistors. After I graduated I began to apply the theories I learned in college.
Yum Chan Dong employment; automatic bonding
Eu:
I worked in schematics part time at first, from early November to December 1970, when I was hired full time.
Goldstein:
Where was that?
Eu:
Yum Chan Dong in Seoul, near the Kimpo Airport. At that time it was my first experience with the bunting machines, the ICs and the wafers. I did the inspection under the microscope and found that they were all different. The commercial product is about 10 or 20 times the regular magnifier, making it easy to see whether the dye was good or bad. Most of the commercial was physically damaged.
The military is different from the commercial. It starts with 100 times the regular magnification and enough high power to actually inspect the outside. Any blemishes on the outside and such kinds of things are exposed. If visually acceptable, then you start the dying process. Due to the INT, however, the military product was much more difficult to make. This was due to identification traceability; that is when the names written down were not traceable. At that time the semiconductor packing material was silicone. Before that we did all the thermal dye attaching to the lead frames, which is gold plated, under a heat block that was like 350 °C. We called it a 1 ml. diameter wire, though some of the power packages that they used were thicker. They all were called wires. The vendors dispensing the wires were CRM and Secom at that time. After the binding dying was done we put on the resins and dried in ovens at about 400 °C for about an hour or two. Then we sealed it using silicone, and then later on we changed an epoxy because it is much better than the silicone.
First it came from Dow Chemicals, and then we noticed a lot of the units had cracks, which made nickel-wet dipping process a problem. Nickel-wet is a very, very strong acid. After that we’d clean it, dry it, and then we could solder it. So we changed to epoxy and the transparent resin, which was a good idea because it was very pure. Its expansion coefficient was big because all thermal expansion collections are all different. So when you do the silicone encapsulation it hollows out the inside.
When the temperature goes down the board shrinks, so by the time you use the IC in the printed circuit board, then the temperature goes up. This allows it to hold the boil and shows a thermal failure window. We got rid of that process and changed the epoxy. After that here were no cracks, and so there was no chance the nickel-wet or strong acid would penetrate.
Goldstein:
What is nickel-wet?
Eu:
Nickel-wet is a very strong acid. If there were leaks, it would disturb the solder, so to keep this from happening we would use a different process called de-flasher. De-flasher uses crystals, which allows you to remove it from the mixture with the epoxy. This process, however, does produce some pollution.
After a couple of years we stopped using the de-flasher process although we did overcome these flaw at the time. That process has been developed for 14 pins, 16 pins, 18 pins, 24 pins, and 40 pins. The bonding times and other measurements were very important. When we changed any aspect of the process, like the weight of the bonding arm, we had to retest all the measurements. If they checked out we proceeded.
Then we changed the process. All of this gave me an opportunity to learn a lot within a very short time. I went from knowing nothing to an introduction to this kind of process, and I later learned more when automatic bonding machines were introduced. Dr. Warner Deutzer, a German gentleman, designed the automatic bonding machines. They were pretty simple, XY based, so they bonded quite successfully. Even the die machines are fully automated.
At that time, we started from what the manual said. Our lead operators at the time were bonding around 15 wires. I started from around 60 units in an hour. Then, after we changed the equipment to KNS, it rose to something like 120, because the stitch bonding was almost automatically done. Then we modified that, and we could reach almost 180 units in an hour. The automatic bonder, on the other hand, could do about 400 units in an hour. Once it reached that point I quit the company. That is when the bonding reached something like 2,000 an hour, but I wasn’t there to experience that.
Signetics
Goldstein:
Can you tell me about the structure of Signetics in Korea?
Eu:
Yes, the father company was in Silicon Valley, Sunnyvale, California. It first belonged to Corning Glass and then they sold the company to Phillips. Signetics, then had its head office in the United States at Sunnyvale, all the wafers were fabricated there. After the wafer were made in the U.S. they were then sent to Korea for assembly, not just because the labor cost there was low, but also to increase the yield.
At that time you had to take out the pigtail when the stick bonding was done, and then you have to take out the tail of the wires. Later on with KNS bonding, you didn’t have to. They called this process “gray line,” and it was used in the United States because many grandmas were hired to take out the gold wire. Removing that one little gold wire under a microscope was very difficult. The dyes can be hurt very easily at this time, which can be very expensive because of this the yield was not that great.
When they transferred that process to Korea, younger ladies there did this who had smaller hands, they also used metal chopsticks. The Chinese and Japanese didn’t use the metal chopsticks so it was very slippery, and less reliable. But because Koreans use metal chopsticks we can pick up very small items, which means that the hands have to be very mobile or at least better than the Western ladies. So, that process was good to the Far East — much more effective and bringing higher yields. Moreover the labor cost is low.
Goldstein:
When did Signetics begin the final assembly in Korea?
Eu:
I believe they looked around in 1967, and started near the downtown but that was just for a short time. After that they took the site that they believed would be the most successful. They moved to Yum Chan Dong, which is near the airport, built a big factory there and then started pumping out the money.
Goldstein:
That was after 1967?
Eu:
They moved in early 1969. In Korea I learned not just the packaging technology, but also the wafer fabrication. We got this information from the Americans, who enjoyed the low labor costs and higher yield. The Koreans too enjoyed these things. I learned from Americans about many things, like management, system engineering, and quality assurance, that was all C curve and sampling plans. Without that industrialization of the Koreans, it would have been delayed for many years, so it was good marriage.
Goldstein:
Then what was your position at Signetics Korea, and what was the management like? How many people were under you, and over you?
Eu:
I started as a process engineer. I took care of all the process assemblies and packaging. The factory manager was Dean Strowser, and the Controller and President were Americans. We learned English and other things. Korean people can get easily excited about something, but instead of emotionally thinking about something, we learned to think logically. If you’re stubborn that’s no good, only logic mattered. That is the same for everyone, from the President of Korea to a five-year-old boy, it doesn’t matter.
Oltron Corporation
Eu:
In late 1979, I resigned the company and joined a company named the Oltron Corporation.
Goldstein:
I don’t know what that is.
Eu:
That was a new company, established in 1974. The boss of Signetics moved out and established that company. So I joined there, because the Signetics head office decided not to transport the wafers to Korea because of the electrical supplies and other environmental concerns.
Goldstein:
Can we go back to when you work all the bugs out of the assembly? Did your job become more routine?
Eu:
Yes, and then I hired many people who worked for me. I became very bored with the newer process.
Goldstein:
And you said Signetics didn’t want to relocate the wafer fabrication plant to Korea because of the unreliability of the power supply?
Eu:
Not just the power supply, also because of the environment, including the water and Korean regulations. They therefore stayed in United States. So, I quit the company, and then joined the Oltron Corporation.
Goldstein:
Where was that based?
Eu:
In Curro, Seoul’s Industrial States. From downtown it takes about half an hour. Today, you never know because of the heavy traffic. At that time we started we made digital wristwatches and it was pretty good. Then we switched over to LCD watches. In the meantime, we diversified the product line to include CB radios and TV video games. The TV video games, we called Pong Games, which was the first introduced by GI as ball and paddle games. Later on TI came up with the same kind of product. It looks almost like a copy of the GI’s and it was really successful.
Goldstein:
That was before 1979, wasn’t it? Was that before you got there?
Eu:
No. The old company was established in 1974. I joined in ’75, and within one year they designed and started to produce the wristwatches, the LED watches. We called them “blind watches,” because of the power consumption and whenever you wanted to see the time you had to press a button. Then in a few seconds it shows the time, and then it goes dark again. That was how the business started. When I joined, the watch was not that great. It had lots of problems. So I flew to Tsu San many times and spent many days down there teaching them how to control the dimensions for quality assurance. I taught everyone, from the management and vice presidents down to the operators.
Goldstein:
The people you were teaching, were they contractors or were they your suppliers?
Eu:
They were suppliers of the watchcase.
Goldstein:
So Oltron wasn’t vertically integrated this way?
Eu:
No, and at that time they didn’t have enough concessions in the dimensions, so the enclosure of the body and the back were not matched very well. What would happen is when you tried to make the right cut for a good fit, often times the blades were not sharp enough. I showed the tech mounting cutting blades, the shadow graph, and said “See, this is the difference. Until you do it this way, then you are out of tolerance. So you have to sharpen again after 200 units.”
Goldstein:
Now, why would you work so hard with this supplier rather than simply take it to a different one?
Eu:
Because there are not many watch case suppliers around, so there wasn’t much choice at that time. Of course, I tried Hong Kong, and I stayed there a couple of weeks, and all the samples were great. So we placed an order first for 5,000, and that didn’t work out because we had the same problem.
After some time we were faced with the problem of having to throw away parts, which was not very feasible. I was posed with the question of how many watchcases could throw away before it greatly affected our sales revenue? So, I had to solve that problem, as well as the quality issue. We could control what happened inside the company, but outside, with the problem case, we knew couldn’t always control the product and we couldn’t always throw the defective parts away. So, sometimes we had to work on the defective parts to make them fit properly. Can I take my watch off? It was made back in 1978. You see area, the corner of the watch, it has a very sharp end and it can hurt your skin which is a problem. I taught them to puff it a few seconds for it to pass inspection.
Goldstein:
Were the watches intended for domestic sale, or export?
Eu:
Mostly exports, and then later on domestic sales, but the price dropped radically. Finally Hong Kong people said they would buy the parts. First they purchased all the inside parts, we called modules, but later on they in turn build their own. Today they still build their own at a lower cost for themselves.
We still maintained some quality levels, because we can’t close the door tomorrow, but customers began asking for the same low price that Hong Kong gave.
Video games
Eu:
We got tired of that and then in 1977, I started doing telecommunications and the video games. We stopped doing other things like the Speak-and-Spell, that thing where you hit the button and can tell what it will spell. TI’s product was good for the English in the country, because even if the pronunciation is wrong, you could at least tell if your spelling was right. At that time, the RAM memory was very expensive, so they couldn’t afford to have a very nice voice quality. Therefore we realized a quality product was far off, so we concentrated on microprocessor based video games. It was the 6502 based processors, called the ASICS, which took about five years to develop.
We spent a lot of money and failed. We worked very hard to design the chips and the systems, and we hoped for good business, like the Atari Games, and the goods sales. The manufacturing was going to be done in Korea. The demonstrations for Coleco went well, therefore the Chairman and the President gave us a contract. Then a few days after I left Hartford, which is the head office of Coleco, TI guys came in, and made really good suggestion, so I was bumped off.
Goldstein:
Let’s see if I understand this. You were going to manufacture the video games and sell them to Coleco, is that right? But then Texas Instruments interceded? They stepped in, and they got the contract themselves?
Eu:
Yes.
Goldstein:
Tell me about the way these video games were designed and developed. Do you develop the hardware, and then offer it for sale to a company like Coleco, who simply put their brand name on it? Do they ever design it and asked you to manufacture it?
Eu:
No, we designed it. For about four or five years there were no customers, we just worked hard to design the product. We tried other arcade games, such as the big one at the time Pac Man, but they failed.
Goldstein:
After Coleco said no were there other companies?
Eu:
No, most companies avoided us because TI controlled almost everything. One of the disadvantages we had was that we didn’t have software engineers to support the big programming. So, we contacted Spectra Vision or rather Activision, the one that had cartridges. That’s where the RAM codes were written, so you just plugged in there, and it becomes different game.
Goldstein:
So when you approached Coleco, you had a few games to offer?
Eu:
Just a few games.
Goldstein:
When you say that Texas Instruments had conditions, what do you mean?
Eu:
We didn’t have a fabrication process, so we had to subcontract some of the work to Silicon Valley. But TI had everything back in 1981 and 1982, and the semiconductor business was still in its infancy. Due to this it was in TI’s best interest to also work in video games.
If you just compared Apple to our product, I mean the hardware, ours was probably a little bit better. But that’s not all to consider in this business, because the system may be good but there has to be reliability of supplying the product. At that time I was so young that I believed if you have a good product then everybody would buy it. That was very naïve. Looking back from where I am now I see that Coleco’s decision against us wasn’t bad. Anyway, that’s the story about the video games.
Goldstein:
How many people were working on it with you in those four or five years you had no customers? What sustained the company at that time? Where did the investment come from?
Eu:
At the time we had no customers because we didn’t have the products. The investments that sustained us came from the head office. We had a New York branch office that dispensed the money.
To continue with the video games, the management team thought it would be a very good future product. In 1980, Oltron was not in a good situation financially, and then when Coleco refused our products in 1981 we stopped making them. We then contacted telecommunications.
Telecommunications; automatic dialing
Eu:
In 1977, I picked out the autodial—at that time, all the telephone systems were monopolized by each country’s government so I couldn’t get into the telephone thing. What I realized was that there were side services to the telephone, like the item that helps the dialing that I could focus on.
[Tape 1, Side B]
Goldstein:
Let me repeat what you just said. You were talking about the dialing unit and the keys it uses. You then started talking about the twenty automatic keys used to dial. Can you expand on this?
Eu:
There were ten keys, but there was an option key also but it was a lower frequency. Most frequency numbers, because they come out after a few seconds, are in the upper frequency. Consequently, you have two tones for each key. If you receive this, then this number will be dialed out and if the option key fits then the frequency becomes lower. This number goes out, and also the direct dialing.
At that time in Korea, and in many European countries, everyone used rotary phones. Even the United States used rotary phones. So instead of this the cumbersome dialing, you just hit certain buttons. It was so much more convenient, especially for the fingers of secretaries. It worked just like a calculator, or a watch that was programmable. It was very good product.
Goldstein:
I’m not sure I know how this would attach to the phone system?
Eu:
You connect this to the phone.
Goldstein:
You couldn’t do this in the United States. Isn’t it true that you weren’t allowed to manufacture equipment?
Eu:
It was allowed because we got FCC approval. So we shipped about twenty thousand to the United States. At that time, it was very expensive. I was an engineer, not a businessman and sold it very cheap as compared to what it was worth. I was asked, “How much is it?” I said, “Oh, it’s a hundred dollars.” In the 1970s one hundred dollars was the equivalent to three hundred, which was a lot of money.
Goldstein:
What brand was this product to be sold under?
Eu:
The Micon and it had Oltron’s name on it.
Goldstein:
Was Oltron a brand on the watches also?
Eu:
Yes, sold a lot of good quality Oltron watches to the United States. Anyway, I knocked on AT&T’s door with the phones, and they said they will call us if they needed any. At that time all phones were leased from them, so if they called us each call cost us at least one hundred dollars. That was way too much for us to pay. I think this was because it was based on microprocessors. Due to the fact that the system was processor based whatever was out of order, any function, means it was totally out of order.
Goldstein:
You mean you were trying to get AT&T to offer the product, but they refused because they used microprocessors?
Eu:
I also tried Sprint. Today Sprint is big, but at that time it started somewhere near San Francisco. And MCI was contacted too, but it was too expensive. We shipped out about 20,000 to 25,000 units to the United States. It wasn’t very successful because it was too expensive.
I also took it to Europe, and we got a program from Scandinavian countries, so we sold them to there. But the quantities were not enough. So, I attacked the German Bundespost. At that time, TEC was importing this product. Still, the companies near Frankfurt, about one hour drive from Frankfurt liked the product. When I showed them a demonstration, the manager of engineering said he was so excited about it he couldn’t get sleep. I put his home phone number in, and hooked it up to the telephone line, and said, “You hit this.” He did and his wife answered. The manager said, “Oh, I can’t believe this.” So he tried it again and again finally saying, “Oh, now I have to get it.” Later he was showed a Siemens unit that was big and clumsy, with only one digit.
Goldstein:
Was the Siemens not electronic? Was it electromechanical?
Eu:
It was like relays. It had about 80 to 40, when a normal switch is 80 to 35 plus 2 K bytes of RAM. That was the Siemens brand. Our phone worked even when you pull out the batteries because there was a little electron battery inside. It supported Siemens memory. This was good for Europeans because they unplug everything and go on vacation. After six weeks they come back and plug in, and it’s still there. So, they were very excited.
They want exclusivity rights, but I said, “Get the Bundespost approval first.” So, of course they tried which was very difficult because of the power that Siemens in the Bundespost. But we tried. We supported all the materials and everything. After nine months, they rejected us because they said it will make the German people lazy.
We expected good business, and they said, “We want a minimum of 5,000 a month, but it could go to 10,000 to 50,000 a month.” We thought that would be wonderful. We were excited about it, and waited, and waited nine months. After nine months, nothing. We then changed the strategies to take out all the clock options and the calculator options, but strengthened the dialing functions. So we called it at that time MD-61, a Memory Dialer 61. That was the second generation. We sold also to Scandinavian countries and many countries.
In 1980, we started to build some telephones for Denmark. But actually, they wanted us to ship them to the United States. Because of all the labor unions, we couldn’t ship to Denmark any units. So, politically, it was no good. Only America’s FCC authorized the telephones. So we got FCC approval, and we shipped some very nice, very expensive phones to the American market.
Goldstein:
Who sold the phones in America?
Eu:
GNTA of Denmark, and through GNTA we built lots of repertory dialers to TTAS, which is a Copenhagen company that is run by the government. Today they say jokingly, “This is a private company, 100 percent owned by government.”
Solitaire phone manufacturing for GTE; Code-a-Phone manufacturing for Conrac
Eu:
In late-1980 there was a tender from GTE. They used to have a big factory in Huntsville, Alabama, and wanted some OEM business. There were twenty-two volunteers involved in the program, including three Japanese companies, but we were the ones selected.
Goldstein:
To manufacture what?
Eu:
Phones called the Solitaire, which was a one-piece phone. It was very successful. We started the shipments in 1982, and in 1983 sent more than one million pieces. In 1984, the telephones business wasn’t doing so well in the United States. But, we enjoyed a lot of good business with GTE.
One of the big bosses of GTE moved on to Conrac. Conrac was the father of the Code-a-Phone and maker of answering machines. They instructed the Code-a-Phone people to visit Oltron, because to GTE the Oltron phone was of very good quality and priced very well. Also the billing was punctual. All of a sudden I got a phone call from unknown people.
At that time, Jim Owen was the Vice President at Code-a-Phone. He came in and we talked. The first product was a reparatory dialer, and we joined the designer. We did all the hardware and software for the Code-a-Phone. It was not really that successful, but in the meantime, I asked if they wanted us to build the answering machine and they agreed. So we started to build answering machines in 1984.
Goldstein:
Where was Code-a-Phone getting their answering machines before then?
Eu:
Their own factory, part of which they purchased from Japan. It was more than successful from 1985 to 1992, then the Code-a-Phone business died because of AT&T. But we were very good, so we continued building answering machines. We didn’t build very many, but we continued producing small quantities until 1996. That was the year I quit the company.
Overall, the Code-a-Phone was really successful. Going back to 1982, at that time we designed the cordless phones, which ran at 46 megahertz to 49 megahertz. We started to shipping them to GTE in 1984.
Then we dropped it because 46–49megahertz wasn’t a very clear frequency band. It creates lot of external noise, when big trucks go by it’s going to be interrupted.
Goldstein:
Why does that happen? Is it because that interference is at 50 megahertz?
Eu:
Yes, somewhere between 50 or 100 megahertz.
Cellular and cordless phone design
Eu:
I was watching the cellular and cordless phone business move toward the higher frequencies, the component wasn’t well developed, prices were high, and the physical size was too big.
I started designing cordless and cellular phones in 1989. I thought 900 megahertz cordless phones was easier to design and build than the cellular, but actually it was the other way around. My pride would not let me fail at 900 megahertz cordless phones. Because a cellular phone works from a base stations, and power is transmitted at like 60 to 100 watts. Well, maybe 100 to 200 watts. But, there is a part, part 15, in 900 megahertz cordless phones that needed it to be less than 1 milliwatts. So, what do you expect? It caused a lot of headaches, and took actually more than three and a half years to build.
As you can see we failed with the first generation, the second generation failed, but the third generation, in 1993, was fine. This one gave greater talk time, something like four hours and a stand-by time of twenty-four hours. There was better clarity at greater distances, so the product was ready for delivery.
I was sure 900 megahertz phones will replace 46–49, and today it is on store shelves. In fact, 17.8 percent of the phones on the market are 900 Mhz. Before they only expected it to take like 11 percent, but it’s gone beyond their expectations. The 900 Mhz in booming 1997, because it sells for about $99 retail. The 46–49 Mhz still hold the majority in the market, but the 900s are coming. In the Korean market, the number of units sold has already around 40 percent, and next year it will be like 60 percent for the 900 megahertz. The Korean market is very small, and the America’s is very big. We marketed to one the older conglomerates, Hong Wa, giants in Korea.
Goldstein:
When did that happen?
Eu:
Officially in 1995, but before that it also happened in December 1994. Hong Wa was not really used to this kind of business. They were in the switchboard business previously. They merged with an OPC company called OTEL, which also makes switchboards like the TDX-2 or TDX-10 manufacturers. OPC had no experience in the consumer terminal equipment business and wanted exposure, so they former a merger.
Goldstein:
OPC acquired Oltron to give them a start?
Eu:
Yes. They actually started 50 years ago with explosives and dynamites. By the way, they said, “If you want some samples, we can send it.” Making explosives is a different animal than switchboards and telephones, but I realize that they were trying to stay abreast of the new technology. I quit working with this project in December 1995.
Oltron business models: small corporations, exports, and budgets
Goldstein:
When you started in 1974, did Oltron consider itself in competition with other companies? If so, what companies? Was there any Korean ones?
Eu:
Yes. There was Wintron Hantronics, and Handok. Handok was very successful in the watch business, but they were about six months to one year behind Oltron. Hantronics was successful with wigs and watches, but eventual they went out of business, which benefited everyone else. I don’t know about any others
Goldstein:
Did you have any special problems being a small company?
Eu:
Yes, but the expert doesn’t care about those things. Today it might matter to have a big name behind you; but at that time it did not.
Goldstein:
I know that Korea, as a nation, focused on increasing its exports as a path towards economic growth. Were there any special policies that made it easier for you to export?
Eu:
Yes, we had tax shelters for exports, but only exports.
Goldstein:
So if you imported materials intended for later export, what would happen?
Eu:
First we would pay the import tax, and later we collect back when we exported. In between there was a lot of paperwork, which was crazy and annoying. It’s getting much better, but you still have to deal with the Korean government’s bureaucracy. That is bad for the entire country, so we need more overhead to compensate.
Goldstein:
Did you have the same position at Oltron? I don’t have a good sense of the size of the research organization, of the development facilities, and how many people were working for it.
Eu:
When I was at Oltron, back to the late 1980s and early part of the ‘90s, we had just 76 engineers, and also about 18 product process engineers.
Goldstein:
How big was the development budget?
Eu:
I can’t remember all the budget. But today labor costs have risen so high that it is difficult to justify hiring a single person. In the 1980s that wasn’t a problem. So we hired in lots of engineers. That’s why we were so successful in Korea in answering machines. We were the number one answering machine producers in Korea. We even beat out Samsung, Handok, and LG; they lost a hell of a lot of money through the answering machines. We were the only ones who really made the money.
Goldstein:
What’s do you attribute that to?
Eu:
From the design standpoint, it must be good. Otherwise, the customer will never expect good products. After that you have to consider the mass producability, consistency, qualities, material component deliveries, cost, prices, and man hours. This is the first time it’s a problem when the mechanical things and the electronics come together. We came to expect problems so everybody carried a book with a list of known problems.
Because the companies and employees had a lot of experience, both companies worked very hard, combined their talents, and built very nice answering machines. Therefore a company like LG, that subcontracted to the outside, and didn’t fully test the units, was susceptible to problems and complaints. Once you don’t test something, then there’s no defense.
Goldstein:
When you were with smaller a company in Korea, did you eventually have to deal with the bigger ones like LG or Samsung in some way?
Eu:
Yes, and no. There were times when the company was not financially stable, and that is when you have to rely on bigger companies to remain afloat. Then after that, you might come out with a new product, a new concept, a new technology, then it becomes okay. But that low period, if you are too small, is the most trying time, because Korea does not give very good backing for struggling companies. You can’t borrow the money from the bank with your own credit. All the banks ask for collateral, and something. So really it’s like the risky business in this country, what you call a venture business capital.
Korean economics and venture capital
Goldstein:
Can one look for venture capital outside of Korea? Has anyone tried that?
Eu:
No. So financing and money is like playing a game. This country is one of the really under-developed countries in that area. Koreans don’t know how to play the money game, because all the major banks are government owned.
Goldstein:
Are the banks generally too conservative?
Eu:
More than too conservative. The regulations are too stiff, without collateral, practically you can’t start or run a business. Due to this policy all the land tracts are very high. The President of Korea, Mr. Tibb, made things worse. He started a squeeze-out of the land transaction business. So land cost is down, much way down, which makes you have to put up more land as collateral to meet the loan cost.
The Korean bank is run with the money from national taxes, and that has the potential to be very dangerous. If all the banks open up, I think all the Korean will go bankrupt. I’m talking not just Chapter 11, but something like Chapter 7.
Goldstein:
Are you’re saying that in Korea’s development, the technical capabilities have outstripped the financial support system, and has consequently handicapped business.
Eu:
Yes, there is no balance. Also, Korean basic technologies are still in the process of development. Some specific areas, they are good. But still, the basic technologies have a long way to go.
Goldstein:
How did that happen? And perhaps you can tell me which areas are over-developed and which areas are under-developed. Finally, what’s the cause of that imbalance?
Eu:
The semiconductor business is one. Next the furnace and the dole sticks, we can build here. We have to.
Goldstein:
What do you mean by furnace business?
Eu:
Furnaces are used to burn the silicon. They designed the product but it is not nearly as effective as it could be. Also we have to import the chemicals, steel, and aluminum which are other problems.
Goldstein:
How did this get out of balance?
Eu:
Because of the business. If it is a goof business then people jump in there and invest the money, and put some manpower there. But if the business is bad then nobody cares.
Goldstein:
Let look at examples, DRAMS are one that appeared promising and attracted a lot of investment. Are there other examples?
Eu:
Yes, there is diversifying to other businesses, like linear devices, but it takes time. Because our business lacks the necessary investment and tends to be one-dimensional, there is no balance in this country.
Influences on Korean industrial history
Eu:
Do you know Korea’s industrial history? How many years we have been at it? It has been about thirty years, whereas European countries have been at it for around 400 years. After 1966 Japan and Korea start to go back and forth legally. Then the Japanese came in this country with all of their polluting items, or out-of-date technologies and they enjoy the low labor costs. That was our actual start of the industry. Before then we had no technology.
Earlier in the 18th and 19th century the Lee Dynasty closed down the borders to outsiders. They only talked to China. Then, the Japanese came in. They won the war game against China and beat Russia. So, they just came in, without passport. But we couldn’t stop them. So, they occupied this country almost 50 years.
Goldstein:
From 1910 to the end of World War II.
Eu:
Actually, it was from 1900. So until Uncle Sam releases us from Japan, which is 1945, Japanese occupied this country and suppressed any form of indigenous industrialization. So when they left, Koreans didn’t even have the capacity to make telephones. We couldn’t do anything.
Goldstein:
So during the Colonial Period, the Japanese operated the power network and telephone network.
Eu:
No the Korean’s were allowed which is interesting. Soon we started building our own technologies. Then Korean War came and everything went totally flat. Everything was burned and all technology collapsed. It was difficult to even get food, so we never even had a chance to even dream about technologies. Due to all of this we actually started our industries in the late 1960s.
When I started working in 1975 it was the beginning of industry in this country. We worked really hard. At first for bread and a better life, because I was so hungry when I was a little boy during the Korean War. During the Korean War there was no food. Many, many, many people committed suicide because of this , and became pessimistic about life.
[Tape 2, Side A]
Eu:
So, back to late 1960s, that’s the point when this country started to wake up, and they jumped into the industrial area. Fairchild, Motorola, and Signetics in semiconductors, they just came in, and that was the start of the semiconductor industry in this country. Americans were not really for chips at the time. They opened up lots of technologies and taught to the Koreans about industry unlike the Japanese.
In the 1960s, all the assemblies had one date to have all equipment, so they sent the retired engineers, men around 65 years old to gather the orders. The engineers wanted to repair the old equipment, and then get new things . They wanted some spare parts, and ask the Japan, and he came in and let all the Koreans out. Which means they didn’t want to transport the technology. They only enjoyed the lower labor costs. But, it’s their ball game, so we couldn’t do anything. Koreans tried to learn by looking at the Japanese. Also, I’m sure many Koreans tried to steal some technology from them. But their protection was very also heavy. Later we did learn a lot from Americans by watching.
Oltron watch supplies and designs
Goldstein:
When you were with Oltron and you were working with the watches, where did you get your supplies? You told me about the watchcases, but what about the electronics?
Eu:
We got the dye for the wafer from the Harris semiconductors in the United States. And some parts from Japan because the power consumption was low. But most of our materials came from the States.
Goldstein:
So, did the watch require a lot of electronic design? Where the part for them off the shelf or were they made specifically for you product?
Eu:
We did most of the design for the watches, and then placed an order with Harris semiconductor. The first time, the substrate was the ceramic and imported from Japan. Later on they changed to PCV which came from Japan, then later on we got it from Korea or Hong Kong.
Goldstein:
You said that you went as far as Oltron being acquired. Can you explain what was involved in setting up your new business?
Eu:
This company, their major business was leather tanning and garments, and they wanted to diversify their business to construction and department stores, and telecommunications. So, it did not begin form a brand new company. We were a new division of an existing corporation.
This company was actually established in November 1995,and I was made President of this company in December. So I started working with cordless phones, and we wanted to diversify to wireless, PBX, and key phones. We planned to start to building digital phones in Europe from around [inaudible].
Video game design
Goldstein:
When you were talking about the design of the video games, you called that a failure. Was there anything that you gained out of the experience? Did you get patents for certain technologies, or did the things you learned help you later?
Eu:
Actually, we didn’t much care about the patents, because we were not smart enough to chase around such kinds of rights. Today people consider the patents, but what is to gain? Like ASICS chip design at that time, the layout of the board wasn’t done by CAD system. There was no CAD system. So, it takes a couple of years to design a little bit complicated chips. So, what is the layout of the chips, and the semiconductors?
We learned. I personally learned a lot. The video games today, three dimensions, at that time I was dreaming about them. Because you have to work between the blank period of the TVs, and so we need very, very fast processors, and with lots of RAMs, but we couldn’t afford to do that. So, the resolution of the screen was limited. But today, after almost twenty years, the Nintendo or Sega, or some other successful game manufacturers, they realized my dream.
Goldstein:
What I’m looking for is some idea of the continuity between these different businesses. Did the experience with the watches or the video games contribute, in some way, to later successes?
Eu:
Yes, because how to deal with the customers, also we learned a lot. We also worked on components, and participated in the Las Vegas consumer shows. We look around the trends, not just the watches either, but other areas. We looked at the semiconductor house, the component suppliers, and what is on the market.
This allowed us to easily approach the customers and suppliers, and those know-hows. Without that kind of background, we would have to start shipping the cordless phones last June, and with such a complicated product, however, I can ship to the customers now.
Seoul National University
Goldstein:
Let’s return to your education. Do you know about how large your class was at Seoul National University? Do you know how many people were in the Electrical Engineering Department?
Eu:
Twenty, but you had to travel to classes. You had to make sure, when registering, that your classes were on adjoining campuses so you could make them.
Goldstein:
Did get your Masters Degree?
Eu:
No, no, bachelors in Electrical.
Evolution of Korean engineering and industry
Goldstein:
Are there certain landmarks, or critical events that mark the improvement?
Eu:
Yes the transformer. Before the transformer the quality was so poor. But today mostly they automatically build and test those, so if we give them the specs, they will make good transformers.
Goldstein:
Are you saying that the transformer industry has improved?
Eu:
Yes, but so has the infrastructure. Of course it’s not balanced, but then we import from other countries it is much better.
Goldstein:
Is the talent pool of engineers different now?
Eu:
That is a very difficult question to answer. Based upon my experience, American people are number one in software, and then Europe, and then Far East. Mentally, however oriental societies are moving up. In mass production, I think oriental people are doing a very good job.
Goldstein:
Do you think many people in Korea hold that opinion?
Eu:
I think so. I have many friends here and they all agree that Americans are more creative than Asians, but in hardware designs and mass production, oriental countries might be better.
Goldstein:
Do you think most Koreans are comfortable with that division? If not how would you like it to be changed?
Eu:
We cannot change that within very short period of time. So, we need a to be strategic. We need each country to give their expertise, and then we might change this.
So, like RF, high frequency handling, America is still number one. All the basic technologies come from the United States, and then they are applied to all the other directions, like GSM, etc.
Goldstein:
GSM? I don’t know what that is?
Eu:
GSM is Global systems, which is the TV image system. We get the products from America or Europe and then we combine together and make it more practical for the production. So, globalization is a good strategies.
After the jumbo jet was invented, and ESS from AT & T, which is the electronics switching system, in the 1970s I felt, “Okay, there is no border line. We’re getting more closer and closer. The world is getting smaller.” So, our expertise will be combined automatically, and then the best product will be delivered to the human society. This can change the human lifestyle and solve problems. We deliver this kind of services, and also make some money out of that for next product design and technology development.
Goldstein:
Do you think that attitude could be shared by say Indonesia?
Eu:
Globalization is only a business point. Some Americans not see this as helping people, and may be more concerned chasing the lower labor costs. Not everyone does this, but lot’s of companies have done this and will do this. Think about the Japanese.
