The show debuted quietly last year, when Grace hired Bush as a director. But after a slow start, the unfolding story has garnered heavy media attention. News reports in the U.S. following Bush's messy divorce proceedings revealed his connection to the chipmaker. And like most TV sitcoms, the twists and turns have a dollop of sexual intrigue, with Bush admitting in a deposition that he had sex with women he said just happened to appear at his hotel rooms in Hong Kong and Bangkok.
Maybe it makes sense that Neil, the former President's son, is a director of Grace. After all, one of its founders is Jiang Mianheng, the son of former President Jiang Zemin. Perhaps Grace execs were thinking that Neil could somehow help get Washington to ease restrictions on the transfer of technology to China. Or perhaps they believed having Neil on the board could help Grace arrange for a visit from his father, former President George H.W. Bush, and lift its profile.
FAMILY TIES. If so, the way the Neil-and-Grace saga has unfolded probably isn't the way Grace's co-founder, Taiwanese businessman Winston Wong, hoped. For Wong, the whole affair must be especially annoying, since it recalls some messy episodes from his own past. (Grace officials were reluctant to go on the record with any public comment about Neil Bush's hiring, but they're hardly happy about the way the way the story has unfolded in media reports.)
Like Neil Bush, Wong is yet another son of a high-profile father and has some more successful siblings. His father is industrialist Y.C. Wang, the billionaire head of the giant Formosa Plastics group and probably Taiwan's richest man. Winston had a falling out with his father back in the mid-1990s, following reports in the Taiwanese press about Winston's extramarital affair.
And while Winston has struggled ever since to establish a successful chip business of his own, his sister, Cher, has shined as the chairwoman of some of Taiwan's most successful electronics companies, including chipset powerhouse Via Technologies and High Tech Computer, which makes PDAs such as the iPaq for Hewlett-Packard (HPQ
LEFT BEHIND? To much of the industry's surprise, Wong's company has turned out to be an also-ran among Chinese chipmakers. Back in 2000, when Grace was first getting started in Shanghai, Wong seemed to have the edge on rivals that also wanted to establish themselves as the biggest names in China's nascent semiconductor business. Not only did he have the Jiang connection, Wong had the experience at Nanya Technology, a Taiwanese producer of memory chips that's part of his father's empire, which he ran until he and his father became estranged.
Like others venturing into the semiconductor business in China, Wong also could count on the support of the Chinese government, which was determined to build a semiconductor industry that could reduce China's reliance on imported chips -- and create headaches for longtime rival Taiwan, where world-leading foundries Taiwan Semiconductor Manufacturing Co. (TSM
) and United Microelectronics Corp. have brought the island high-tech glory. Grace's backers included several state-owned Chinese banks.
Things haven't worked out so well, however. Wong's project has fallen far behind schedule: While Grace planned to be producing 50,000 wafers a month by the middle of 2002, actual production didn't begin until this year. Meanwhile, crosstown rival Semiconductor Manufacturing International Corp., which launched around the same time, has come on strong, with two fabs operating in Shanghai and another under construction in Beijing. SMIC recently took control of Motorola's (MOT
) chip fab in Tianjin, in exchange for Motorola taking a stake in the company, and SMIC is selling to the likes of Fujitsu, Infineon (IFX
), and Toshiba.
FIGHT FOR POSITION. Time may be running out on Grace's efforts to catch up. Not only is SMIC already looking at an initial public offering next year but other Chinese chipmakers are expanding, too. And since the Taiwanese government has eased its restrictions on investment in the Chinese chip industry, heavyweights like TSMC are now investing directly in China.
Given the industry's notoriously volatile cycles and the huge amounts of capital required, many people who follow the chip business think it has room for only a few top players. With Grace late to the party, it may not be one of them. The Neil and Grace show may be popular now, but it's no shoo-in for a long run. Einhorn covers technology from Hong Kong for BusinessWeek. Follow his weekly Online Asia column, only on BusinessWeek Online