We sat on the couch, staring down at the table. On the table lay the L6.
"This one is definitely well-made."
The economist Keynes once said:
"In the long run, we are all dead."
If applied to phones, the statement could be modified to:
"In the long run, all phones are discontinued."
Thus, even the latest L6 would eventually meet the same fate of discontinuation.
The crucial question is...
"Why and when will it be discontinued?"
I fiddled with the L6, turning it over and examining it. Unlike earlier, nothing came to mind. I inspected it thoroughly, but no apparent issues stood out.
"Did you notice anything strange while using it?"
"Not strange at all. It's the best phone I've ever used."
"Has any Seosung Electronics smartphone ever been discontinued due to a problem?"
Taekgyu shook his head.
"Not that I know of. And even if a phone had issues, they'd offer repairs or compensation, not discontinue it. That wouldn't make sense."
He was right.
Unlike feature phones, which were used mainly for calls and texts in the past, smartphones are comprehensive devices that combine functions of laptops, MP3 players, cameras, and other portable electronics.
Because a smartphone integrates so many features, its complexity naturally leads to occasional software and hardware issues.
If manufacturers discontinued a phone every time a problem arose, all of them would have gone out of business by now.
"No manufacturer would willingly take such a loss."
So, what could possibly justify discontinuing a successful smartphone?
---
That night.
While sleeping on the couch, I suddenly heard a scream from inside the room.
"Uwaaagh!"
"What? What's going on?"
Startled, I sprang to my feet and rushed to the room.
Bang!
The door flew open, and Taekgyu burst out, panicked. His glasses were crooked, and he looked utterly shaken.
"What happened?"
"Something... exploded near my head!"
I was baffled.
"What nonsense are you spouting? Did you have a nightmare?"
"No, I'm serious! Something really exploded. Am I okay? My eyes or ears didn't blow off, right?"
"..."
Honestly, he didn't look mentally okay at the moment.
I stepped into the room and turned on the lights. To my surprise, Taekgyu was telling the truth. The bed pad was scorched, with embers faintly burning through it.
"Hey! Bring some water!"
Taekgyu ran to the fridge, grabbed a bottle of water, and handed it to me. I poured it over the bed.
Sizzle!
Since the flames weren't too large, the embers were extinguished immediately.
What the hell happened in the middle of the night?
I searched for the source of the fire. It didn't take long to find. In the center of the scorched bed pad was a phone, melted and blackened.
When I reached closer, I could feel the heat radiating from it.
Looking at the barely intact phone, Taekgyu muttered:
"What the...? The L6 exploded?"
I turned to Taekgyu.
"What did you do to the phone?"
"I didn't do anything! I just plugged it into the charger before going to sleep."
According to Taekgyu, he had been playing games on the phone until just before bed and plugged in the charger before dozing off. Then, the explosion occurred while he was sleeping.
"Why would it explode?"
"I have no idea."
I examined the charger. It was a genuine Seosung Electronics product and showed no signs of wear or damage.
So why did this happen?
Taekgyu, still catching his breath, said:
"How does a phone blow up just a week after buying it? What is it, a bomb?"
"A bomb?"
We exchanged a glance.
"Don't tell me...?"
---
Taekgyu sat at the computer, scouring the internet.
"There've been a few other explosion incidents before."
The first report surfaced three days after the L6's release.
A post on the online community "Ppomppu" included a picture of an exploded L6. The victim claimed their phone exploded for no reason while charging.
Seosung Electronics responded swiftly, and after reaching a settlement with the victim, the incident quickly faded from the spotlight. However, similar posts later appeared on blogs and social media.
Just from what we could confirm online, there had been three other incidents.
"With yours, that makes it four?"
"If we count unreported cases, there are probably even more."
It wouldn't be surprising if the company had hushed things up by offering cash compensation to prevent quality concerns from spreading.
"What's Seosung's explanation for the incidents?"
"They're blaming external shocks. Technically, phone explosions aren't that rare."
Taekgyu explained further.
Most electronic devices, including phones, use lithium-ion batteries because they are energy-dense and efficient for their size.
However, lithium-ion batteries are prone to exploding when subjected to physical damage. Instances of phones from other brands like Enple blowing up aren't unheard of.
The real issue lies in the rate of occurrence.
A phone exploding once in a million units versus once in ten thousand units is a significant difference.
Was this really caused by external shock?
We spent the night researching Seosung Electronics, the L6, and related reports on social media.
There were several explosion incidents and minor issues with features like voice recognition and screen brightness, but none had significantly impacted the L6's sales.
CL Electronics had released the Prime 5 around the same time, but it was being overshadowed by the L6.
Until Enple launched the Enphone 7, the L6 seemed poised for market dominance.
Even after reviewing explosion cases from other brands, it was clear that the L6 had an abnormally high explosion rate.
Could there have been a flaw in the manufacturing process?
Surely, a company like Seosung wouldn't make a mistake even a small firm would avoid... would they?
While I tried to analyze the situation calmly, Taekgyu grew more impatient.
"This is an opportunity. We've stumbled upon huge information."
"Let's wait a little."
"Why wait? We need to act fast."
Taekgyu sounded frustrated.
"What if Seosung announces the discontinuation first? Then it's all over."
Selling VanTech Coin was a move to hedge against risk, not an investment. Even if Mountain Hill hadn't gone bankrupt, we wouldn't have suffered much of a loss. Buying WTI was only 3 million dollars out of the assets.
But this time was different.
If we were only talking about a 2 or 3-million-dollar investment, I wouldn't be agonizing this much.
Even if discontinuation was certain, turning that into profit wasn't straightforward. We needed to analyze the timing and ripple effects before deciding on a strategy.
I replied cautiously:
"Let's monitor the situation for a few more days."
---
The next day.
Taekgyu called the Seosung service center to report the L6 explosion. A staff member was immediately dispatched to our house.
Not all service center staff are direct employees of Seosung Electronics. Most are subcontractors. However, the person who arrived was from Seosung's headquarters.
I asked him:
"What caused the explosion?"
The employee answered cautiously:
"We'll inform you after our investigation."
He collected the exploded L6 and handed over a replacement device. Then, he brought up the topic of compensation.
There was one important condition to receive the full compensation: we were not to post anything online about the incident or share photos until the investigation was complete.
The employee pleaded with us.
Taekgyu agreed and sent him on his way.
"Seems like this has happened quite a bit."
The employee wasn't fazed by the sight of the burnt phone, following a predetermined protocol without hesitation.
"If the reported cases are this many, there must be several times more unreported ones."
For minor malfunctions, repairs or replacements suffice. But explosions are a different story.
The most critical aspect of electronics is safety.
For phones, safety is especially vital since they contain personal information like photos and contacts and are carried everywhere.
In Taekgyu's case, the phone exploded while sitting nearby, but if it had happened during a call or while gaming, he could have been seriously injured.
If explosions continue, discontinuation could very well be justified.
Currently, Seosung Electronics' market cap is 260 trillion won.
Their annual operating profit is around 30–35 trillion won, spread across semiconductors, displays, consumer electronics, and the IM (IT & Mobile) division.
The IM division, which includes smartphones, accounts for 40% of that profit.
"If the L6 gets discontinued, does that mean 40% of their profits are gone?"
I shook my head at Taekgyu's question.
"There are mid- to low-end models too, so it wouldn't be that drastic. Plus, they still have previous-generation models."
Unlike Enple, which releases one or two premium phones a year, Seosung offers a wide range of devices, from high-end models over 1 million won to budget phones under 300,000 won.
In domestic markets, the L series dominated but in emerging markets with lower incomes, Seosung relies heavily on its budget-friendly models.
Even considering all these factors, the discontinuation of the L6 would still deal a significant blow to Seosung Electronics.
I turned to Taekgyu and asked, "How many countries was the initial release for?"
"About ten, I think—Korea, the U.S., Canada, and Europe, to name a few."
"And the sales numbers?"
"Roughly six million units sold so far."
That's a staggering figure.
If the L6 were discontinued due to explosions, not only would future sales be halted, but Seosung might also have to refund all previously sold units.
At an average price of 1 million won per device, refunds alone would amount to 6 trillion won.
Adding the revenue they'd lose from unsold inventory and the damage to their brand reputation, the losses would multiply several times over.
If our information was accurate, we'd stumbled upon a massive opportunity.
---
Even if the L6's discontinuation was certain, the real challenge lay ahead.
If you expect a particular stock to rise, all you need to do is buy it. If you're confident, you can even leverage margin trading.
But what if you expect a stock to fall?
In that case, your options are much more limited.
Taekgyu spoke matter-of-factly.
"That's what short selling is for, isn't it?"
"Well, yes."
Short selling comes in two forms: borrowing shares to sell them (covered short selling) or selling shares you don't actually own (naked short selling). The former involves borrowing stock, while the latter involves selling unowned shares outright.
In Korea, naked short selling is prohibited, meaning only covered short selling is allowed.
Theoretically, individual investors can participate in short selling, but in practice, the process is so restricted that it's mostly limited to institutional investors and foreign entities.
Fortunately, OTK Company operates through a foreign corporate structure. Since OTK's accounts are linked with Golden Gate, any funds from Taekgyu are classified as foreign capital.
In other words, we're what's commonly referred to as "black-haired foreigners."
A "black-haired foreigner" is a term for Korean individuals who establish overseas corporations to invest in the Korean stock market under the guise of foreign capital.
It's not illegal, but individual investors tend to dislike them, seeing them as forces that disrupt the market—a sentiment that's partially true.
The process of short selling itself isn't particularly complicated.
In traditional investing, you buy first and sell later. With short selling, you simply reverse the order: sell first, buy later.
"The issue is the profit margin..."
Short selling has an inherent limit to its profit potential.
Even if you short-sell a stock at 1 million won and later buy it back for 1,000 won, your maximum profit margin is 99%.
Realistically, Seosung Electronics' stock wouldn't crash that dramatically. Even if the L6's discontinuation became a reality, the stock would likely drop by 20–30% at most.
"So, even if we invest 13 billion won, the best we can hope for is 3 or 4 billion won in profit?"
That's still an impressive return.
But is that all there is?
Should we settle for such a modest return when faced with such a golden opportunity?
Is there no way to achieve a bigger payoff?
As I pondered deeply, Taekgyu suddenly spoke up.
"What about derivatives—futures and options?"
I had considered it.
"I don't know much about derivatives."
"Didn't you learn about it in college?"
"I only stayed for a year."
Derivatives courses are usually taken in the third or fourth year of college, far beyond my reach at the time.
"What about your investment club?"
"Our funds were just 1 million won. Do you think we could've traded derivatives with that kind of money?"
With such a small sum, even entering the derivatives market would've been impossible.
---
But now, things were different.
We had $12.5 million at our disposal—not my personal money, but still a substantial amount.
With that kind of capital, it was worth taking a serious shot at the derivatives market.
"Alright," I said, nodding. "Let's explore the options market."
Taekgyu grinned. "Now we're talking."
If we could use the leverage offered by options trading, this could be the chance to turn an already huge opportunity into something extraordinary.
The real game was about to begin.