[Insight & Opinion] The Future of Electric Vehicles and Samsung Electronics

Apple's stock price is soaring. Recently, it surpassed $185, setting a new record high, and there are predictions that it will exceed at least $250 by 2025. The iPhone now comes at a high price with each new release, almost mocking expectations as a joke. Adding AirPods and Apple Watch to the mix, the cost reaches a level that even Apple fandom finds painful.

Despite this high-price policy, Apple's global market share for the iPhone continues to grow steadily. This contrasts with Samsung Electronics, which has adopted aggressive low-price strategies such as half-price discounts. According to market research firm Canalys, in the fourth quarter of last year, Apple's smartphone market share was 25%, while Samsung's was 20%. In the first quarter of this year, Samsung led again with 22% compared to Apple's 21%, but looking at the trend, Apple's victory is a foregone conclusion.

What is the power behind Apple's market dominance? It is the consumer ecosystem built by the Apple product lineup. The connectivity between Apple products provides convenience, and consumers accustomed to this habitually repurchase Apple products. Consumers trapped within the walls built by Apple find it difficult to escape this reality. Even this powerful Apple has recently faced a dilemma. The reason is that electric vehicles cannot be excluded from the future electronics ecosystem. Without electric vehicles, Apple could face a crisis in the coming years, at the latest within five years. The consumer electronics ecosystem is likely to be reorganized around electric vehicles rather than smartphones. Rather than expecting an Apple Car centered on the iPhone, it would be much more feasible to anticipate a proprietary smartphone line linked with Tesla, a leading electric vehicle company.

This crisis for Apple could perhaps be the last opportunity for Samsung. Samsung's entry into the electric vehicle industry is not so much an opportunity as an inevitable matter of survival. Today, a significant portion of automobiles already consists of electric and electronic components, and electric vehicles have become a fierce battleground for many IT companies, combining autonomous driving, artificial intelligence (AI), and more.

Unlike Apple, Samsung already has considerable experience in the electric vehicle parts sector and holds a significant advantage in the electric vehicle development environment. Within the framework of fair trade laws, Samsung affiliates contribute to electric vehicle development. Samsung SDI has been focusing on producing batteries, the core of electric vehicles, for over 20 years and is conducting joint research and development or establishing joint factories with major overseas automobile companies. In particular, autonomous driving requires large-capacity memory semiconductors. Samsung Semiconductor's high-performance memory sector is indispensable for developing electric vehicles combined with AI. Samsung Electronics is also increasing production of vehicle products utilizing semiconductors. Above all, Samsung is strong in production capacity, Apple’s biggest weakness. Samsung SDS, which is world-class in automation and production management, will be a powerful ally in this regard.

Apple excels in product concept development and accurately predicts future demand. When the Apple App Store opened in July 2008 with about 500 applications, it was unfamiliar territory, but last year's revenue reached $1.1 trillion (approximately 1,450 trillion won). This is the power of the product ecosystem and platform Apple has built. On the other hand, Samsung Electronics must acknowledge that despite being the world's number one smartphone manufacturer, it has not utilized this advantage well. Without its own ecosystem, it will always be unstable. Electric vehicles are not the future of Samsung's smartphone industry?they are already a reality.

Professor Kim Gyu-il, Michigan State University