The disgrace of Apple and Samsung

PARK SU-RYEON
The author is head of the industry news department at the JoongAng Ilbo.

What’s wrong with Apple and Samsung? They face the similar situation of being caught off guard and chased. It may be the fate of the top players who no longer possess agility and desperation.

Earlier this month, Apple CEO Tim Cook announced a plan, empty-handedly, to reveal a new AI feature within this year. This is unusual for Apple. Although Cook wanted to change investors’ minds after losing the top NASDAQ spot to Microsoft, the mood at the end-of-month shareholders’ meeting was cold. WhileApple’s stock price fell by 14.6 percent in six months, Microsoft’s rose by 24.4 percent.

Apple just did what it had been doing, but it is now criticized for being slow. It is the price Apple must pay for continuing to coast on iPhone sales while keeping R&D investment from revenue in the single digits (8 percent) last year as its competitors invested in cloud computing and data centers — the backbone of AI services.

Apple also kept its voice assistant, Siri, locked in the iPhone for 13 years, and confined itself in a monopolized market by taking a fee from the App Store, which generates more than $1 trillion in sales.

As demonstrated in the recently dropped Apple Car project, Apple’s perfectionism does not fit the current inflection point of the technology market. Meanwhile, Microsoft has changed its focus to cloud services and invested in OpenAI, boasting a strategy of strengthening its weaknesses and reinventing itself after blunders in the early days of mobile technology.

What about Samsung Electronics? Nvidia, which accounts for more than 80 percent of the world’s AI chip market, has signed contracts to supply the latest memory HBM3E only with SK Hynix and Micron, the second- and third-largest semiconductor makers, not with Samsung, the largest. That is a shock to both Korea and the semiconductor industry. Samsung has even been outdone by the third-placed player in technology and sales power.

What happened to Samsung? Just as Apple did, it simply did what it had been doing. Unlike DRAM, which can be mass-produced and sold merely by adjusting to market demand, high-bandwidth memory requires an accommodating spirit from the AI chip designer. The runner-up, which had nothing to lose, has been working with Nvidia for more than 10 years, but the top player was dismissive of such a move.

The accommodating spirit is more important in the field of AI foundry based on consigned chip production. Many companies in various industries are trying to design their own AI chips. The world’s top foundry, TSMC, is said to have a better sales ability and service than Samsung. The service to understand customers’ problems better than them made TSMC what it is today. When Apple and Samsung cannot avoid humiliation with their existing success formulae, the map of the global high-tech industry may change depending on their moves.