HMG and Kia appear to be in the process of “understanding Apple’s secrecy Increases” with each of the firm’s legal representatives possibly exchanging documents on their versions of NDAs such as those signed by Samsung and LG Display.
By Kim Yoo-chul
Apple’s Obsession With Secrecy Increases Burden On Hyundai-Kia : Will Apple walk away from negotiations on an alliance in driverless electric vehicles with Korea’s top automotive conglomerate Hyundai Motor Group (HMG)?
The answer is “no” as the iPhone maker is set to seal a deal with the group, with affiliate Kia handling the “initial production” of Apple vehicles at its plant in the U.S. state of Georgia.
Supporting this is the fact that HMG is a frontrunner when it comes to cooperation with tech companies. The conglomerate has forged partnerships with Chinese internet company Baidu, U.S. chipmaker Nvidia and ride-hailing company Uber in mobility services. Simply put, Hyundai’s expanded partnership portfolio seems to make it more appealing for Apple.
HMG’s reported talks with Apple to produce EVs under the name “Project Titan” topped headlines in South Korean media over the last few weeks. Investors hailed news reports that Apple was considering Kia as its partner to produce EVs, and shares of Kia and Hyundai Motor skyrocketed as a result. According to the Korea Exchange (KRX), Kia shares ended at 101,500 won last week, up from 82,500 won, Jan. 29. Hyundai owns a 34-percent stake in Kia.
But Hyundai executives are said to have thought hard over the possible deal, with some analysts saying the media leak of the partnership talks apparently coincided with HMG Chairman Chung Euisun’s moves to make the conglomerate a leader in the global EV market.
“Hyundai has been receiving proposals for cooperation from various companies, however, no decision has been made so far,” said one source.
But a few weeks after those comments were made, some foreign media claimed Apple and Hyundai had “paused” their talks, noting it remained unclear when negotiations would resume. Apple made no comment.
One possible reason behind the halted talks is that speculative reporting and rumors made Apple feel uneasy given its penchant for secrecy when it comes to new products. Apple is a design company and not a manufacturing firm. And a flurry of reports about a partnership with others involving future projects goes against its shareholder value protocols, as strict secrecy on new products is considered essential.
Samsung Display and LG Display are Apple’s top-tier display suppliers. Apple has asked Samsung and LG to manufacture display panels according to its specifications and volume using designated production lines.
Apple invests in these companies in advance and is said to have asked them to abide by strict non-disclosure agreements (NDAs) to prevent business details from being leaked to the media.
“When local media reports come out involving any updated deals with Apple that have to do with its new products, Apple asks us to correct such reports and sends a complaint letter that may hurt the mutual business relationship. Apple’s business is very complicated and actually has thinner margins, however, given its significance, we have to keep a close eye on media reports,” said an executive at one of Apple’s local suppliers.
HMG and Kia appear to be in the process of “understanding Apple’s secrecy Increases” with each of the firm’s legal representatives possibly exchanging documents on their versions of NDAs such as those signed by Samsung and LG Display.
For Kia, profits it could earn from doing business with Apple are less significant than the partnership itself, which will undoubtedly become a major appeal in winning more customers, according to industry watchers.
Also, Apple has been involved in partnership talks with other car manufacturers in addition to Kia as part of the U.S. tech giant’s “dual-vendor” strategy to help it gain the upper hand in pricing and also to deal with issues involving leaks of product information.
Originally published at The Korea times