korean it industry for next decade new opportunities for global partners

Ubiquitous IT Korea1

Korean IT Industry Korean IT Industry for Next Decadefor Next Decade

New Opportunities for Global PartnersNew Opportunities for Global Partners

April 7, 2005April 7, 2005

Myung Sun, ChoiMyung Sun, Choi

President of Korea Association of President of Korea Association of Information & Telecommunication (KAIT)Information & Telecommunication (KAIT)


ICT Status of Korea ICT Status of Korea

Business Opportunities in Korea Business Opportunities in Korea

Table of Contents Table of Contents

ICT Status of Korea ICT Status of Korea

IT 839 Strategy IT 839 Strategy


US$ 605B(11th)

GDP

US$ 194BGlobal M/S 2.6%(12th)

ExportImport

US$ 178BGlobal M/S 2.3%(14th)

US$ 373B Global M/S 2.4%(12th)

Trade Volume

Source: Bank of Korea

[2004]

[2003]

US$ 224B US$ 254B US$ 478BUS$ 634B

800

600

400

200

1970 1980 1990 2000 2001 2002 2003

(Unit: KRWT )

*

* : GDP US$ 605B

Real GDP Growth (1970-2003)Real GDP Growth (1970-2003)

Overview of Korean EconomyOverview of Korean Economy

Import Export(Unit: US$B)

Export/Import Trend (2000-2004 )

0

50

100

150

200

250

300

2000 2001 2002 2003 2004


Korean ICT Leading the World MarketKorean ICT Leading the World MarketKorean ICT Leading the World MarketKorean ICT Leading the World Market

Contribution to Korean Contribution to Korean

Economy :Economy : GDP (14%) & GDP (14%) &

Export(30%) Export(30%)

HHP(28.8%) TFTLCD

(41.3%) DTV(13%)

MP3(20%)

Memory(45.0%)


Mob

ile

Phon

e

Syst

em L

SI

Mem

ory

LCD

D-TV

Broa

dban

d

equi

pmen

t

50

100

150

200

(B$)

250

10%

20%

30%

40%

60%

50%

Compu

ter

3434 3333

109109

196196

1818

107107

MP3

P

2266

SW

’03 Market Share’03 Market Share

’02 Market Share’02 Market Share

Global Market SizeGlobal Market Size

17917928.8%28.8%

13%13%

43.8%43.8%

41.3%41.3%

4.1%4.1%3.4%3.4%2.4%2.4%

20%20%

2.5%2.5%

24.9%24.9%

11.5%11.5%

2.4%2.4% 2.8%2.8% 2.4%2.4%

7.7%7.7%

45%45%

37.7%37.7%

15.0%15.0%

Major Korean ICT Products : M/S Major Korean ICT Products : M/S


0

5

10

15

20

25

30

35

System LSI LCD MP3P DTV ComputerSystem LSI LCD MP3P DTV Computer

19.8

(16.9)

21.5

(10.2)

30.4

(20.5) 1.1

(0.2)

3.9

(1.7)

3.7

(0.6)

Total Production

Export

(B$)

Mobile Phone

(15) (44) (10) (152) (10) (12)No. of

Companies

Major Korean ICT Products (Cont’d) Major Korean ICT Products (Cont’d) : Total Production/Export/No. of companies: Total Production/Export/No. of companies


8 Services8 Services

WiBro Service

DMB Service

Home N/W Service

Telematics Service

RFID-based Service

W-CDMA Service

Terrestrial DTV

Internet Telephony

Broadband Convergence NetworkBroadband Convergence Network

Ubiquitous Sensor NetworkUbiquitous Sensor Network

Next Generation Internet ProtocolNext Generation Internet Protocol [IPv6][IPv6]

3 Infrastructure3 Infrastructure

Mobile Telecomm Handset & Equipment

Digital TV & peripherals

Home Network HW/SW

System-on Chip

Next Generation PC

Embedded SW

Digital Contents & SW Solutions

Telematics

Intelligent Service Robot

9 Products9 ProductsServiceService

InfrastructurInfrastructuree

ProductProduct

IT839 StrategyIT839 Strategy


Role of Gov’t

Role of Business

Value chain of ICT industryValue chain of ICT industry


Wireless BroadbandPortable Internet (WiBro) (’06) Start of Commercial Service

Digital MultimediaBroadcasting (’06) Introduction of Bilateral Service

Home Networking (’07) Deployment to 10M Households

Telematics (’07) Serving for 10M subscribers

RFID/Ubiquitous Sensor NW (’07) Nationwide Applications

W-CDMA (’06) Nationwide Broadcasting NW

Terrestrial DTV (’05) Nationwide NW Coverage

Internet Telephony (VolP) (’07) Serving for 4M subscribers

New Services Activities & Plans

Rollout Plans for the 8 Services Rollout Plans for the 8 Services


Evolution of Mobile CommunicationsEvolution of Mobile CommunicationsEvolution of Mobile CommunicationsEvolution of Mobile Communications19

91-

1995 2G2G

Mass Market for Cell Phones10 Kbps

GSM / TDMA

CDMA 95A

199

9 2.5G2.5GWireless Net Service

64 – 144 Kbps

GPRSCDMA 95B

CDMA 1XEDGE

Location-Based Services384 – 2000 Kbps

WCDMA CDMA EVDO3G3G

200

1-20

05

OFDMOFDM10 – 100 Mbps

4G4G

201

0

3.5G

1G1GFirst Car Phones

198

1-19

83 * Advanced Mobile Phone SystemAMPS *


T - DMB : max. 700kbps @1.5MHz BW based on Eureka 147 World DAB Forum adopted as Standard. Commercial Service (1H 2005) S - DMB : Commercial Service (1H 2005)

T - DMB : max. 700kbps @1.5MHz BW based on Eureka 147 World DAB Forum adopted as Standard. Commercial Service (1H 2005) S - DMB : Commercial Service (1H 2005)

DMB Network

Data Server

AV Server

BroadcastingStation

ReturnChannelServer

MediaAuthoring

Station

InternetMobile Network

(WiBro, CDMA, etc.)

SatelliteDMB

TerrestrialDMB

DMB : ‘Digital TV in Your Hand’DMB : ‘Digital TV in Your Hand’


Public Procurement

Ammunition ControlLogistics Management

Imported Beef Tracking Air Luggage Tracking

RFID/USN ServiceRFID/USN ServiceRFID/USN ServiceRFID/USN Service

Pilot Projects were initiated to create market demandand thus to accelerate the technology development.


[Bil

lio

n $

]

0

10

20

30

40

50

60

70

80

90

100

2004 2005 2006 2007 2008 2009 2010 2015

ControllableNetworkSensor ActivePassive

0

10

20

30

40

US

N W

orl

d-w

ide

Mar

ket N

um

ber o

f Ch

ips [B

illion

]

RFID/USN Market EstimationRFID/USN Market Estimation


9 New Growth Engines9 New Growth Engines9 New Growth Engines9 New Growth Engines

’02’02 ’05’05 ’07’07

116116116116

156156156156

175175175175

1729

36 Evolution toward broadband convergence NW

Key product to lead the global IT Industry

4G mobile comm. prototype by 2007

Low power source

tech/core parts Global standardization

’02’02 ’05’05 ’07’07

21

38

58

9

17

Rapid growth of DTV market

Core device in convergence era

13.5M DTV’s in Korea (’07)

Nationwide digital broadcasting NW (’05)

20hrs/week HDTV broadcasting (‘05 )

Strategic Strategic ImportanceImportance PlanPlan

Mobile HHP& Equipment

Digital TV

3

Market ($B)Market ($B)

(Korea) (Global)


9 New Growth Engines (Cont’d)9 New Growth Engines (Cont’d)9 New Growth Engines (Cont’d)9 New Growth Engines (Cont’d)

IT SoC

DC & SW Solutions

Strategic Strategic ImportanceImportance PlanPlan

’’0202’’0202 ’’0505’’0505 ’’0707’’0707

92929292

138138138138

173173173173

8 17

SoC critical for overall competitiveness

Huge demand led by digital convergence

Top 3 IT SoC Country (’07)

Strategic Alliance in SoC & Systems

Industrial infra. for low cost SoC development

’’0202’’0202 ’’0505’’0505 ’’0707’’0707

53535353

90909090

127127127127

712

2

Value-added industry

Large SW Engineer Pool

Top 5 DC Country(’07)

Core tech. (DC developing tech.)

Building an IT Complex (’07)

2

Market ($B)Market ($B)

(Korea)

(Global)


S/W & Digital ContentsS/W & Digital Contents

ComponentsComponents

Equipment & Devices Equipment & Devices

ServicesServicesB$

2003 2004

176176203203

2007(e)

16162121

25253030

3838

67677575

8787103103

128128

6868 8282100100 130130

5757

3939 4242 4343 51513636

347347

236236276276

2005(e) 2006(e)

Start of Trial Service

Start of Trial Service

DTVVoIP

W-CDMA

Home Network

DMBTelematics

RFIDWiBro Domestic ProductionDomestic Production

Expected Outcome of IT839 StrategyExpected Outcome of IT839 Strategy


ICT Enterprises in KoreaICT Enterprises in Korea

SMEsLarge enterprises

74%

26%

15%

85%

350

22,900

318,000

250,000

(2004)

Exports Total 74.7 Billion $

Production Total 226 Billion $ No. of Companies

No. of Employees


Create Leading SME Group

Strengthen Global Competitiveness

Develop Strategic Industries (Components, SW)

Supporting Policies for SMEsSupporting Policies for SMEs

IT Small & Medium-sized Enterprises Revitalization Program

OverseasMarketing

Education & Training

ASP RentalFor 1Million SMEs

Consulting Advice

CommunityFormation

ProvidingShared Services

Stable Financial Support System

Company ProfileDB Construction

Partnership withLarge Companies

Technology Transfer

11

22

33

44

55

66

77

88

99

1010


Internet Use

Country

Iceland

Sweden

US

New Zealand

%

67%

57%

55%

53%

Rank

1

3

4

5

Broadband Subscribers

Country

HK

Canada

Taiwan

Belgium

#

153

112

93

84

Rank

2

3

4

5

Mobile Phone Subscriber Ratio

Korea Japan CanadaU.S.AAustralia

0

20

40

60

8064

69

3850

64

(# of subscribers per 1,000 inhabitants)(ITU, IMD World Competitiveness Yearbook 2004 , World

Telecommunication Indicator)

““Most competitive in ICT industry among OECD countries”Most competitive in ICT industry among OECD countries”- 2004 (Source: OECD)- 2004 (Source: OECD)

World Best ICT InfrastructuresWorld Best ICT Infrastructures

Korea 218 1

Korea 60% 2

%


Research area Key Decision Factors

Foreign R&D Centers in KOREAForeign R&D Centers in KOREA

• World leading ICT infrastructure• Gov’t strategy focusing the national

growth engines

Telematics, Embeded SW(6/’04)

• World leading BB & mobile penetration• Strong Gov’t commitment to introduce

new services & tech• A large pool of experienced researchers

Digital Home, Wireless communication(3/’04)

• World leading ICT technology • Tech-savvy Consumers

RFID/USN

(10/’04)


Research area Key Decision Factors

Foreign R&D Centers in KOREAForeign R&D Centers in KOREA

• Excellent workforce, motivation, know-how • Good product base • Direct access to key customers • Innovative market

N/W Equipment

SIEMENS(6/’04)

• Strong manufacturing base• HR of high quality• Know-how in ICT application techs

Virtual Simulation

FranunhoferIGD

(5/’04)

• Leading mobile technologies• A large pool of quality engineers in RF area

RF ModuleAgilent(2/’05)


Ideal Test-bed Ideal Test-bed MarketMarket

Large Domestic Market

World Class ICT Industry & Infrastructures

Consumers in favor of innovative technology and products Aggressive Rollout Plans of New Telecom and Broadcasting Services

Shared Services Available (Testing, Wafer Fab., EMS, IDC, Legal, IP and SW) Over 20,000 companies in IT- related business.

Large Pool of Human Resources Over 240,000 college graduates (~60,000 for IT) annually 1.2M IT- related employees (Mostly Engineers)

Strength of Korean ICTStrength of Korean ICT

Collaboration among Industries, Universities & Government Sharing the Vision for Globalization and Economic Growth Over 5% of GDP for National R&D Spending


Geographic Attractiveness of KoreaGeographic Attractiveness of Korea

Courtesy : Pietro A. Doran, Gale International Korea

Logistics Base of Northeast Asia

Regional Financial Center

Northeast Asian R & D Base

Free Economic Zones

Hub of Northeast Asia

ICT & Electronics

Automobiles

Financial Services

Investment Opportunities

North Korea

South Korea


ICT Industrial ClustersICT Industrial Clusters

Digital contents, Media & Entertainment

Digital Media City Digital Media City

New material, Sophisticated

Electronics

Daedeok Special Daedeok Special Development ZoneDevelopment Zone

SW, Service, Mechatronics

Songdo Songdo Free Economic ZoneFree Economic Zone

korean it industry for next decade new opportunities for global partners

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