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ITA and the Growth of Korea ’ s IT Industry

ITA and the Growth of Korea ’ s IT Industry. 2007. 3. 28-29, Geneva Hyeo-eun Lee, Ph.D Director, IITA Republic of Korea. Contents. 1. Status of the Korean IT Industry . 2. Korea ’ s KSFs and Recent Policy. 3. ITA & International Trade . 4. For More Success of ITA.

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ITA and the Growth of Korea ’ s IT Industry

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  1. ITA and the Growth of Korea’s IT Industry 2007. 3. 28-29, Geneva Hyeo-eun Lee, Ph.D Director, IITA Republic of Korea

  2. Contents 1 Status of the Korean IT Industry 2 Korea’s KSFs and Recent Policy 3 ITA & International Trade 4 For More Success of ITA

  3. 1. Status of the Korean IT Industry 2

  4. 1-1. Overview of the Korean Economy Korea is a model-country of accomplishing economic growth thru int’l trade GDP : $2 bil.(’60)  $788 bil.(’05), 12th Intl. Trade : $.38 bil.(’60)  $546 bil.(’05), 12th $635 bil.(’06) - Export : $.03 bil.(’60)  $284 bil.(‘05), 12th $326 bil.(’06) - Import : $.34 bil.(’60)  $261 bil.(’05), 13th $309 bil.(’06) Degree of Dependence upon Foreign Trade : 69.3%(’05), 9th Korea’s Top Exporting Items in 2006 3th 4th 1st 2nd $27.0 B $22.1 B $37.4 B $32.9 B (Source: KITA)

  5. 1-2. Importance of IT Industry : GDP IT industry has been a leading growth engine of Korean economy IT Real GDP : KRW49 tri.(’00)  KRW97 tri.(’05) Share in GDP : 9.5%(’00)  15.0%(’05) Contribution to GDP Growth : 32.1%(’00)  46.6%(’05) (Source: Bank of Korea)

  6. 1-2. Importance of IT Industry : Export IT has led Korea’s export growth and contributed to early exit from 1997 financial crisis IT Export : $63.1 bil.(’00)  $113.3 bil.(’06) Share in Total Export : 36.6%(’00)  34.8%(’06) Contribution to Export Growth : 51.1%(’00)  26.6% (’06) (Source: KITA)

  7. 1-3. Share in the Global Market Flagship products are memory semiconductor, display panel and mobile handset. NAND Flash ($12.8 B) Volume of Global Market (’06) PDP-Panel ($7.7 B) LCD-Panel ($50.7 B) DRAM ($34.3 B) 60% SEC, HYNIX (62.1%) Handset ($159.0 B) LGE, Samsung SDI (49.5%) LCD-TV ($22.2 B) 40% SEC, LPL (46.6%) SEC, HYNIX (45.2%) 20% SEC, LGE (24.4%) SEC, LGE (22.4%) Share of Korea (’06, Production) (Source: Gartner, Displaysearch)

  8. 1-4. IT Infrastructure Korea is at global top-level in IT infrastructure and penetration Current Status of Informatization in Korea (Source: www.nia.or.kr)

  9. 2. Korea’s KSFs and Recent Policy 8

  10. 2-1. Evaluation of the World Digital Opportunity Index 2005 (ITU) Country Rank DOI Infrastructure Opportunity Utilization Korea Japan Denmark Iceland Hong Kong 0.99 0.99 0.99 0.99 1.00 0.74 0.69 0.75 0.72 0.70 0.79 0.71 0.71 0.69 0.69 1 2 3 4 5 0.64 0.46 0.37 0.37 0.38 1 Korea is top-ranked in major IT indices (2005, 2006) World Competitiveness Scoreboard (IMD) Technological Infrastructure Broadband Subscribers Broadband Cost High-Tech Exports 1(’05) 1(’06) 2(’05) 2(’06) 7(’05) 7(’06) 2(’05) 6(’06) # of subscribers per 1,000 habitants # US$ per 100 kbps per month % of manufactured exports

  11. 2-1. Evaluation of the World Korea’s accomplishment in IT became the bench marking target of the world IT Powerhouse, the Korean Special Report : Oh! Surprising IT Korea, Mobile Internet Era, Koreans are connected Anytime, Anywhere. (BBC, ’06 May) South Korea, the world’s most wired country, is rushing to turn what sounds like science fiction into everyday life. (New York Times, ’06 Apr.) Korea would have the most influence in the future digital world. (Fortune, ’04 Sep.) The development of IT in Korea is a miracle. There is nothing to recommend. (ITU, ’04 Apr.)

  12. 2-2. Key Success Factors National Consensus on IT Development Korea’s IT today is the result of combined efforts of private and public sectors Public Sector Private Sector - Establishment of MIC and IT Promotion Fund - Sharing Vision w/ People - Strategic Investment in IT R&D and HRD - Deregulation and Market Liberalization - Heavy and Timely Investment in Strategic Areas - Building up Tech. Competency - Market Diversification and Globalization Digital Minded People & Quality Labor Force

  13. (Reference Data) Korea’ Export Volume by Region (Source : IITA)

  14. 2-3. IT 839 Strategy : Introduction Service Product Infrastructure Korea’s initiative to build new growth engines and realize U-society 8 Services 9 Products Mobile Telecom/Telematics Devices Broadband/Home NW Devices Digital TV/Broadcasting Devices NG Computing/Peripherals Intelligent Service Robot IT SoC/Convergence Components RFID/USN Devices Embedded SW Digital Contents/SW Solution HSDPA/W-CDMA Service WiBro Service Broadband Convergence DMB/DTV Service u-Home Service Telematics/ Location-based Service RFID/USN Application IT Service Broadband Convergence Network u-Sensor Network Soft Infraware 3 Infrastructures

  15. 2-3. IT 839 Strategy : Recent Achievements DMB (Digital Multimedia Broadcasting) • Converged broadcasting & communications service • Digital TV on mobile handset • Adopted by ETSI as a standard in Europe • Commercial service started in 2005 WiBro (Wireless Broadband Portable Internet) • Fast and seamless access with lower fee to broadband internet on the move • Based on OFDM / TDD (IEEE802.16e) 50Mbps with 10MHz BW @2.3GHz • Adopted by IEEE as an international standard • Adopted by Sprint Nextel(USA) as 4G Mobile Service in 2006 • Commercial service started in 2006

  16. 3. ITA and International Trade 15

  17. 3-1. ITA and Korea ITA products have led Korea’s foreign trade growth in 1990s. However, Share of ITA products in Korea’s int’l trade began to decrease in 2000s. - ’96~’01 : trade CAGR of ITA products > non-ITA products - ’02~’06 : trade CAGR of non-ITA products > ITA products ITA does not cover new products whose int’l markets grow fast in recent years. Korea’s Trade in IT (HS 10 digit) : ITA vs. non-ITA (Unit : $B) (Source : IITA, CAGR : Compound Annual Growth Rate)

  18. 3-1. ITA and Korea TV and Monitor are representative non-ITA products in Korea’s foreign trade Korea’s Major Non-ITA Products (Unit: $M) (Source : IITA)

  19. 3-2. Changes in the First Decade : Summary There have been remarkable changes in major products and players Trends of Major Products and Countries (Unit : $B) (Source : UN Comtrade HS 1996 or HS 1992, GTIS

  20. 3-2. Changes in the First Decade : Summary ITA has contributed to the take-off of developing countries in IT export. Major Export Countries of ITA Product (Unit : $B) Country Country Country ‘96 ‘99 ‘05 83.4 62.6 16.6 13.4 13.1 13.0 10.7 1.8 0.3 96.3 70.0 65.3 37.0 29.9 27.0 25.7 24.2 20.7 13.0 210.7 140.1 133.1 114.4 114.0 83.5 69.5 58.1 32.4 24.1 USA Japan Taiwan China Mexico Korea Canada Indonesia S. Africa USA Japan EU(25) Taiwan Hong Kong Malaysia China Mexico Korea Canada China USA EU(25) Hong Kong Japan Korea Taiwan Malaysia Mexico Thailand ITA Product : Attachment A, Section 1 (Excluded 9026, 9027, 903440, 854381)

  21. 3-2. Changes in the First Decade : Summary IC&Chip and Computer : steady, Radio(wireless) : up, wired : down (Source : GTIS)

  22. 3-2. Changes in the First Decade : Computer China and Malaysia have emerged as new powerhouses. ☞ 108.2 B$(’96)  198.9 B$(’00)  271.0 B$(05), CAGR(00~05)6.4% 3.7 B$(’96)  11.0 B$(’00)  76.4 B$(05), CAGR(00~05) 40.8% 25.2 B$(’96)  30.9 B$(’00)  25.4 B$(05), CAGR(00~05) -3.9% 13.0 B$(’00)  19.3 B$(05), CAGR(00~05) 8.2% 4.7 B$(’96)  9.3 B$(’00)  9.2 B$(05), CAGR(00~05) -0.1% Export of ADP Machines and Units (HS 8471) (Source : GTIS)

  23. 3-2. Changes in the First Decade : Wired Telecom Traditional powerhouses sustained and China and Mexico have emerged. ☞ 40.9 B$(’96)  86.4 B$(’00)  66.8 B$(05), CAGR(00~05)-5.0% 15.0 B$(’00)  11.6 B$(05), CAGR(00~05) -5.1% 6.5 B$(’96)  12.9 B$(’00)  10.3 B$(05), CAGR(00~05) -4.5% 1.4 B$(’96)  3.1 B$(’00)  9.4 B$(05), CAGR(00~05) 24.7% 0.8 B$(’96)  0.7 B$(’00)  0.9 B$(05), CAGR(00~05) 6.0% Export of Wired Telecom Equipment (HS 8517) (Source : GTIS)

  24. 3-2. Changes in the First Decade : Radio Transmission China and Korea have emerged and EU sustained. ☞ 29.5 B$(’96)  77.1 B$(’00)  182.9 B$(05), CAGR(00~05)18.9% 0.5 B$(’96)  3.3 B$(’00)  30.9 B$(05), CAGR(00~05) 56.6% 11.3 B$(’00)  30.8 B$(05), CAGR(00~05) 22.2% 0.8 B$(’96)  6.3 B$(’00)  20.2 B$(05), CAGR(00~05) 26.3% 5.5 B$(’96)  9.8 B$(’00)  13.7 B$(05), CAGR(00~05) 6.8% Export of Radio Transmission Apparatus (HS 8525) (Source : GTIS)

  25. 3-2. Changes in the First Decade : IC & Chips Top 4 Countries have been unchanged : USA, JPN, TWN, KOR ☞ 109.9 B$(’96)  252.2 B$(’00)  299.0 B$(05), CAGR(00~05)3.5% 32.8 B$(’96)  54.1 B$(’00)  42.0 B$(05), CAGR(00~05) -4.9% 24.8 B$(’96)  30.2 B$(’00)  29.1 B$(05), CAGR(00~05) -0.8% 7.1 B$(’96)  18.6 B$(’00)  27.0 B$(05), CAGR(00~05) 7.8% 14.2 B$(’96)  20.0 B$(’00)  24.4 B$(05), CAGR(00~05) 4.0% Export of IC & Chips (HS 8542) (Source : GTIS)

  26. 3-2. Changes in the First Decade : TV & Monitor HS 8528(non-ITA) has been led by Mexico(non-ITA Member). ☞ 17.6 B$(’96)  28.7 B$(’00)  57.0 B$(05), CAGR(00~05)14.7% 3.3 B$(’96)  5.7 B$(’00)  10.3 B$(05), CAGR(00~05) 12.3% 0.8 B$(’96)  1.3 B$(’00)  8.4 B$(05), CAGR(00~05) 45.3% 2.0 B$(’96)  3.3 B$(’00)  3.9 B$(05), CAGR(00~05) 3.3% 2.2 B$(’96)  1.6 B$(’00)  3.0 B$(05), CAGR(00~05) 13.3% Export of TV & Monitors (HS 8528, non-ITA) (Source : GTIS)

  27. 4. For More Success of ITA 26

  28. 4.1 Recommendations For ITA to be more successful, we recommend the followings ; Expansion of ITA coverage Developing and regularly updating standard definition of HS codes wrt ITA coverage Concerted efforts to reduce NTBs such as TBT

  29. “Happy U-Life that does with U-Korea realization” THANK YOU www.iita.re.kr 82-42-710-1007 lee@iita.re.kr 28

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