0 institute for information technology advancement hyeo-eun lee, ph.d ita and the growth of koreas...

1Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D

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.DDirector, IITA

Republic of Korea


ContentsContents

Status of the Korean IT Industry

Korea’s KSFs and Recent Policy

ITA & International Trade

For More Success of ITA

1

2

3

4

1. Status of the Korean IT Industry

3


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

1-1. Overview of the Korean Economy1-1. Overview of the Korean Economy

$37.4 B$37.4 B$37.4 B$37.4 B

1st

(Source: KITA)

$32.9 B$32.9 B$32.9 B$32.9 B

2nd

$27.0 B$27.0 B$27.0 B$27.0 B

3th

$22.1 B$22.1 B$22.1 B$22.1 B

4th

Korea’s Top Exporting Items in 2006


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)

1-2. Importance of IT Industry : GDP1-2. Importance of IT Industry : GDP

(Source: Bank of Korea)

15.0%

9.5%

51.3%

0

20

40

60

80

100

120

2000 2001 2002 2003 2004 2005

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

IT Real GDP(Left) Share of IT(Right) Growth Contribution Ratio of IT(Right)

(Unit: 1Trillion KRW)

(1US$ = 940 KRW, '07.2)


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)

1-2. Importance of IT Industry : Export1-2. Importance of IT Industry : Export

(Source: KITA)

113.3

48.5

34.8%

36.6%

26.6%

71.9%

51.1%

0

20

40

60

80

100

120

2000 2001 2002 2003 2004 2005 2006

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

IT Export(Left) Share of Export(Right) Growth Contribution Ratio(Right)

(Unit : 1Billion US$)


Flagship products are memory semiconductor, display panel and mobile handset.

1-3. Share in the Global Market1-3. Share in the Global Market

LGE, Samsung SDI(49.5%)

PDP-Panel($7.7 B)

Share of KoreaShare of Korea(’06, Production)(’06, Production)Share of KoreaShare of Korea

(’06, Production)(’06, Production)

Volume of Global Market (’06)Volume of Global Market (’06)Volume of Global Market (’06)Volume of Global Market (’06)NAND Flash

($12.8 B)

SEC, HYNIX(62.1%)

60%

40%

20%

SEC, HYNIX(45.2%)

DRAM($34.3 B)

SEC, LPL(46.6%)

LCD-Panel($50.7 B)

SEC, LGE(24.4%)

Handset($159.0 B)

SEC, LGE(22.4%)

LCD-TV($22.2 B)

(Source: Gartner, Displaysearch)


Korea is at global top-level in IT infrastructure and penetration

1-4. IT Infrastructure1-4. IT Infrastructure

Current Status of Informatization in Korea Current Status of Informatization in Korea

(Source: www.nia.or.kr)

2000 2001 2002 2003 2004 2005 2006(P)

Subscriber (10,000 households) 401 781 1,040 1,118 1,192 1,219 1,404

Subscriber per 100 households 25 49 63 66 69 68 77

User (10,000 persons) 1,904 2,438 2,627 2,922 3,158 3,301 3,412

User per 100 inhabitants 45 57 59 66 70 73 75

Subscriber (10,000 persons) 2,682 2,904 3,234 3,359 3,659 3,834

Subscriber per 100 inhabitants 57 61 68 70 76 80

Transaction Volume (Trillion KRW) 58 119 178 235 314 358

Transaction Rate (%) 4.5 9.1 12.8 15.1 19.3 19.8

5 11 15 18 31 4,145

409 1,131 1,771 2,275 2,427 2,673 3,454

e-Commerce

Internet Banking Subscriber (10,000 persons)

IPv6 Address

Category

Internet Usage

Mobile Phone Services

Broadband Internet Services


2. Korea’s KSFs and Recent Policy

9


Korea is top-ranked in major IT indices

2-1. Evaluation of the World2-1. Evaluation of the World

Technological InfrastructureTechnological Infrastructure

Broadband SubscribersBroadband Subscribers

# of subscribers per 1,000 habitants

Broadband CostBroadband Cost

# US$ per 100 kbps per month

2(’05) 6(’06)2(’05) 6(’06) 1(’05) 1(’06)1(’05) 1(’06) 2(’05) 2(’06)2(’05) 2(’06)

Digital Opportunity Index 2005 (ITU)Digital Opportunity Index 2005 (ITU)

DOIDOI

1

RankRankCountryCountry

KoreaJapanDenmarkIcelandHong Kong

KoreaJapanDenmarkIcelandHong Kong

0.790.710.710.690.69

0.790.710.710.690.69

12345

12345

OpportunityOpportunity InfrastructureInfrastructure

0.990.990.990.991.00

0.990.990.990.991.00

0.740.690.750.720.70

0.740.690.750.720.70

UtilizationUtilization

0.640.460.370.370.38

0.640.460.370.370.38

(2005, 2006)(2005, 2006)

World Competitiveness Scoreboard (IMD)World Competitiveness Scoreboard (IMD)

High-Tech ExportsHigh-Tech Exports

% of manufactured exports

7(’05) 7(’06)7(’05) 7(’06)


Korea’s accomplishment in IT became the bench marking target of the world

2-1. Evaluation of the World2-1. Evaluation 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.)


Korea’s IT today is the result of combined efforts of private and public sectors

2-2. Key Success Factors 2-2. Key Success Factors

National Consensus on IT Development

Public SectorPublic SectorPublic SectorPublic Sector Private SectorPrivate SectorPrivate SectorPrivate Sector

- Establishment of MIC and

IT Promotion Fund

- Sharing Vision w/ People

- Strategic Investment in

IT R&D and HRD

- Deregulation and Market

Liberalization

Digital Minded

People & Quality

Labor Force

- Heavy and Timely Investment

in Strategic Areas

- Building up Tech.

Competency

- Market Diversification

and Globalization


Export Volume Share Export Volume Share

US 11,039 28.7% 12,489 11.0% 1.2%

Japan 3,956 10.3% 9,353 8.3% 9.0%

EU 6,524 17.0% 18,853 16.6% 11.2%

Sub-total 21,519 56.0% 40,695 35.9% 6.6%

China 1,089 2.8% 28,399 25.1% 38.6%

India 87 0.2% 1,644 1.5% 34.1%

Brazil 587 1.5% 1,965 1.7% 12.8%

ASEAN 6,584 17.1% 12,054 10.6% 6.2%

Middle East 819 2.1% 1,609 1.4% 7.0%

Africa 221 0.6% 441 0.4% 7.2%

Sub-total 9,388 24.4% 46,112 40.7% 17.3%

38,403 100.0% 113,261 100.0% 11.4%

CAGR(96~06)

ConventionalMarkets

EmergingMarkets

Worldwide IT Export

1996 2006Nation & Region

(Reference Data) (Reference Data) Korea’ Export Volume by RegionKorea’ Export Volume by Region

(Source : IITA)


Korea’s initiative to build new growth engines and realize U-society

2-3. IT 839 Strategy : Introduction 2-3. IT 839 Strategy : Introduction

InfrastructureInfrastructure

ServiceService ProductProduct

8 Services HSDPA/W-CDMA Service

WiBro Service Broadband Convergence DMB/DTV Service u-Home Service Telematics/ Location-based ServiceRFID/USN ApplicationIT Service

Broadband Convergence NetworkBroadband Convergence Network u-Sensor Networku-Sensor Network Soft InfrawareSoft Infraware

3 Infrastructures

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

9 Products


DMB(Digital Multimedia Broadcasting)

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)

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

2-3. IT 839 Strategy : Recent 2-3. IT 839 Strategy : Recent Achievements Achievements

3. ITA and International Trade

16


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.

3-1. ITA and Korea 3-1. ITA and Korea

(Source : IITA, CAGR : Compound Annual Growth Rate)

Korea’s Trade in IT (HS 10 digit) : ITA vs. non-ITA (Unit : $B)

1996(Before)

2001(After 5yr.)

2006(After 10yr.)

CAGR('96~'01)

CAGR('96~'06)

Note

Amount 24,304 32,210 64,208 5.8% 10.2%

- Share 63.3% 66.4% 56.7%

Amount 14,099 16,266 49,053 2.9% 13.3%

- Share 36.7% 33.6% 43.3%

38,403 48,476 113,261 4.8% 11.4%

Amount 17,199 25,835 43,215 8.5% 9.7%

- Share 74.3% 78.4% 73.4%

Amount 5,954 7,104 15,697 3.6% 10.2%

- Share 25.7% 21.6% 26.6%

23,154 32,939 58,912 7.3% 9.8%Total

Color TV Receivers, TV Camera, Digital Multi-Media Players(DVD, CD)

Korean ITExport

Korean ITImport

ITA

Non-ITA

Total

ITA

Non-ITA

Computers, Peripheral Devices, SW, Wired & Wireless Equipments, Semiconductor, IC & Chip


TV and Monitor are representative non-ITA products in Korea’s foreign trade

3-1. ITA and Korea3-1. ITA and Korea

(Source : IITA)

Korea’s Major Non-ITA Products (Unit: $M)

1996 2001 2006 1996 2001 2006

2,111 782 1,415 36 58 80

CRT TV 2,111 782 333 36 58 6

LCD TV 0 0 605 0 0 56

PDP TV 0 0 423 0 0 13

Projection TV 0 0 54 0 0 5

Flat Panel Display Parts & Material 300 295 15,482 204 1,003 3,321

HS 853939 2 7 279 17 162 541

HS 900120 4 20 549 26 199 1,228

HS 900190 1 38 204 6 198 309

HS 901380 285 217 12,228 80 278 913

HS 901390 7 13 2,223 75 165 330

78 165 372 41 28 67 TV Camera

Non-ITA ProductsExport Import

Color TV


There have been remarkable changes in major products and players

3-2. Changes in the First Decade : Summary3-2. Changes in the First Decade : Summary

(Source : UN Comtrade HS 1996 or HS 1992, GTIS

Trends of Major Products and Countries (Unit : $B)

USA Japan Canada EU25 China Taiwan Malaysia Thailand Indonesia India Korea Mexico Brazil

1996 25.2 15.8 1.7 3.7 10.7 3.9 3.5 0.4 0.16 4.7 2.7 0.20 108.2

2005 25.4 7.3 1.9 19.3 76.4 4.5 14.2 8.3 1.9 0.16 9.2 9.2 0.33 271.0

Growth 1% -54% 12% N/A 1970% -58% 263% 134% 337% 2% 96% 239% 66% 151%

1996 6.5 4.4 2.5 1.4 1.6 1.2 0.6 0.25 0.02 0.8 0.7 0.06 40.9

2005 10.3 1.5 3.7 11.6 9.4 1.8 1.6 1.0 0.21 0.05 0.9 3.0 0.16 66.8

Growth 58% -65% 48% N/A 594% 13% 35% 71% -15% 185% 7% 319% 174% 63%

1996 5.4 5.5 0.8 0.5 0.1 0.12 0.09 0.05 0.00 0.8 0.5 0.01 29.5

2005 7.2 13.7 2.2 30.8 30.9 3.5 3.9 0.60 0.80 0.06 20.2 5.5 2.55 182.9

Growth 33% 151% 170% N/A 5831% 2993% 3027% 535% 1458% 1523% 2283% 970% 27725% 519%

1996 32.8 24.8 2.8 0.6 7.1 10.7 2.3 0.13 0.10 14.2 1.2 0.01 109.9

2005 42.0 29.1 2.5 20.3 14.6 27.0 19.6 5.5 0.36 0.03 24.4 1.1 0.05 299.0

Growth 28% 17% -13% N/A 2358% 278% 83% 137% 175% -76% 71% -4% 494% 172%

1996 0.9 2.0 0.1 0.8 1.6 2.1 1.0 0.05 0.05 2.2 3.3 0.00 17.6

2005 1.8 3.9 0.1 2.3 8.4 2.4 1.9 1.7 0.27 0.08 3.0 10.3 0.10 57.0

Growth 102% 92% 164% N/A 958% 49% -10% 61% 508% 71% 34% 208% 5870% 225%

8471 Automatic dataprocessing machines(computers)

8528 (Non-ITA) Television receivers,video monitors,projectors

8542 Electronic integratedcircuits andmicroassemblies

8525 Radio and TVtransmitters, televisioncameras

8517 Electric apparatus forline telephony,telegraphy

Non-ITA Mem.Global

Developed CountryHS 4

Developing Country


ITA has contributed to the take-off of developing countries in IT export.


ITA Product : Attachment A, Section 1 (Excluded 9026, 9027, 903440, 854381)

Major Export Countries of ITA Product (Unit : $B) Major Export Countries of ITA Product (Unit : $B)

‘96‘96CountryCountry

USAJapanTaiwanChinaMexico KoreaCanadaIndonesiaS. Africa

USAJapanTaiwanChinaMexico KoreaCanadaIndonesiaS. Africa

83.462.616.613.413.113.010.7 1.8 0.3

83.462.616.613.413.113.010.7 1.8 0.3


USAJapanEU(25)TaiwanHong KongMalaysia ChinaMexicoKoreaCanada

USAJapanEU(25)TaiwanHong KongMalaysia ChinaMexicoKoreaCanada

96.370.065.337.029.927.025.724.220.713.0

96.370.065.337.029.927.025.724.220.713.0


ChinaUSAEU(25)Hong KongJapan KoreaTaiwanMalaysiaMexicoThailand

ChinaUSAEU(25)Hong KongJapan KoreaTaiwanMalaysiaMexicoThailand

210.7140.1133.1114.4114.0 83.5 69.5 58.1 32.4 24.1

210.7140.1133.1114.4114.0 83.5 69.5 58.1 32.4 24.1


IC&Chip and Computer : steady, Radio(wireless) : up, wired : down


(Source : GTIS)

110

252

299

108

199

271

30

77

183

41

86

67

18 29

57

0

50

100

150

200

250

300

IC & Chip Computer Radio Wired TV

1996 2000 2005


CAGR13.3%

CAGR12.2%

CAGR25.6%

CAGR6.3%

CAGR15.9%


76.4

19.314.2

25.4

9.2

4.7

3.7

15.8

10.7

30.9

25.2

0

10

20

30

40

50

60

70

80

90

96 97 98 99 00 01 02 03 04 05

Korea

China

EU25

Japan

Malaysia

Taiwan

USA


USA

KOR

MAL

TWN

JPN

China and Malaysia have emerged as new powerhouses.

3-2. Changes in the First Decade : Computer3-2. Changes in the First Decade : Computer

(Source : GTIS)

Export of ADP Machines and Units (HS 8471)

☞ 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%


0.9

3.7

2.5

9.4

1.4

11.6

15.0

1.5

4.4

3.0

10.3

6.5

0

2

4

6

8

10

12

14

16

96 97 98 99 00 01 02 03 04 05

Korea

Canada

China

EU25

Japan

Mexico

USA


Traditional powerhouses sustained and China and Mexico have emerged.

3-2. Changes in the First Decade : 3-2. Changes in the First Decade : Wired Wired TelecomTelecom

Export of Wired Telecom Equipment (HS 8517)

☞ 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%

(Source : GTIS)


20.2

30.930.8

11.3 13.7

5.5

3.5

7.2

0

5

10

15

20

25

30

35

96 97 98 99 00 01 02 03 04 05

Korea

China

EU25

Japan

Mexico

Taiwan

USA


5.5 JPN

0.5 CHN

0.5 MEX

0.8 KOR

5.4 USA

China and Korea have emerged and EU sustained.

3-2. 3-2. Changes in the First Decade : Radio Changes in the First Decade : Radio TransmissionTransmission

Export of Radio Transmission Apparatus (HS 8525)

☞ 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%

(Source : GTIS)


24.420.0

14.2 14.6

29.130.2

24.8

27.0

7.15.5

42.0

54.1

32.8

0

10

20

30

40

50

60

96 97 98 99 00 01 02 03 04 05

Korea

China

EU25

Japan

Malaysia

Taiwan

Thailand

USA


Top 4 Countries have been unchanged : USA, JPN, TWN, KOR

3-2. Changes in the First Decade : IC & Chips3-2. Changes in the First Decade : IC & Chips

Export of IC & Chips (HS 8542)

☞ 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%

(Source : GTIS)


3.0

8.4

3.9

10.3

1.8

0

2

4

6

8

10

12

96 97 98 99 00 01 02 03 04 05

Korea

China

EU25

Japan

Mexico

Taiwan

USA


3.3 MEX

1.6 TWN

0.9 USA

2.0 JPN

2.2 KOR

0.8 CHN

HS 8528(non-ITA) has been led by Mexico(non-ITA Member).

3-2. Changes in the First Decade : TV & 3-2. Changes in the First Decade : TV & MonitorMonitor

(Source : GTIS)

Export of TV & Monitors (HS 8528, non-ITA)

☞ 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%

4. For More Success of ITA

27


For ITA to be more successful, we recommend the followings ;

4.1 Recommendations4.1 Recommendations

Expansion of ITA coverage

Developing and regularly updating standard definition of HS codes

wrt ITA coverage

Concerted efforts to reduce NTBs such as TBT

29Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D29

www.iita.re.krwww.iita.re.kr82-42-710-100782-42-710-1007

[email protected]@iita.re.kr

0 institute for information technology advancement hyeo-eun lee, ph.d ita and the growth of koreas...

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