Present Situation of the IT Industry

Recent Changes in the IT Industry

IT Industry Policy Direction

Present Situation of the IT industry

1

Korea’s rapid growth as an IT powerhouse in the 1990s.

* Production (IT Equipment, SW): (’91) 11.3 (’11) 330 trillion won (29 times increase )

* IT Employment(IT Equipment, SW) : (’91) 131,000 (’11) 658,000 people (5 times increase )

Korea’s IT production capacity : 7% of the total world IT production in 2011 (4th in the world)

* IT production ranking (‘11 Yearbook of World Electronics Data) : China (1st) , U.S.A. (2nd), Japan (3rd), Korea (4th)

* IT Export (’11) : Export 156.6 billion USD (1.7% )

Trade surplus of 75.1 billion USD

* IT Export ranking : 9th (’00) 5th (’09 ’11)

* IT Export ranking by country (’11)

: China (1st), U.S.A. (2nd), Japan (3rd), Germany (4th), Korea (5th)

5 million dollars in 1970 156.6 billion dollars in 2011

Korea exported 156.6 billion dollars worth of IT products for two consecutive years

Memory, Display panels, Mobile phone became 1st market share product within 10~20 years

Source : SA Source : Display Search Source : isuppli

2

* (Memory) 64K DRAM (’83) 1st (M/S : 49.9% (’10) ) 1st (M/S 51.4% (’11) )

* (Panel) 1st generation LCD line (’95) 1st (M/S : 51.4% (’10)) 1st (M/S : 52.9% (’11))

* (Mobile phone) First mobile phone (’88) 2nd (M/S : 29.9% (’10) ) 1st (M/S : 27.5% (’11) )

51.4 52.9

Global market share : 62.6% (mobile AP, 1st ) , 27.1% (LCD driver IC, 3rd ) in 2010

S/W export : (’07) 54.8 US $ Billion (’11) 91.1 US $ Billion (1.7 times )

# of S/W companies : 34% increased for past 4 years , 5,092 (’07) 6,826 (’11)

* Companies with revenue over 10 billion won : 13% increased, 466 (’07) 528 (’10)

3

Global smart-phone market share rapidly increased

* 5% in early 2010 24% in 2011 (1st in the world)

* System semiconductor export : US$131.3 billion (’08) US$ 200 billion (’11), average annual growth rate of 15.0% (’08~’11)

e-Government Readiness Index (’12, UN) : 1st

ICT Development Index (’11, ITU) : 1st

Mobile/wire phones penetration rate

* Wire phone (per 100 persons) : 60.9 (’11)

* Mobile phone (per 100 persons) : 108.5 (’11)

Mobile high-speed Internet penetration rate : 1st in the world

* Mobile high-speed Internet (per 100 persons) : 91 (’11, 1st in the world)

* High-speed Internet (per 100 persons) : 35.7 (’11, 4th in the world)

4

* ICT Availability (’09~’11, 1st for the third consecutive year), ICT Applicability (’11, 2nd)

Present Situation of the IT Industry

Samsung successfully developed the 64M DRAM, first in the world(‘92)

Display companies with preemptive investments in the 7th generation during ‘04 and ‘05

Electronics Industry Promotion Plan (’68), Electronics Industry Promotion Law (‘69)

Reduction of the trade barriers by WTO multilateral system

5

Building the infrastructure for High-speed internet and advancement

Actively responding to IT tech. change from analog to digital

Policy directions Core achievements Period

1960’s

~1980’s

1990’s

2000’s

2008~

Electronics industry promotion plan ('68)

Electronics industry promotion law ('69)

1st basic plan for computerized public administration ('78)

Comprehensive semiconductor promotion plan ('85)

Electronics industry export: 500,000 dollars ('62)

1 billion dollars ('74) 10 billion dollars ('87),

TDX development ('82), 64K DRAM development ('83)

Establish the Ministry of Information and Communication ('94)

Cyber Korea 21('99)

First CDMA commercialization in the world ('96)

Over 10 million mobile phone subscribers ('98)

e-Korea Vision 2006 ('02)

IT839 Strategy ('04)

100 billion dollar IT industry export

('05, first as a single industry)

New IT strategy ('08)

IT Korea future strategy ('09)

IT convergence strategy ('10)

“Smart Gov” promotion strategy ('11)

S/W ecosystem development strategy ('11)

Minus growth of the world IT market (-4.6%)

vs. positive growth of Korean IT industry (5.3%,'09)

Ranked 5th in IT export and 2nd in the trade balance ('09)

Largest smartphone market share in the world ('11)

Basic plan for u-Korea ('06)

u-IT839 Strategy ('06)

First WiBro and HSDPA service in the world ('06)

Over 40 million mobile phone subscribers ('06)

[e-Korea : Systemizing new growth engine]

[u-Korea : Advancing ICT service]

[Smart Korea : Accelerating the spread of IT convergence]

[Cyber Korea : Advancing the national information infrastructure]

[Fostering of electronics industry]

6

Recent Changes in the IT industry

2010 2015 2020

7

1.2 trillion

2 trillion

3.8 trillion

36.5 billion 68.1 billion 123.7 billion

Collapse of the IT bubble in 2000 Slowdown of global IT market growth

PC market : General PC Tablet PC Mobile market : feature phone Smart-phone

2010 2014

General

PC (94%)

Tablet PC

(6%) Tablet PC

(27%)

General

PC (73%)

2009 2014

Smart-phone

(15%)

Feature phone

(85%)

Feature phone

(60%)

Smart-phone

(40%)

($)

Conversely, the world’s IT convergence market : double-digit growth by 2020

HW Key to competitiveness : S/W, contents, services

8

(당기순이익 기준, 백만 달러) * 지난 20년 간 시가총액 기준 10위권을 유지한 기업은 단 한 개(IBM)

구 분 2007년 2008년

2,947

160

14,065

4,204

2,478

485

17,681

4,227

2009년

1,433

-227

14,569

6,520

•

Developed robust S/W (iOS)

for Apple mobile

iPhone iPod touch iPad

연평균성장률

-3.7%

-7.0%

10.1%

26.5%

1990

•

Acquired Motorola

: S/W company Total IT company

(S/W & H/W) like Apple.

(시가총액 순위) 2010

•

Acquired Autonomy

(a U.K. S/W co.)

: Strengthened S/W business

* Apple became the top company through OS, contents, platform

Competition among heterogeneous industries Emergence of Contents as competitiveness

Apple, a computer company Samsung Electronics

(mobile phone) Nintendo (portable game console)

Competitiveness of earlier TVs

<Key factor>

Size, performance of TV

Competitiveness of smart TVs

<Key factor> Various contents

Previous mobile industry Present mobile industry

Competition among enterprises for the same product

Platform Network Terminal

Competition among enterprise ecosystems

Advanced economic zones (U.S, EU, Japan)

Newly industrialized countries join in the mobile industry

9

Change of Competitive source among enterprises

Advanced countries New countries’ participation in mobile industry

- ZTE in China: 5th in the world mobile phone market seller(’11)

- 6 companies in India ranked among the world’s top 100 IT service

companies (‘10, Gartner)

• •

(%)

(%)

(%)

(2012/09] KEA

10

(2012/09] IMF

(2012/09] Gartner

Global economic growth rate

Global IT spending growth rate

IT industry production growth rate in Korea

(%)

(2012/09] KEA

IT industry export growth rate in Korea

IT Industry Policy Direction

1 Next-generation H/W

2 3

4 5

Global competitiveness of S/W

스마트클라우드

시장 주도권 확보

창의융합

인재양성

Spreading IT convergence

11

4 5 6 Global Cooperation Initiative in the

smart / cloud computing

Creative Personnel

1 Next-generation

H/W

2 3

4 5

Global Competitiveness of S/W

스마트클라우드

시장 주도권 확보

창의융합

인재양성

Spreading IT convergence

11

4 5 6

Global Cooperation Initiative in the

Smart / Cloud computing Creative Personnel

Securing strategy for IT convergence to all industries

Establishment of ‘2nd IT convergence spreading strategy’

1st strategy (2010) : IT convergence to auto, shipbuilding, textile, etc.

Strengthen the core capability of IT convergence

Secure core technologies such as the cloud platform and U/X, U/I

Strengthen the IT convergence infrastructure

2nd strategy (2012) : IT convergence to healthcare, civil service, education, etc.

Foster the next-generation H/W industry (ex. Transparent/ flexible displays)

12

Enlarge the # of IT Convergence Innovation Center

Developed the world’s first internal/external integrated antenna for vehicles

Installation of the Ship Area Network (SAN)-based remote maintenance system

Remote management of diseases (u-Health) such as diabetes and asthma, using the smart-phone

37 hospitals and clinics have participated in medical information exchange project (‘11.6)

Localization of the core computer system and embedded S/W (2011)

(mission computer mounted on T-50 advanced trainer aircraft)

Export of unmanned surveillance equipment mounted with a heat image camera system

by developing embedded S/W In the national defense area

IT convergence-based management innovation by attaching an RFID to all medical

supplies for the first time in the world

Expansion of the market and successful export of service robots

(cleaning, security and Surveillance. Etc.

First development and commercialization in the field of vehicle semiconductor area

13

Nurture advanced S/W engineers : S/W specialized College / Graduate School

Establish the S/W bank

Support R&D to strengthen embedded S/W competitiveness

Promote S/W convergence

Support Next-generation S/W platform by the private sector

Establish a S/W fair trade system

Constraints on conglomerates’ participation in the public market

Strengthen the fundamentals of the S/W industry

Creating S/W eco-system to achieve success in global market

14

Promote technological innovation of the H/W industry

Display

Semi-conductor

Improve technological competitiveness in the promising semi-conductor area

Foster semi-conductor engineer education (employment-related type)

Preemptive investment in the next-generation display technology

Support the R&D for core equipment & materials

16

Sensor, Secondary battery

LED

Develop leading technology to the world LED lighting market

Expand the infrastructure to promote the LED convergence industry

Strengthen the competitiveness of the materials industry 15

Mobile

Commercialize 4th generation smart-phone & mobile communication network

Secure the source technology for terminals, S/W after the 4th generation

communication technology

Cloud

Promote the cloud market by introducing cloud service in the public sector

Big Data

Support in R&D, HR development, networking for Big data industry

16

Take the initiative in the next-generation mobile (4G/5G) &

Cloud market

Network Terminal (Device)

Platform / SW Contents / Service

Network security technology

Super high speed/Ultra Low Power information processing

Display that able to multisensory cognitive

High performance computing technology

Hologram stereo-scopic image processing technology

Super high speed processing platform

Virtual reality experience

Fixed Mobile Communication environment that 40 times faster than present

17

Creative & convergence-oriented talents to meet industry demands

Nurture professional engineers to meet industry demands.

Advanced R&D personnel in the IT and IT convergence areas

Nurture creative engineers who will lead the age of convergence.

Engineers in S/W industry by recruiting and fostering creative S/W engineers

Creative talents by establishing a research center like MIT Media Lab.

18

Joint projects of PhD students and IT companies

Expansion of IT Industry cooperation beyond Northeast Asia 19

(Objective) S/W export and global cooperation

(Present Status)

(Contents)

- Global cooperation in IT services (SEIS conference etc.)

- Enhance small/medium S/W businesses' global competiveness

(S/W export mentoring, etc.)

(Objective) Share open S/W policies and discuss cooperation agenda between Korea, China, and Japan

(Contents) Operate meetings and forums

- Announcement of the newest open S/W technology for each country and market trends

- Prize to open S/W area contributor and excellent developer

(Present Status) Cross meeting every year with D/Gs of Korea, China, and Japan (’04~, 10 times)

(Objective) exchange e-commerce related information, establish the cooperation system

(Agenda) e-commerce cooperation

① E-commerce policy ② Electronic document ③ Pilot project

④ Holding symposiums ⑤ Global cooperation issues

(Present Status) Cross meetings every year with D/Gs (’11~, Once)

(Objective) promote e-commerce cooperation between two countries

(Present Status) Cross meeting every year with D/Gs of Korea and Japan (’00~,15 times)

(Contents) e-commerce cooperation

- Policy council

- Expansion of cooperative project such as paperless trading

- Holds SEIS (Sharing Experience in IT Service) conference every year

- Supports overseas consulting for developing countries (’07~)

Promote mutual cooperation and share IT best b/w Asian countries

Organize working group meeting (First half of 2013)

Organization of Asian electronics and IT industry cooperation consultative Group

20

Agenda

- Discuss detailed issues such as concrete cooperation area, organization system,

subcommittee and conference schedule. Etc.

- Sharing policy experiences & information

- Identifying cooperation projects including personnel exchange