1. 0 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D ITA and the Growth of Koreas IT Industry 2007. 3. 28-29, Geneva Hyeo-eun Lee, Ph.D Director, IITA Republic of Korea

2. 1 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.DContents Status of the Korean IT Industry Korea s KSFs and Recent Policy ITA & International Trade For More Success of ITA 1 2 3 4

3. 1. Status of the Korean IT Industry 2

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

5. 4 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D 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 : GDP (Source: Bank of Korea)

6. 5 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D 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 : Export (Source: KITA)

7. 6 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Flagship products are memory semiconductor, display panel and mobile handset. 1-3. Share in the Global Market LGE, Samsung SDI (49.5%) PDP-Panel ($7.7 B) Share of Korea (06, Production) Share of Korea (06, Production) 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)

8. 7 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Korea is at global top-level in IT infrastructure and penetration 1-4. IT Infrastructure Current Status of Informatization in Korea (Source: www.nia.or.kr)

9. 8 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D 2. Koreas KSFs and Recent Policy 8

10. 9 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Korea is top-ranked in major IT indices 2-1. Evaluation of the World Technological Infrastructure Broadband Subscribers # of subscribers per 1,000 habitants Broadband Cost # US$ per 100 kbps per month 2( 05) 6( 06) 1( 05) 1( 06) 2( 05) 2( 06) Digital Opportunity Index 2005 (ITU) DOI 1 Rank Country Korea Japan Denmark Iceland Hong Kong Korea Japan Denmark Iceland Hong Kong 0.79 0.71 0.69 0.79 0.71 0.69 1234512345 1234512345 Opportunity Infrastructure 0.99 1.00 0.99 1.00 0.74 0.69 0.75 0.72 0.70 0.74 0.69 0.75 0.72 0.70 Utilization 0.64 0.46 0.37 0.38 0.64 0.46 0.37 0.38 (2005, 2006) World Competitiveness Scoreboard (IMD) High-Tech Exports % of manufactured exports 7( 05) 7( 06)

11. 10 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Korea s accomplishment in IT became the bench marking target of the world 2-1. 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 worlds 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. 11 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Korea s IT today is the result of combined efforts of private and public sectors 2-2. Key Success Factors National Consensus on IT Development 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 Digital Minded People & Quality Labor Force - Heavy and Timely Investment in Strategic Areas - Building up Tech. Competency - Market Diversification and Globalization

13. 12 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D (Reference Data) Korea Export Volume by Region (Source : IITA)

14. 13 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Korea s initiative to build new growth engines and realize U-society 2-3. IT 839 Strategy : Introduction InfrastructureServiceProduct 8 Services 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 Broadband Convergence Network u-Sensor Network u-Sensor Network Soft Infraware Soft 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

15. 14 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D 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 2-3. IT 839 Strategy : Recent Achievements

16. 3. ITA and International Trade 15

17. 16 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D 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 (Source : IITA, CAGR : Compound Annual Growth Rate) Koreas Trade in IT (HS 10 digit) : ITA vs. non-ITA (Unit : $B)

18. 17 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D TV and Monitor are representative non-ITA products in Korea s foreign trade 3-1. ITA and Korea (Source : IITA) Koreas Major Non-ITA Products (Unit: $M)

19. 18 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D There have been remarkable changes in major products and players 3-2. Changes in the First Decade : Summary (Source : UN Comtrade HS 1996 or HS 1992, GTIS Trends of Major Products and Countries (Unit : $B)

20. 19 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D ITA has contributed to the take-off of developing countries in IT export. 3-2. Changes in the First Decade : Summary ITA Product : Attachment A, Section 1 (Excluded 9026, 9027, 903440, 854381) Major Export Countries of ITA Product (Unit : $B) 96 Country USA Japan Taiwan China Mexico Korea Canada Indonesia S. Africa USA Japan Taiwan China Mexico Korea Canada Indonesia S. Africa 83.4 62.6 16.6 13.4 13.1 13.0 10.7 1.8 0.3 83.4 62.6 16.6 13.4 13.1 13.0 10.7 1.8 0.3 99 Country USA Japan EU(25) Taiwan Hong Kong Malaysia China Mexico Korea Canada USA Japan EU(25) Taiwan Hong Kong Malaysia China Mexico Korea Canada 96.3 70.0 65.3 37.0 29.9 27.0 25.7 24.2 20.7 13.0 96.3 70.0 65.3 37.0 29.9 27.0 25.7 24.2 20.7 13.0 05 Country China USA EU(25) Hong Kong Japan Korea Taiwan Malaysia Mexico Thailand China USA EU(25) Hong Kong Japan Korea Taiwan Malaysia Mexico Thailand 210.7 140.1 133.1 114.4 114.0 83.5 69.5 58.1 32.4 24.1 210.7 140.1 133.1 114.4 114.0 83.5 69.5 58.1 32.4 24.1

21. 20 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D IC&Chip and Computer : steady, Radio(wireless) : up, wired : down 3-2. Changes in the First Decade : Summary (Source : GTIS)

22. 21 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D China and Malaysia have emerged as new powerhouses. 3-2. 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%

23. 22 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Traditional powerhouses sustained and China and Mexico have emerged. 3-2. Changes in the First Decade : Wired Telecom 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)

24. 23 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D China and Korea have emerged and EU sustained. 3-2. Changes in the First Decade : Radio Transmission 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)

25. 24 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D Top 4 Countries have been unchanged : USA, JPN, TWN, KOR 3-2. 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)

26. 25 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D HS 8528(non-ITA) has been led by Mexico(non-ITA Member). 3-2. Changes in the First Decade : TV & Monitor (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%

27. 4. For More Success of ITA 26

28. 27 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D For ITA to be more successful, we recommend the followings ; 4.1 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

29. 28 Institute for Information Technology Advancement Hyeo-eun Lee, Ph.D 28 www.iita.re.kr82-42-710-1007lee@iita.re.kr