South Korea - Commercial Guide
Information and Communication Technology

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2020-09-20

South Korea has earned a reputation as a leading global information and communication technology center and is ranked second in Bloomberg Index of Most Innovative Nations 2020. With its cutting-edge ICT infrastructure boasting the world’s fastest internet speeds, the country is home to global leading electronics and IT companies such as Samsung Electronics, LG Electronics, SK Hynix and Naver. Korea is motivated to keep its reputation as a global ICT powerhouse by investing heavily into innovative technologies such as 5G Network, Artificial Intelligence and Big Data.

 

Artificial Intelligence

ITA Code: ICT

Overview

South Korea is developing its AI capabilities and has expressed its ambition to position itself as a global contender in AI technologies markets. ROK officials see AI as a crucial element for the country’s prowess in the ICT sector and are committed to Korea becoming an AI powerhouse. In support of this goal, in 2019, the ROK Government announced its first national AI strategy which included focusing on heavy investments in AI infrastructures and greater use of AI technologies across all industries. In 2020, the government released the Digital New Deal which envisions state-led industrial and educational efforts on the potential opportunities in AI.

South Korea recognized that there is an engineering gap for experienced and skilled AI talent and therefore in 2019, the ROK designated five universities as AI Engineering schools. Additionally, the ROK plans to add more schools in the coming years with a focus on developing highly qualitied AI engineers. Many in the country see the creation and development of AI startups and businesses as vital to building a strong AI ecosystem. As a result, the ROK is supporting the creation of an AI-oriented startup incubator to help develop emerging AI businesses.

The major Korean ICT companies are aggressively pursuing AI technologies. Two leading electronics companies - Samsung and LG Electronics, the top internet companies - Kakao and Naver, and the major telecom companies - SK and KT, have invested significantly in Artificial Intelligence. Just to highlight a few investments:

  • Samsung has opened seven AI centers in five countries and worked on various projects such as new machine learning algorithms, AI Chip and On-Device AI.
  • Naver, Korea’s largest search engine and portal site, acquired Xerox AI research center Europe in 2017 and developed its own core AI engines for speech/image recognition, machine learning platform and test analytics, etc. Also, in 2019, the company and the Softbank group jointly committed to invest $1 billion investment, annually.
  • KT, the second largest mobile carrier in Korea, has committed $300M investment on core AI research for the next three years, and announced a plan to expand its AI engineer headcount and partnership with other AI companies.

Regardless of the size of the firms or solution’s countries of origin, these companies are seeking cutting-edge technology and applications to enhance their AI capabilities and implement AI technologies to their products and services. 

Sub-Sector Best Prospects

· On-Device AI: In order to lower the power consumption of devices and increase the speed of AI computation, the Korean electronics companies are interested in developing light and fast deep learning solutions which allows devices to perform AI computation independent of any external server.

· AI Chip: By reducing the need to send and receive data over the internet, AI chips enable devices to perform intensive AI computations on all IT devices. All the major Korean ICT companies have been investing heavily on developing AI chips for adding new product and services based on AI. 

· Monetization of AI: As Korean companies are leveraging AI as part of core technology stacks, they need to monetize the technology on a large scale. These companies are actively seeking to learn more on how to monetize AI through their new/existing products and services.

· Explainable AI: As the influence of AI technology spreads across sectors such as healthcare, finance and defense, companies are looking for the AI models that provide greater interpretability or users and guarantee the reliability of the model.

Resources

Trade Shows

  • AI EXPO Korea (September, Seoul)
  • Organized by KORAIA, AI Expo is the only AI exhibition in South Korea.  In 2019, 127 Korean/global companies and 21,000 participants attended the event. The exhibition also featured technology seminars and network events.

Web Resource

Local Contact

Mr. Chan Hyuk Kim
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188, Sejong-daero,
Jongno-gu
Seoul 03141, Korea
Tel: 82-2-397-4466
E-mail: Chanhyuk.kim@trade.gov

https://www.trade.gov/southkorea

 

Cybersecurity

ITA Code: ICT

Overveiew

 

2016

2017

2018

2019 (est.)

Total Market Size

2,113.7

2,427.0

2,777.4

2,813.5

 

System & Product

N/A

1,886.2

1,923.2

 

Consulting & Service

891.2

890.2

Exchange Rate: 1 USD

1,161

1,131

1,110

1,165

Source: Ministry of Science and ICT, Korea Internet and Security Agency (KISA) Unit: $1 million.

As the world becomes more interconnected, cyberattacks have become more serious and sophisticated. Due to the focus of global hacker groups and cyber terrorists, cyberattacks are better organized, more persistent and executed on a larger scale. That focus broadened to include not just critical infrastructure but also private sector assets. The borderless nature of the internet contributed to the vulnerabilities of certain devices or data storage.

With South Korea’s introduction of a 5G network, high degree of network connectedness, high penetration of mobile devices, and significant intellectual property, the country has become a prime target for cyberattacks. According to the recent Deloitte Cyber Smart Index, South Korea is the second-most exposed country to cyberattacks in the APAC region. The ransomware WannaCry attack in 2017 shook the Koreans awake to the notion that their society was being attacked at every possible vulnerability, not just with real world weapons, but also through easily executable cyberattacks. Cyberattacks in South Korea continue to increase in both frequency and complexity. The latest attacks on South Korea include the use of advanced malwares, phishing mails, crypto-jacking and zero-day attacks.

Not surprisingly, as the awareness of cyber vulnerabilities became apparent, the market demand for cybersecurity products and services in Korea continues to grow. According to a Korean government survey, the market demand for cybersecurity in 2019 was expected to be over $2.8 billion in 2019.  

South Korea deemed cybersecurity as a matter of national security. Although the country boasts one of the world’s fastest and most mobile IT infrastructures, it also has an infrastructure that is vulnerable to cyberattacks. The frequency and gravity of recent cyberattacks prompted the South Korean government to re-evaluate its cybersecurity strategy. In 2019, led by the office of the President, the Korean government announced its National Cybersecurity Strategy This strategy includes strengthening partnerships with foreign countries and companies and expanding investment to the domestic cybersecurity industry.

There is a growing number of domestic and U.S. companies providing cybersecurity services in Korea. As of 2019, 473 cybersecurity firms were registered in Korea. While most of these firms have developed their own products, some are opened to partnering with small and medium sized exporters from the United States. These Korean companies are interested in filling gaps in technology and product/service line-up, helping the company to meet a wide range of cybersecurity needs.

Sub-Sector Best Prospects for 2020

The Korean public and private sectors predict that the key sub-sectors for the domestic cybersecurity market in 2020 include anti-ransomware, cloud security, IoT security etc.

 

KISA

FSI

Boan News

Key-Sectors

for 2020

Anti-ransomware

Spear Phishing

Cloud Security

Anti-malware

Cloud Security

Ransomware

APT

Bio Information

Industrial Security

Industrial Security

Opensource Security

Smart Monitoring

Cryptocurrency

AI threats

Privacy

IoT Security

Dark Web

Smart City

Source: Korea Internet and Security Agency (KISA), Financial Security Institute (FSI),

Boan News (www.boannews.kr)

Opportunities

Due to its leads in high-speed internet use and advanced ICT infrastructure, South Korea is an ideal market for U.S. firms seeking to test cybersecurity solutions before deployment in other markets. While firms that produce sophisticated and cutting-edge products for critical infrastructure are more likely to succeed, there are also opportunities for firms that provide cybersecurity related consulting and training services. Overall, the Korean market favors the quality and reliability of U.S. products and demand for American products is expected to continue.

To enter the cybersecurity market, the U.S. Commercial Service in Korea recommends that U.S. technology firms partner with qualified and capable South Korean companies which maintain existing sales networks in both private/public sectors and are fully aware of local market characteristics and unique regulatory requirements. 

Resources

Trade Shows

· SECON 2020 (July, Seoul)    https://www.seconexpo.com/2020/kor/main.asp
Hosted its first event back in 2001, SECON is the Korea’s largest security exhibition covering all sectors of both cyber and physical security. In 2019, 500 companies attended the event and exhibited their products and solutions.

· ISEC 2020 (September, Seoul)    http://www.isecconference.org/2020/
Hosted by Ministry of Interior and Safety, ISEC is the largest cybersecurity conference in South Korea. The conference provides 35 sub- sessions and opportunities to engage with relevant domestic ministries and companies.

Key Contacts

Local Contact

Mr. Chan Hyuk Kim
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188, Sejong-daero,
Jongno-gu
Seoul 03141, Korea
Tel: 82-2-397-4466
E-mail: Chanhyuk.kim@trade.gov

https://www.trade.gov/southkorea

 

Semiconductor

ITA Code: ICT

Overview

Semiconductors is a core industry in South Korea. According to the Ministry of Trade, Industry and Energy, the industry accounts for 7.8 percent of GDP and makes up 17.3 percent of exports ($93B).Thanks to solid demand for memory chips for IT devices and datacenters over the past few years, and the emergence of innovative devices (smartphones) and services (cloud computing), the demand for chips has grown, resulting in the industry posting strong growth before a downturn which began in January 2019.

Korea is home to two semiconductor giants – Samsung Electronics and SK Hynix. According to the DRAM exchange, these two Korean companies held 73 percent of the global DRAM and 44 percent of the NAND flash memory market. Additionally, Korea has many small and medium-sized companies producing various semiconductor products.

As South Korea is a leading producer of semiconductors, the country is an enormous market for suppliers of equipment, materials and services for semiconductor production. According to SEMI (Semiconductor Equipment and Materials International), in 2019 the semiconductor equipment market in Korea was $10B while the domestic material market was about $9B. South Korea still imports significant amounts of semiconductor manufacturing equipment and materials from other countries—mainly from the United States and Japan. In total, South Korea imported more than $55B of semiconductor related products in 2019.

Opportunities

The rapidly growing A.I. and cloud computing markets are key growth factors for semiconductors. Market demand will be driven further by increasing connectivity through innovative technologies such as 5G network and IoT. As one of the world’s major semiconductor manufacturers, Korea will be among the primary beneficiaries of such technology innovation. Moreover, as the total production increases, more equipment and materials will be needed, including imports.

While South Korea is considered a leader in technological competitiveness in memory chips, other types of semiconductor products such as microprocessors and sensors still need to be improved to compete on the global stage. To retain its leadership in the semiconductor market, local governments and companies are proactively investing in the next step of miniaturizing semiconductors with innovative processes such as utilizing extreme ultraviolet lithography, developing new materials and diversifying its supply chain beyond existing suppliers. Another promising sector is core technology used in specialized chips for AI, cybersecurity etc.

  • Samsung Electronics: In 2019, Samsung announced that it will invest $116B in non-memory chips through 2030 to change its current dependence on the volatile memory chip market and develop specialized chips for A.I. and Autonomous Driving Vehicles. Also, in 2020, the company announced plans to expand its foundry capacity at Pyeongtaek to accelerate the company’s capabilities for sub-5nm process and extreme ultraviolet lithography-based solution.
  • SK Hynix: In 2019, SK announced $107B size long-term investment plan which includes building four fabrication plants after 2022. However, with recent downturn in the industry, the company decided to hold its plan for this year.

Resources

Trade Shows

· SEDEX (October, Seoul)    http://www.sedex.org/public_html_eng/index.asp
Organized by Korea Semiconductor Industry Association, the exhibition covers the full spectrum of the semiconductor industry supply chain and products including SoC, memory, sensor, equipment and material. During the 2019 event, 192 companies including Samsung Electronics and SK Hynix presented their products to more than 60,000 participants.

· SEMICON KOREA (February, Seoul)    htps://www.semiconkorea.org/enFocusing on semiconductor equipment and materials, SEMICON is one of the major trade events in the semiconductor industry in Korea. The event features keynote speeches from global companies such as Intel and SK, 469 exhibition booths, technology conferences and network events. 

Key Contacts

Local Contact

Mr. Chan Hyuk Kim
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188, Sejong-daero,
Jongno-gu
Seoul 03141, Korea
Tel: 82-2-397-4466
E-mail: Chanhyuk.kim@trade.gov

https://www.trade.gov/southkorea

 

Cloud Computing

ITA Code: ICT

Overview

With Korean enterprises and government institutions are adopting cloud services with increasing frequency, the cloud computing market in Korea is expected to grow at a faster rate than other IT services market sectors. According to Gartner, the South Korea cloud computing market is estimated to reach $2B in 2019, a 15 percent increase over 2018. The market is forecasted to grow at a CAGR of 16 percent until 2022 even though only one third of South Korean companies are currently using cloud services, according to a recent survey by Bespin Global.

South Korea was one of the first countries to establish a national cloud computing strategy. The government presented its first blueprint for the promotion of the cloud computing industry in 2015. To stimulate the sector, the government released new guidelines in 2018 on the use of the private cloud services by the public sector. The guidelines designate cloud computing as an alternative measure to network separation for cybersecurity and for storage of important data such as financial information.  Lastly, this year the government included cloud computing as one of the sub-areas for its digital New Deal projects with the goal of transitioning to cloud services through state-led projects and investments.

Global players such as Amazon Web Services and Microsoft have led the cloud computing market in Korea. According to IDC, as of 2018, AWS had more than 50 percent of market share within Infra as a Service (IaaS) sector, while Microsoft led Platform as a Service (PaaS) sector. In order to further increase their market share, these global players have accelerated their investments in Korea.

  • AWS opened its third data center in Korea in 2019. 
  • Microsoft plans to open its third data center in Busan this year.
  • Google opened its first data center in Seoul early this year.

The recent boost in demand for cloud computing has caught the attention of Korean companies. Major Korean IT companies (Naver) and mobile carriers (KT, LG U+) have entered the market, but struggled to increase their presence.

Cloud Computing Market Share by sectors in Korea

Rank

IaaS

PaaS

SaaS

1

AWS (51%)

Microsoft (18%)

SAP (9%)

2

KT (20%)

AWS (13%)

Microsoft (9%)

3

LG U+(3%)

Oracle (10%)

Douzone (5%)

Market Size

$600M

$390M

$825M

* Source: IDC (2018), Gartner (2019, Figures excluding the cloud management/security service sector)

As the global companies’ presence is expected to strengthen further within the IaaS and PaaS sectors, there will be more opportunities for SaaS companies in the Korean market as more local companies seek to adopt various and customized applications and services on their cloud. Also, cloud management service would be another promising sector as a smooth cloud migration is critical for local companies new to cloud computing.

Resources

Trade Shows

· Grand Cloud Conference (December, Seoul)     http://www.grandcloud.co.kr

· Cloud Impact Conference (February, Seoul)     http://seminar.ddaily.co.kr/seminar26/

· AWS Summit Seoul (April, Seoul)     https://aws.amazon.com/ko/events/summits/

· Azure Cloud Summit (January, Seoul)     https://azure.microsoft.com/ko-kr/community

Key Contacts

Local Contact

Mr. Chan Hyuk Kim
Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188, Sejong-daero,
Jongno-gu
Seoul 03141, Korea
Tel: 82-2-397-4466
E-mail: Chanhyuk.kim@trade.gov

https://www.trade.gov/southkorea