Digital Korea

Leading edge technologies to achieve sustainable growth

by Weiqi HAN

Over the past several decades, South Korea has undergone an economic boom, referred to as the “Miracle on the river Han,” which has been in part due to swift progress in ICT. The country has the world’s fifth most competitive digital economy, and is one of the first to have launched 5G in 2019.

State of the art network infrastructure, providing ballast for digital economy growth

South Korea leads the way in digital economy development, and is one of Asia’s most technologically innovative nations. According to IDATE DigiWorld, digital tech markets are expected to reach 86 billion EUR in 2023, thanks to average annual growth of 4.4% between 2018 and 2023. Standing at 25 billion EUR in 2018, the telecoms market is the main contributor to this revenue, and forecast to reach 26 billion EUR in 2023 (+0.7% a year). Internet services, meanwhile, are expected to be generating 17 billion EUR (+7.9% a year on average) by then. The telecom industry’s development provides the backbone to country’s economic growth. South Korea is the world’s most connected country, with the fastest Internet connections and the highest penetration rate. It also leads the way in 5G plan sales.

The telecoms sector is the digital economy's largest contributor

Progression of South Korea's digital services market, by segment

Source : IDATE DigiWorld

Collaboration between conglomerates accelerating the stages of the transformation digital

South Korea’s biggest ICT conglomerates are first in line in supporting the country’s digital transformation. Telecom service providers, including SK Telecom, LG Uplus and KT, have invested heavily over the past several decades in installing a national infrastructure to underpin growth of the country’s digital economy. With the launch of 5G-capable smartphones, Samsung Electronics and LG Electronics are helping to guarantee the success of 5G rollouts. These industry heavyweights, and Samsung in particular, are major players in both national and global consumer electronics markets in general, and smartphone markets in particular. South Korea is also one of the rare countries to have a powerful local Internet services ecosystem, thanks to companies like Kakao (communications, social media), Naver (search engine, gaming), Daum (portal) and Coupang (e-commerce).

Local apps dominate Internet and mobile use in South Korea

Most popular apps in South Korea in Q2 2019

Source : AppAnnie

Increased financial support from the governmental for the main tech sectors

The South Korean government has invested massively to support the development of ICT (around 5% of annual GDP for telecoms R&D) to secure the underlying technology. The aim is to revitalise the economy by creating a local tech market and increase spending in key sectors in 2020. The government plans to invest around 4.76 billion KRW (3.5 billion EUR) in six innovative sectors in 2020 (vs. 3.3 billion KRW in 2019). Topping the bill are investments in AI, 5G and big data projects. Next in line are IoT through the semiconductor, health, biotech, and automotive sector innovations. Investments in the country’s 5G network will represent around 14% of the total tech spending budget, or 650 billion KRW.

Growing spending in key innovation sectors

South Korean government investment in digital innovation

Source : Ministry of Science and ICT (South Korea)

5G leadership to create growth opportunities abroad

South Korea is one of the first countries to have launched 5G services. In April 2019, the country’s three national operators – SK Telecom, KT and LG Uplus – launched a nationwide 5G network simultaneously. In less than three months, more than a million people had signed up for a 5G plan, overshooting the 4G adoption rate. The three mobile operators are capitalising on their global leadership to strengthen 5G partnerships with mobile equipment suppliers worldwide. The government has a target of creating 600,000 jobs and 73 billion USD in exports in 5G-related sectors by 2026.

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