Korea IT Industry March , 2004 Catalyst To Fastening Digital Opportunities Korea IT Industry March , 2004 Paul, Chang Managing Director/PH.D. International Cooperation Agency for Korea IT(ICA)

CONTENTS IT Industry Briefs The Role of ICA

Korea IT Industry Briefs

Korean Economy Overview Korean Economy Key Indications Size of Korean Economy(2003) Population : 47.9 Million GDP : 422.2 Billion US$ Per Capita GDP : 14,000 US$ Korean Economy & Trade(2003) Export : 193.8 Billion US$ Import : 178.8 Billion US$ Trade Surplus : 15 Billion US$

Korean Economy Overview Korea in the World Economy $ 4th (Ranking in the World) (Ranking in the World) 12nd 12rd 13th 26th Population Import Export GDP Foreign Exchange Reserve (2003)

Korean Economy Overview New Economic Policy Directions Short Term Measures Early Execution of the Government Budget Holding IR Meetings (New York, London) Attracting Foreign Investment Long Term Measures Establishing of a Free and Fair Market Economy  Accounting System & Corporate Governance  Deregulation Promotion of Science & Technology including IT

Weight of Korean IT Industry Trade Influence of IT industry in Korean Economy Export (US$ Bill) Import (US$ Bill) 57.6 (29.7%) 36.4 (20.4%) IT Sector IT Sector Non-IT Sector IT Sector 136.2 (70.3%) Non-IT Sector Non-IT Sector 2004. 1 142.4 (79.6%) 128.4 (79.7%) 2004. 1 Trade Surplus in IT Sector : 21.1 Bill US$ Total Trade Surplus : 15 Bill US$

Weight of Korean IT Industry Contribution of IT industry in Korean Economy “Making Substantial Contributions to the Korean Economy” Production (KW) 380T  209T W 15.6% 19.3%  % in GDP 110B 57B  Export (US$) 2003 2007 (Korea National Statistical Office)

The Prospect of Korean IT Export Weight of Korean IT Industry The Prospect of Korean IT Export [100 mill US$] 383 2001 2002 105 152 200 400 800 366 549 767 2003 2005 2007 207 287 IT Trade Surplus IT Export 464 [Average 16.2% growth from 2003 to 2007] 1000 600 1,000 We expect the Korean IT export will grow at a CAGR 16.2% to 2007. We will achieve the export size 76.7billion$, trade surplus 28.7 billion$ in 2005 in line with such a annual growth rate. However, there are some stumbling blocks such as overall world economy slowdown including IT sector and Korean economy’s uncertainty due to North Korean Nuclear threat. Thus the estimated IT export size may be a little reduced compared with above estimation. But also, there are some positive driving point, for example, the wide spread of 2.5G and wireless internet as well as the growing demand on transition to 3G. From these IT paradigm changes, Korean IT export size will grow continuously.

Weight of Korean IT Industry Share of IT Industry in GDP IT share in GDP 16.5% 16.3% 15.5% 14.9% 13.0% 12.9%

Weight of Korean IT Industry The Korean IT Ranking in the World E-stock Trading  1 St Broadband Internet Penetration Rate  1 St Internet Penetration Rate  4 th Development of Mobile Communication  7 th IT Export  8 th E-government Index  15 th

Status of Korean IT Industry Numbers of PCs The numbers of PCs: 6.3 million (1996) to 24 million (2004. 1) The number of PCs per 100 Capita reached 65.5% (2004. 1) PC’s (1,000 unit) Per 100 capita

Status of Korean IT Industry Numbers of Internet Users

Broadband Internet Users Status of Korean IT Industry Korean Informatization Subscriber(million) Penetration rate(%) 100.0% 69% 32.4 56% 50.0% 28.6 36% 17.2 22.6% 10.6 Internet Users Mobile Phone CDMA2000 1x Broadband Internet Users

Status of Korean IT Industry Status of Broadband Internet subscribers Unit : person (2004.1) 6,495,419 6,000,000 5,000,000 3,839,872 4,000,000 3,000,000 916,989 2,000,000 1,000,000 This slide shows the types of broadband internet access and their subscribers. xDSL, especially ADSL internet service accounts for nearly 55% followed by cable modem usage with about 33% share. Recently, maybe since the late of 2002, the state-of-the-art technology, VDSL, which has 52 mega bit per second as downloadable bandwidth, has been taking the place of ADSL. 4,780 ADSL Cable Modem Apartment LAN Satellite

< Broadband internet user(% of 100 persons, 2003. 12, OECD) > Status of Korean IT Industry Subscribers of Broadband Internet Service < Broadband internet user(% of 100 persons, 2003. 12, OECD) > Korea 17.2 Hong-Kong 14.9 Canada 11.2 Taiwan 9.4 USA 6.9 Japan 7.1

Market Share In the World Status of Korean IT Industry The Position of Korean IT hardware : 4th in the world Market Share In the World 100.0% 59% 43.8% 50.0% 33.8% 26.8% DRAM TFT-LCD Mobile Phone CDMA

Mobile Hand-Sets Sales of Korea World Mobile Phone market: 460 mil. (CDMA:73.25 mil. – GSM: 274 mil.) Korea: CDMA:43.40 mil. (59%) – GSM: 67.24 mil. (24.5%) 2000 2003 CDMA 2,785 (53.6%) 2,421 GSM 2,457 (10.2%) 24,199 4,340 (59%) 2,985 6,724 (24.5%) 27,414 Korea Except Korea Unit : 10 thousand unit

Initiatives for “Broadband IT Korea” Key Strength of the Korean IT industry World-Class Broadband IT Infrastructures Large Domestic IT Consumer Base Ideal Test-bed for technology Innovations Talented Engineering Pool for Advanced R&D activities Launching National R&D Flagship Projects Starting Next Generation Telecom. $ broadcasting services Strengthening Global Competitiveness

Korean IT Export Vision IT as a Frontier of Economic Growth Build the international cooperation in IT industry Strengthen the Overseas marketing in IT sector Focusing on the promising IT products Korean IT export visions is entering into the world 5th rank IT export country by achieving IT export 400 billlion $ and trade surplus 100 billion$ by 2007. In order to achieve this goal, ICA is promoting various projects such as building IT support system, strengthening overseas marketing and building international cooperation system in IT industry. Establish support system for IT SME Entering into World 5th in IT Export, Will achieve IT export $400 billion and trade surplus $100 bill by 2007

The Role of ICA

CONTENTS Introduction Activities of ICA ICA Roles ICA’s Global Network

Introduction Gateway to the Hub of the Global IT Business, ICA Korea Subsidiary of Ministry of Information and Communication Promoting ICT Trade Introducing new ICT Technologies into the oversea market Matching Korean Partners with foreign governments and companies global core center of IT Cooperation network

Activities of ICA Working for international cooperation in 2003 Korea-Germany Mobile Business Forum 2003 Korea-East Europe ICT Business Development Forum(’03.4) : Czech, Poland, Bulgaria Road show in France(’03.10) Korea-China IT Biz Development Day(‘03.10) SMEs Roadshow for Investment(’03.11) Algeria ICT Cooperation (’03.12) Korea-Malaysia/Indonesia ICT Forum(’03.8) Korea-Brazil ICT Cooperation Meeting(’03.10) India SME matchmaking Program (’03.12) Australia Broadband Summit Korea-Chile ICT Cooperation Meeting(‘03.10)

Activities of ICA Working for international cooperation in 2004 Hungary/Poland-Korea ICT Forum(’04.11) Russia-Korea ICT Forum(’04.9) Germany/France-Korea ICT Forum(’04. 4) America-Korea ICT Forum(’04.11) China-Korea ICT Forum(’04.9) Japan-Korea ICT Forum(’04.3) Spain/Italy-Korea ICT Forum(’04. 10) Korea-Thailand ICT Forum(’04.3) India-Korea ICT Forum(’04. 5) Korea-South America (Brazil & Mexico) ICT Forum(’04.4) Indonesia/Malaysia – Korea ICT Forum (’04.7)

Roles of ICA To support efforts to cooperate with the World’s IT Industry - Sending ICT delegation mandated to open global IT Markets - Supporting domestic companies to discover a new market - Holding seminars for foreign investment - Forming an advisory team for foreign investment To support domestic IT companies to venture overseas market - Operating a consortium of domestic IT export companies for overseas market - To help domestic IT industry to become globalized - Providing a framework for international cooperation in ICT area This slide shows ICA Visions and Goals. The ICA visions in 2003 are summarized in 5 categories.

Roles of ICA To research & analyze overseas market - Building and Operating the IT trade information system - Finding promising IT export Items and research for their markets - Publishing the white paper for export of the IT industry To campaign the vision of IT Korea - Producing public relations materials for IT Korea - Holding seminars for International Cooperation for Global IT Korea This slide shows ICA Visions and Goals. The ICA visions in 2003 are summarized in 5 categories.

ICA’s Global Network Foreign Partners for Global IT Network  AEEMA (Australian Electrical and Electronic Manufacturer’s Association)  ARIES (Romanian Association for Electronics and Software Industry)  CIAJ (Communications and Information network Association of Japan)  CAN (Computer Association of Nepal)  ESC (Electronics and Computer Software Export Promotion Council of India)  HKCR (Economic Chamber of the Czech Republic)  ITAHK (Internet and Telecom Association of Hong Kong)  TEEMA ( Taiwan Electrical and Electronic Manufactures’ Association)  Association of CDMA Network Operators of Russia This slide shows ICA Visions and Goals. The ICA visions in 2003 are summarized in 5 categories.

ICA Business with France To set up cooperation network - ICA MOU with French Northern France Expert (NFX) - ICA Business Exchange with Paris Regional Development Agency for IT development - Cooperation between ICA and Sophia Antipolis with information exchange To facilitate business exchange - Digiport dispatched broadband delegations to Korea for business meetings - Korean IT companies have meetings with French companies in DICON2003 - Korean IT Delegation will visit France in April This slide shows ICA Visions and Goals. The ICA visions in 2003 are summarized in 5 categories.

Future Cooperation between Korea and France Strength of Korea and France Korea World Class IT Frontier High Tech. in IT IT Hub in East Asia France Traditional IT Giant in Europe Most Advanced in the field of Culture and Content Economic Leader of EU

Future Cooperation between Korea and France Best Cooperation Sector Digital Content o Establishing Cooperation Network between Korea and France in Digital Content (game, character, movie….) o Promotion of Business Exchange in Digital Content BEST IT PARTNER