2. ICT Korea Where Success Knows No Limits Index 1. Introduction 3 2. Competitiveness 8 3. Government Policies 12 4. Foreign Direct Investment 15

3. Introduction Status of the global ICT industry 3 Source: Gartner (Sept. 2014) Status and prospects of the global ICT market Unit: USD 1 bn

4. Introduction Production trends 4 Source: Ministry of Science, ICT and Future Planning (MSIP), KAIT, KEA Unit: KRW 1 tn Production conditions of the Korean network equipment industry

5. Introduction Export / import trends 5 Source: Clarkson Unit: USD bn Export / import status of each category of the Korean network equipment industry Export / import status of each category of the Korean network equipment industry

6. Introduction Sales and profitability  The Korean network equipment industry has generally focused on expensive premium products, and it has relatively higher architecture costs compared to the major powers and China, which is improving these days. 6 Source: Corporate Management Analysis, Bank of Korea Note: This includes broadcasting devices due to the limitations of related statistics. Ratio of costs of sales to turnover and profitability of the Korean network equipment industry Ratio of costs of sales to turnover Ratio of operating profit to net sales

7. Introduction Korea’s network service market  The Korean communication service market saw the launch of the world's first broadband LTE-A service, which is 3 times faster than the previous LTE-A, in 2014 as well as the greater distribution of smartphones and tablet PCs, which resulted in expanded data service. 7 Source: Gartner (Sept. 2014) Unit: USD bn, % Status and prospects of Korea’s network service market

8. Competitiveness & Prospects Comparison of national competitiveness 8 Source: KEIT (2014), as of 2013 Level of technological competitiveness of mobile network industries for each area Level of technological competitiveness of mobile network industries for each area

9. Competitiveness & Prospects Korea ranked 3 rd for global wireless network market share 9 2000 2005 2013 (p) NationProportionNationProportionNationProportion 1USA36.7USA26.7China35.5 2Japan13.7China14.8USA20.4 3Korea7.5 Japan11.8Korea8.6 4UK7.3Korea11.3 Japan6.6 5France6.5France5.1France3.1 Unit: USD 100 mn, % Source: Reed Electronics Research, Yearbook of World Electronics Data, for each year Variation of ranks of wireless network device-producing nations

10. Competitiveness & Prospects Korea tops the global smartphone market 10 Shares of each company in the global smartphone market Source: Gartner (Feb. 2014), * Indicates a Korean company Unit: % (in sales) Rank Company 200920102011201220131 Samsung Electronics* 3.48.518.730.331.0 2Apple14.415.618.919.115.6 3Huawei0.00.13.34.04.8 4 LG Electronics* 0.31.94.03.84.8 5Lenovo0.00.10.33.24.5 6ZTE-0.12.23.9 7Sony Mobile0.83.44.23.63.8 8Yulong (cool pads)-0.40.82.43.3 9Nokia41.134.217.95.83.1 10HTC6.38.29.14.72.2

11. Competitiveness & Prospects Locational ICT Infrastructure 11 IT, parts & materials Seoul: Digital contents, information and communications, green IT, IMT Namdong: Intelligence fusion parts Banwol / Sihwa: Electronic components Optical electronics industry Gwangju: Optical communication, optical application, LED, electronic components Iksan: LED Medical device Bio Electrical & electronics Gumi: Electronic components, mobile, IT equipment, display Daegu (Seongseo): Mobile, IT electrical and electronics Mechatronics, cars, shipbuilding, aerospace IT & related industries Ochang / Cheongju: Semiconductor, new & renewable energy Asan / Cheonan: Display, industrial material parts

12. Government Policies and Governing Laws Future growth promotion plans 12 Top 13 future growth engine areas Advancement of core industries Preoccupation of future new markets future new markets Development of welf are and industries 9 Strategic Industries Establish backbones for sustainable growth Intelligent semiconductor Convergence materials Intelligent IoT Big data 4 Backbone Industries 5G mobile communications Deep-sea offshore plants Smart automobiles Intelligent robots Wearable smart devices Realistic contents Tailored wellness care Smart disaster control system New & renewable energy hybrid system Source: KEIT (2014), as of 2013

13. Government Policies and Governing Laws Next-generation Smart Device Korea 2020 13 1 2 3 4 Source: KEIT (2014), as of 2013

14. Government Policies and Governing Laws Source: KEIT (2014), as of 2013 1 3 Strategies to enhance the ICT equipment industry 2 2 3 14

15. Foreign Direct Investment Status of foreign direct investment 15 Unit: USD mn /case Source: Ministry of Trade, Industry & Energy (MOTIE) Note: The network equipment industry includes broadcasting devices due to the limitations of related statistics. 20092010201120122013 Electrical & electronics Cases Amount 189 1,798 216 1,562 185 1,746 157 1,307 120 524 Network devices Cases Amount 27 91 20 142 27 147 24 205 23 141 Communicatio ns business Cases Amount 5151 7 21 5151 5 33 5 16 Foreign investment in network devices and services

16. 2005 2006 2008 2011 Recently Ericsson-LG: Joint Venture Foreign Direct Investment Success Case 16

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