Challenging Situation
The electronics and IT industries of Korea, which have led the growth of the Korean economy, are in the doldrums, amid a rapid decline in exports and delay in production. The adverse situation is more and more exacerbated by the global growth slowdown, weak yen, various market uncertainties, increasing presence of Chinese players, and other factors.
Korean companies are having a particularly hard time in the global smartphone market. The market grew 74 percent from a year earlier in 2010, but the growth rate has declined to 58 percent in 2011 and 43 percent in 2012.
Meanwhile, the mid-end smartphone market is showing gradual growth these days, mainly in emerging countries. This segment accounted for 39 percent of the global total in 2010, but the percentage shot up to 66 two years ago. The average selling price of handsets fell from US$331 to US$286 during the same period, and Chinese manufacturers benefited greatly from the trend. For example, Lenovo rose to second place in China in 2012, and Huawei and ZTE took the third and fifth spot each in the global market through successful penetration of emerging markets. They are knocking on the door of the high-end smartphone market nowadays, too. At the same time, existing powerhouses are striving hard to revitalize themselves. Nokia and Motorola are in corporate restructuring processes now, while cooperating more closely with those providing operating systems such as Google.
The TV and display industries, which recorded negative growth for years due to the supply glut in advanced economies, have shown a gradual recovery since last year, thanks to the popularization of smart TVs and stable demand and supply conditions. The average price of TV panels fell 18 percent in 2011, but went up approximately 3 percent the following year. Still, the competition among Korean, Japanese, and Chinese manufacturers is heating up more than ever, in spite of improved market conditions. In particular, Japanese companies are launching a strong offensive with next-generation products such as ultra HD (UHD) TVs and OLED TVs. Sony has already put its UHD TV products on the market and Panasonic has completed the development of OLED TVs as well.
In the global semiconductor sector, Samsung Electronics, Intel, TSMC, and Qualcomm had a dominant position until recently as a memory chip manufacturer, CPU provider, commissioned manufacturer and telecoms chip maker, respectively. However, the boundary is blurring these days for factors like micro-fabrication, supply source diversification, and the development of integrated chips and convergence solutions.
TSMC is increasing its investment to respond to new orders from Apple as well as its traditional client Qualcomm, while Intel is trying to enhance its competitiveness in the field of telecoms chips through M&A. Qualcomm is improving its integrated modem chips for less power consumption, too.